Read the latest Real Estate articles and news reports. Connecting people to the information and keeping you informed.Buyers Market vs. Sellers Market- by Rick Harper
I have been in real estate for over 30 years and this is the best buyers market I have ever seen. The reason we are in such a tremendous buyers market is because there are so few active buyers compared to previous years. A lot of potential investors are missing the boat. They are not taking advantage of this window of opportunity. I am writing today because I have simply had enough! I can’t stand by and watch so many people make the same mistake.
If you want to play the real estate game the way to win is to “buy low and sell high”. In other words we should buy in a buyers market and sell in a sellers market. I know it is hard. It takes guts to do the opposite of the masses. When we see so many of our fellow investors pulling out of real estate the natural tendency is to do the same. You may be comforted to know that when you buy in a buyers market you will have the masses to sell to in the next sellers market and there will be another sellers market around the corner.
Typical conditions that make up a buyers market are; plenty of product to choose from, days on market to sale is increasing, motivated sellers & willing to negotiate, lenders become more conservative making financing more difficult and less competition from other buyers fighting over the same deal. Many potential home buyers end up renting because they can’t get financing or they are scared to buy if the prices are not obviously in an upward trend. As investors we love it when the rental pool increases. In a buyers market real estate prices go down and rents go up. These conditions cause prices to fall making a property more profitable (more equity & higher cash flow). Buyers market conditions do not exist in every region of the country but it is safe to say many of the major markets (hot spots) have transitioned from hot to cold.
Obviously a sellers market is just the opposite of a buyers market. Believe me! It is better to be seller during a buying frenzy. I have seen it turn into such a buying frenzy that buyers are so motivated they will often pay over asking price for a property. They even pay over the appraised value. It seems like good common since goes out the window. They accept lousy financing (ARM’s), pay too much and get in over their heads. That’s why a buyers market will follow a sellers market.
The funny thing is when the market is good and the deals are available the typical buyer goes into hiding. The typical buyer is the one who follows the masses instead of using good business sense. Unfortunately the typical buyer buys in a sellers market like everybody else and then panics and sells in a buyers market: just the opposite of what they should be doing.
I may be suggesting that you should, “buy in a buyers market and sell in a sellers market” but that is not what I do. I don’t sell. I know that over the long term prices will go up. If during the long term there are market fluctuations it does not bother me. I simply don’t even think about it. I know some investors are calculating their net worth on a daily basis and watching their net worth go down may prompt them to want to sell. Not me. I buy in solid markets that show long term potential. I tell everybody, especially the flippers (investors who want to buy and sell for quick cash) “don’t buy anything you are not willing to hold for a very long time”. That means the financing and cash flow have to work or you need to look at a different property.
The hot markets now are typically the markets that were ignored in recent years. Emerging markets, Go-Zone markets, Sun-Belt, midsize cities, small cities are still affordable because the prices were not artificially run up by investors.
I am an investment broker and I do a good job teaching people how to make money in all the different real estate markets. I have been successful in real estate booms and busts. Because we make our money when we buy we make most of our money during the bust (buyers) markets.
10 Great Places to Invest in Real Estate
The magazine Business 2.0 has published its list of the top 10 places to invest in real estate in the next 12 months.
Top 10 Cities: Where to Buy Now
Panama City, Fla."Panama City is an economy waiting to break out," says Steven Cochrane, chief regional economist for Moody's Economy.com.
Vero Beach, Fla. A Manpower Employment Outlook Survey predicts growth in construction, manufacturing, and retail jobs too.
Bridgeport, Conn. "Bridgeport has fixed the corruption," says Norman Feinstein, a principal with New Jersey-based Hampshire Funds. "The local government is pro-development, and buildings are being rehabbed."
Lakeland, Fla. Lakeland is just 30 minutes from Tampa, a juggernaut of 2.7 million people that's projected to add almost 210,000 more residents over the next five years.
McAllen, Texas 85 percent of the population is Latino and they are enjoying improved economic status, creating pent-up demand for nicer homes.
San Luis Obispo, Calif. The last semi-rural stretch of central California coastline, and it's also home to the state's rising star of wine production.
Wilmington, N.C. Highway construction has opening this area of the coast, bringing vacationers from other parts of North Carolina.
Manchester, N.H.Within commuting distance of Boston, without the cost.
Fort Collins, Colo. An outdoor paradise with lots of high-tech jobs, good schools and low crime.
Atlanta, GA. Bruce Katz, head of the urban development program at the Brookings Institution, says Atlanta is "sprawl on steroids." Source: Business 2.0 (11/01/2006)
Absentee Investors- by Rick Harper
Times, they´re a´change´n and so are real estate investment strategies. More and more, investors from all over the country are taking advantage of the tools available to them. When I say tools I don’t mean hammers & saws. I mean the power of technology and delegation. Think about it! We never would have heard of Henry Ford if he did not master modern technology and the art of delegation.
Historically, beginning investors thought they had to do everything themselves. Find the property, do the repairs, find the tenant and then handle every problem from a stopped up toilet to the rent being late. As an investor’s portfolio grows it becomes more & more difficult to "Do It All" so delegating becomes a must! I have experienced this evolution of an investor myself and watched hundreds of other investors go through the transition as well.
There are many willing & qualified potential investors who have lives, jobs & families. that make it impossible for them to commit the time required to invest wisely. They must delegate. There are many willing & qualified potential investors who do not have the skills to find, negotiate & repair property. They must delegate. I don’t feel sorry for them. The richest people in the world have one thing in common. They delegate! Without a doubt, the investors who "Do It All", don’t go as far and make as much money as the investors who get other people to do it for them. When an investor runs out of time and energy their portfolio stops growing.
Most investors love to use OPM (Other Peoples Money) to invest with but when it comes to OPL (Other Peoples Labor) or OPK (Other Peoples Knowledge) there is often some resistance. The best part of OPL is you can buy anywhere in the county, putting the best real estate markets at your fingertips, not just the market in your backyard. Real estate investing is like buying stocks. We want to buy the stock of the company that has the greatest profit potential, not the stock for the company within 20 miles of your home. As an absentee investor using OPM, OPL & OPK, your time is free to enjoy life which is really why we invest. Investing is not buying a job. Investing is how you eliminate your job.
Yes, there are added risks if you can’t drive by your investment, but the benefits far outweigh the risks. Some of the benefits are that now you can invest in better markets, with higher appreciation, higher cash flow, higher rent demand, lower prices for quality property, newer property, waterfront property, golf course property, high CAP Rate commercial or what ever criteria that may be important to you. There are some basic facts most investors are now incorporating into their investment criteria and decision making. Of the 50 states one state will outperform the other 49 states. Some regions of that state will outperform the rest of the state. Invest where the large employers are opening facilities. Mercedes, Honda, Toyota , Hyundai, NASA, Boeing, Lockheed Martin, Northrop Grumman, Teledyne, Siemens and Verizon are just a few corporations who have determined that the right place to invest in is Alabama .
It is easy to find the hot markets. Read the paper, search the internet or just use your common sense and you will find the hot markets. Are people moving in the area? Are businesses moving to the area? Are the businesses diversified? Is the real estate affordable? Are prices appreciating? If the answer to all these questions is Yes! Buy there! Investors can still buy affordable property in great areas. New Homes, Waterfront Homes, Apartment Buildings, Strip Malls & any everything else you can think of is available.
No 'BUST' in site for these solid markets
Anyone reading the news would think the sky is falling in the housing market, but in many markets that’s definitely not the case.
BusinessWeek.com screened data from the NATIONAL ASSOCIATION OF REALTORS® to identify markets with the highest home-price appreciation during the second quarter. To eliminate markets that were undervalued to begin with, the magazine only considered cities that had a median home price higher than the national average of $227,500.
Nationally, home prices increased 3.7 percent in the second quarter. But these top 10 markets all saw prices climb at least three times faster than that:
- Virginia Beach-Norfolk-Newport News (Va.-N.C.), up 23.6% from a year ago
- Portland-Vancouver (Ore.), 19.1%
- Tampa-St. Petersburg (Fla.), 18.8%
- Eugene-Springfield (Ore.), 18.3%
- Orlando (Fla.),17%
- Los Angeles-Long Beach, 14.6%
- Phoenix-Mesa (Ariz.),11.8%
- Philadelphia-Camden-Wilmington (Pa.-N.J.-Del.), 11.4%
- Hagerstown-Martinsburg (Md. -WVa.), 11.4%
- Norwich-New London (Conn.), 11%
Source: Business Week Online, Christopher Palmeri and Douglas MacMillan (08/23/06)
As Real Estate market softens, players need to adapt
For all-weather real estate players, a flattening market means changing one's tactics, not burrowing away to hibernate until the market warms up. For sellers, it means getting acquainted (or reacquainted) with the toolbox of techniques developed during the down periods of the 1970s, '80s and '90s to move houses. For example, seller financing, where you take back a second note on concessionary terms to push the sale, take back a first note if you can afford to, or "buy down" your purchaser's interest rate to lower monthly payments.For buyers, down markets often offer exceptional opportunities to acquire real estate at prices and on terms that were unthinkable just a few years before. Again, the message is: Don't go to sleep. To the contrary, get off your duff and scour the market for properties that may never be cheaper, or even available.
Heads-up real estate is, as the industry adage goes, the art of the possible. You've simply got to adapt to the changed market conditions. And probably work a little harder.
Kenneth Harney, president of a Maryland consulting and publishing firm, is executive director of the National Real Estate Development Center.
FHA finalizes 'anti-flipping fraud' rules
Washington, D.C. -- June 12, 2006 -- Beginning July 7, only the homeowners listed on recorded documents can sell properties slated for Federal Housing Administration-backed financing, according to new FHA rules intended to discourage property flipping. Additionally, FHA financing will not be available for homes sold within 90 days of purchase. Sellers will have to provide additional valuation data to unload properties between 91 and 180 days after the last transaction, in cases where the new sales price is 100 percent or more higher than the previous sales price.
HUD, Fannie Mae, Freddie Mac, lenders unloading their real estate owned (REO) portfolios, local or state housing agencies, nonprofits with HUD permission to purchase discounted REO properties, inherited properties, and dwellings located in presidentially declared disaster areas are exempt from the anti-flipping rules. Source: Realty Times, Kenneth R. Harney (06/12/2006)
Real Estate Investment
When looking to invest in a fixer-upper, it helps to have a checklist of dos and don'ts. The authors of "Fix It and Flip It: How to Make Money Rehabbing Real Estate for Profit," offer a few tips, including to work with a real estate practitioner who knows the market.ST. PETERSBURG, Fla. -- May 17, 2006 -- Gene and Katie Hamilton have spent their careers remodeling older homes, writing syndicated columns and books, and making TV appearances to talk about home repair and do-it-yourself projects.
Their most recent book is Fix It and Flip It: How to Make Money Rehabbing Real Estate for Profit (McGraw-Hill, $18.95).
The book offers checklists (what to know and do before you sign that contract), time lines for two-month, six-month or one-year projects; and formulas for running the numbers to see if a project makes sense before you buy.
Katie Hamilton offered these quick dos and don'ts at a roundtable discussion when the National Association of Real Estate Editors met recently in Charlotte, N.C.:
• Do work only in a neighborhood you've studied. Who's buying there? Who's going to buy there? Is this a neighborhood on the way up?
• Do work with a local real estate agent who knows the market. Real estate agents often buy and flip property themselves, so on the one hand, they're your competition; on the other hand, they know the market from an investor's point of view.
• Do spend conservatively. It's too easy to run over budget. Do the math and realize that every extra penny you spend comes out of your profit.
• Don't get involved in fixing and flipping "if you are involved in a full-time job," Katie said. The project is far more time-consuming than you imagine.
• Don't assume that your spouse or partner has repair/rehab skills you didn't know about, or that he or she has a personality that lends itself to challenges and multitasking. A spouse who has never picked up a paintbrush is not going to morph overnight into an experienced painter.
• Don't skimp or use unlicensed workers on key tasks such as plumbing or electrical work. The building must meet the code.
• Don't start a flip job in the wrong season. Katie talks about a sudden storm ripping the tarps off a roof under construction. You may not want to be without a roof during the summer rainy season in Florida.
Words to the wise from Katie: "It takes twice as much time and three times as much money as you expect."
© 2006 The St. Petersburg Verdana,Arial, Judy Stark, Verdana,Arial Homes editor. All rights reserved.
Housing Boom Relocates to New Markets
(May 11, 2006) -- Many cities that missed out on hot home sales over the past few years are now getting a taste of the frenzy. "The housing coin has flipped," says NAR chief economist David Lereah. "The haves and the have-nots reversed places."
Ask Don Bruemmer, a practitioner with Ramsey Group Real Estate in Salt Lake City, and he'll tell you sales are the best in years. Salt Lake City is one of the metros that seemed to be in the doldrums during many of the boom years while markets in California, Florida, and Washington, D.C., soared.
"The housing coin has flipped - sales are softening in (former) boom cities and gaining momentum in non-boom cities," says David Lereah, chief economist for the NATIONAL ASSOCIATION OF REALTORS®. "It appears the haves and the have-nots have reversed places. Quite simply, affordable metros are in favor and unaffordable metros are experiencing a correction."
"What allthese metros have in common is a healthy local economy and affordable housing prices," says Lereah. "It´s becoming increasingly clear that in the aftermath of the boom, households are now seeking affordable property to purchase (and live in)."
Speaking at the 16th-annual outlook for Texas Land Markets last week, Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University, said that as long as confidence in the stock market remains low real estate will continue to be the investment of choice.
Top 10 metros with declining days on market included Houston, San Antonio, Raleigh-Cary, N.C., Albuquerque, N.M., Mobile, Ala., Fort Myers-Cape Coral, Fla. Kansas City, Mo., Beaumont-Port Arthur, Texas, and Baton Rouge, La.
These markets, with the exception of Fort Myers-Cape Coral, Fla., which benefited from the boom, are considered affordable with median prices below the national median home price, which was $218,000 in March.
-By Camilla McLaughlin for REALTOR® Magazine OnlineBiggest Price Gains Expected in California, Florida
(May 12, 2006) -- Not all financial analysts think housing prices are going to drop. Some, like Michael Youngblood, say prices in many areas are on the way up.
Youngblood, managing director of asset-backed securities research at Friedman Billings Ramsey & Co. in Arlington, Va., told Business Week that the housing market is a lot stronger than most people think due to job market strength and higher personal incomes.
He examined 379 markets and found bubbles in only 75 of them, including New York city, Los Angeles, Washington DC, Phoenix, Honolulu and Tacoma, Wash.
Home prices are likely to rise in far more markets, he predicts. He expects the largest gains in Bakersfield, Calif. (43 percent), Fort Myers, Fla. (42 percent), Stockton, Calif. (39 percent), and Punta Gorda, Fla. (35 percent).
Areas where prices are likely to fall because they are losing jobs include Harrisburg, Pa.; Odessa, Tex.; Roanoke, Va.; and Utica, N.Y.
Source: Business Week (05/15/2006)
2005 Existing-Home Sales Set Annual Record
(January 25, 2006)
David Lereah, NAR´s chief economist, "The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead. Overall fundamentals remain solid, driven by population and employment growth as well as favorable affordability conditions in most of the country, so we expect the housing market to remain historically high but lower than last year´s record."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.27 percent in December, down from 6.33 percent in November; the rate was 5.75 percent in December 2004. Last week, Freddie Mac reported the 30-year fixed rate was down to 6.10 percent.
"Mortgage interest rates have been trending down from a peak in November, and are lower than expected ? if lower interest rates are sustained, the housing market could see some unexpected lift," Lereah said.
The national median existing-home price for all housing types was $211,000 in December, up 10.5 percent from December 2004 when the median was $191,000. The median is a typical market price where half of the homes sold for more and half sold for less.
NAR President Thomas M. Stevens from Vienna, Va., says it may take a while for home price growth to cool. "We´re coming off of five years of tight supply, and many sellers are accustomed to expecting very strong price gains and exceptional returns on their investment," said Stevens, senior vice president of NRT Inc.
Condo Sales Activity Picks Up (based on natiowide numbers)
Existing condominium and cooperative housing sales increased in December by 1.6 percent to a seasonally adjusted annual rate of 877,000 units from a level of 863,000 in November. Last month´s sales activity was 4.5 percent higher than the 839,000-unit pace in December 2004. For all of 2005, condo sales jumped 9.3 percent to 896,000 units, the 10th consecutive annual record.
The median existing condo price was $228,100 in December, which was 10.2 percent above a year ago. In 2005, the median condo price was $218,200, up 12.7 percent from 2004.
Single-Family Sales Slip, Prices Rise (based on nationwide numbers)
Single-family home sales declined 6.8 percent to a seasonally adjusted annual rate of 5.72 million in December from 6.14 million in November, and were 4.2 percent lower than the 5.97 million-unit pace in December 2004. In 2005, single-family sales rose 3.6 percent to 6.18 million, the fifth straight yearly record.
The median existing single-family home price was $209,300 in December, which was 10.8 percent above a year ago. For 2005, the median single-family price was $207,300, up 12.6 percent from 2004.
-NAR- Since 2001 Florida has seen appreciation in the double digits. If we hypothetically, dropped back down to numbers from 10 yrs ago, we would be at 9% appreciation. That shouldn't happen considering the Baby Boomers haven't all retired yet and moved to Florida. We had 53 million people visit Orlando last year. Florida is still the number #1 state to buy in. In my opinion, Real Estate is still booming in Florida and don't let anyone tell you any different.Real Estate Investors Big Winners in 2005
(February 23, 2006) -- Investors who put their money in real estate last year were huge winners, earning an unprecedented 34 percent on their dollars.
The performance of real estate surpassed the stock market worldwide, government and corporate bonds, according to a study being released today by the Massachusetts Institute of Technology’s Center for Real Estate.
"Real estate as an asset class has great potential for the investment industry because there's so much of it out there," says David Geltner, director of MIT's 21-year-old Center for Real Estate. From Realtor Magazine
