Monday, July 02 2012
Real estate practitioners in vacation spots across the country say the market for second homes is picking up steam as buyers grow more confident given signs of growth in small businesses. The National Association of REALTORS® reports a 7 percent jump in vacation sales to 502,000 last year, accounting for 11 percent of all volume. The median vacation home price was $121,000 last year, down from a peak of $204,100 in 2005, but agents in some locales say prices are beginning to creep up as the distressed inventory is moved out. Vacation-home buyers are snapping up higher-priced properties, although Jennifer Calenda of Michael Saunders & Co. in Southwest Florida says prices are not necessarily on the rise. With inventory hitting a seven-year low of 4.7 months in Sarasota, Manatee, and Charlotte counties, she says buyers "are saying 'we better hurry up.'" Inventory is so scarce in some markets that some real estate professionals report multiple offers; and with prices probably at the bottom, Trulia economist Jed Kolko says people ready to make a cash purchase or who can qualify for low mortgage rates should strongly consider buying now. Source: "Vacation Home Buyers Return, Pick Pricier Properties," Investor's Business Daily Friday, June 29 2012
Many eager first-time homebuyers were sidelined by the worldwide economic recession. It’s hard to commit to any decision – much less such a major one – when you read almost daily that the market is falling or downward pressure continues. Who needs any kind of pressure?
So it’s not surprising that, after such an exceptionally lengthy period of down or nearly flat economic expansion, the optimism that drives sales of all kind has been slow to reappear. But for the home buying public, and especially for first-timers, that hesitation could prove costly if, as it now seems likely, the market is entering its recovery phase. So just what does a ‘recovering market’ mean for today’s buyers?
The first sign will be a wakeup call: buyers will no longer find a market filled with purely bargain homes. Already, foreclosures and short sales are selling above the asking price in some areas, with multiple and all-cash offers beginning to reappear. Veteran observers in a few areas report that it even eerily begins to feel like the old pre-crash days. Published reports remain mixed, but as with the stock market, by the time you are reading headlines confirming a certain trend (i.e. “the bottom”), you’ve already missed it.
This is not to say that home buying is already a missed opportunity in the Evansville market. ‘Market recovery’ is a phrase that only signifies that movement and prices are on their way up. For today’s potential buyers, it does mean that it is time to get serious about investigating what is being offered -- what’s out there.
Financing remains an issue. Home buying candidates hoping to take advantage of the historically cheap loan programs may still be able to do so, but fees and insurance costs for the smaller down payment packages are on the rise. In any case, first-timers who encounter bank caution due to their inexperience with home buying will do well to seek help from an experienced real estate professional.
Every recovery is different, and the good news now is the presence of both the historically low interest rates and the survival – for the moment – of some bargain listing prices. Together they mean that regardless of any Evansville resident’s buyer status, most can wind up paying less for more.
By seeking expert advice, it’s possible to take advantage of the benefits our changing market has created. With the assistance of a great agent, you can arm yourself with that kind of market knowledge. Interested in learning what I can do for you during the home buying process in Southwest Indiana? Call me! You can reach me on my cell phone at 812-499-9234. Thursday, June 28 2012
When the time nears to sell your Evansville home, one extra bit of due diligence can pay off in the most meaningful way: helping you to get the best return on your investment. It’s not a requirement that every listing agent may suggest, but particularly if yours is an older home, it is one you should consider: ordering an advance inspection.
Ordering your own advance inspection, like the proverbial ‘stitch in time,’ can alert you to deferred maintenance items that might conk out just as you’re preparing a big showing. Things do have a remarkable tendency to cause trouble at the most inconvenient time. Even more likely, maintenance items that you have long accepted but which might sour a buyer will be spotlighted early. Curing them before your buyer insists upon it prevents receiving demands for overly extensive cures for simple problems. An Evansville listing agent who knows that a home that has already passed an inspection also knows that it is that much more likely to sail through closing. It becomes a marketing asset.
A home inspector will typically examine areas of your home such as the roof, HVAC, plumbing, electrical and structure. Some will even conduct radon and lead paint tests, and do a check of your crawlspace or attic. If you elect for a home inspection prior to listing your home for sale, you will be able to confirm that major elements of the home are in saleable working order -- and can market the property as such. What potential buyer doesn’t want to hear that when considering writing an offer?
But most important from a listing agent’s point of view is the ability to avoid surprises in escrow. Most listing agents will be quick to agree that the more things that go wrong in a home inspection, the more antsy a buyer can become about the wisdom of the purchase. Otherwise perfect home-to-buyer matches can be lost over minor hitches discovered at the last minute. If a list of even small problems is lengthy, it might seem daunting enough to derail a sale. And any repair becomes more costly if a rush job is required.
If you’re preparing to sell your Evansville home, talk to your listing agent about the appropriateness of an advance home inspection. Numerous professionals are available who can help you determine if your home is ready to sell. The National Association of Home Inspectors (NAHI) has over 1,500 members -- and I will be happy to offer trustworthy local referrals anytime. You can reach me on my cell phone at 812-499-9234. Wednesday, June 27 2012
Real estate markets across the country are inching their way to a slow recovery after bottoming out, according to several real estate economists who spoke at a forum hosted by the National Association of Real Estate Editors. National Association of REALTORS®’ Chief Economist Lawrence Yun, Zillow Chief Economist Stan Humphries, and National Association of Home Builders Chief Economist David Crowe shared their views on the direction of the housing market during the forum. "Last year was the worst year on record for [new] house sales, for 60 years of housing-sale info," Crowe said. But things are picking up, the economists note, despite several challenges still threatening that recovery. Yun says that appraisal issues are holding back up to 20 percent of home sales and that lenders’ tightened mortgage underwriting standards are likely holding back another 15 to 20 percent of potential home deals. Here are some of the economists’ forecasts: 1. New-home market: The NAHB predicts a 19 percent increase in single-family housing starts this year over last (from 434,000 last year to a projected 516,000 this year). 2. Single-family rental market: This could be the next housing market bubble, Humphries warns. He expects this sector to cool as rental rates continue to increase and as home ownership looks more attractive to the public again. 3. Distressed home sales: The percentage of distressed homes sales is projected to drop by 25 percent in 2012 and 15 percent in 2013, Yun says. 4. Home price appreciation: Yun says it’s possible some markets may see a 10 percent rise in home-price appreciation next year due to an increase in demand, or a 60 to 70 percent increase in housing starts. Yun argues it won’t be both, however, but rather one or the other. He notes it greatly depends on whether lawmakers reach an agreement once again on the looming debt-ceiling deadline. 5. Home owners’ negative equity: About a third of home owners are underwater, owing more on their mortgage than their home is currently worth. As such, the housing recovery will likely be “stair stepped,” Humphries says. He says home owners with negative equity will gradually begin to list their homes as they see prices inch up, but when they do, that may temporarily swell the housing supply and cause a brief pause to the recovery. Source: “Economists: 2012 Marks the End of a Long Bottom,” Inman News (June 22, 2012) Tuesday, June 26 2012
The Capitalization Rate (also known as "Cap Rate") is used to compare an income property with other similar income properties. It can also be used to place a value on a property based on the income it generates.
The Cap Rate merely represents the projected return for one year as if the property was bought with all cash. But since we don't normally buy property using all cash we would use other measures, such as the cash-on-cash return, to evaluate a property's financial performance. The Cap Rate is calculated by taking the property's net operating income (NOI) and dividing it by the property's fair market value (FMV). The higher the Cap Rate, the better the property's income and market value. The Cap Rate is calculated as follows: Capitalization Rate = Net Operating Income / Value Let's look at an example. Let's say your property's net operating income (NOI) is $50,000. And let's say that the market value of your property is $625,000. Your Cap Rate would be 8%. Capitalization Rate = Net Operating Income / Value As another example, let's suppose you are looking at purchasing a property that has a net operating income of $20,000. From doing a little research you know the average Cap Rate for the area is 7.0%. By transposing the formula we can calculate the estimated market value as follows: Value = Net Operating Income / Capitalization Rate An advantage of the Cap Rate is that it provides you with a separate measure of value compared to appraisals where value is derived from recent sold comparables (which are primarily based on physical characteristics). This is especially true when comparing commercial income properties. Note that a small difference in the Cap Rate may not seem like much but it can make a large difference in your valuation. For example, the difference between a 7.0% and 7.5% Cape Rate, a mere 0.5% difference, on a property with a $50,000 net operating income is a $47,619 difference in value! So be sure to double check the accuracy of your numbers. As always, you want to look at multiple financial measures when evaluating income property including the cash-on-cash return, debt coverage ratio, and internal rate of return. Source: Norada Real Estate Investments http://ht.ly/bFbkT Monday, June 25 2012
U.S. builders started work on more single-family homes in May and requested the most permits to build homes and apartments in three and a half years. The increase suggests the housing market is slowly recovering even as other areas of the economy have weakened.
The Commerce Department said Tuesday that builders broke ground on 3.2 percent more single-family homes in May, the third straight monthly increase. Overall housing starts fell 4.8 percent last month to a seasonally adjusted annual rate of 708,000. But that was entirely because of a 21.3 percent plunge in apartment construction, which can be volatile from month to month. The government also said April was much better for housing starts than first thought. The government revised the April starts to 744,000 — up from an initially reported 717,000 and the fastest building pace since October 2008. And builders are more optimistic about the next 12 months. They requested more permits to build homes, a gauge of future construction. Permits increased to a seasonally adjusted rate of 780,000 — the most since September 2008. Even with the gains, the rate of construction and the level of permits requested remain roughly half the pace considered healthy. Yet the increases add to other signs that the home market may finally be starting to recover nearly five years after the housing bubble burst. Builders have grown more confident since last fall, in part because more people are expressing an interest in buying a home. Cheaper mortgages and lower home prices in many markets have made home buying more attractive. Many economists believe that housing construction could contribute to overall economic growth this year for the first time since 2005. "We continue to expect housing activity to increase gradually in coming months and residential investment to make a positive ... contribution to GDP growth," said Peter Newland of Barclays By region of the country, housing starts rose 14.4 percent in the West, but dropped in other parts of the country. The declines primarily reflected the weakness in apartment activity. Still, the pace of home sales remains well below healthy levels. Economists say it could be years before the market is fully healed. Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks. Some would-be home buyers are holding off because they fear that home prices could keep falling. The economy is growing only modestly and job creation slowed sharply in April and May. U.S. employers created only 69,000 jobs in May, the fewest in a year. Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to data from the Home Builders. Source: http://bigstory.ap.org/article/us-builders-start-more-single-family-homes Friday, June 22 2012
The constant fluctuations of the housing market can mean many things in terms of property investment, rental rates and the life of a landlord. We know, for instance, that there is a higher percentage of renters in the United States than there has been in quite sometime. But what we haven’t addressed is that there are also more landlords.
Whether you have found yourself in a property investment deal that didn’t go quite as planned or you’ve moved to another house while your old property has sat on the market for far too long, you yourself may have already become a landlord due to a lack of options. The life of a landlord can be financially rewarding, but it can also be complex and draining with many rules, laws and advice to wade through. In this article we want to distill a few of the more important tips that will lead to a better life for both you and your tenants. 1. Have a Knowledgeable Attorney on Speed Dial And we don’t mean your friend from high school who now works in criminal law or your neighbor who used to be a paralegal. You should find an attorney who specializes and is intimately familiar with landlord/tenant law and the evictions process. No one wants to think about evictions when you don’t even have a tenant yet, but the fact is that at some point you will have to deal with the process. If you develop a good relationship with an attorney sooner rather than later, it can save you a lot of headache and maybe a few bucks in the future. A good attorney can also help you by reviewing your lease agreement to make sure there aren’t any glaring errors or problems. 2. Consider Professional Property Management It may seem like an expensive prospect, but the fact is that unless you live next door and can dedicate a significant amount of your time to dealing with your tenants, you will be much better off having the property managed professionally. A trusted manager can fix problems as they arise, collect rents and develop a professional relationship with your tenants so that you can go on living your life without the constant threat of a phone call with an emergency plumbing situation. 3. Set Expectations Right Away Most landlords agree it’s important to set your expectations up front and not back down, even if it makes you uncomfortable at first. As a landlord, it is important to remember that while you may respect and even like your tenants, you are NOT friends with them. Insist that they pay their rent in full, on time, from the very beginning. This makes it less likely that they will offer up excuses in the future. You’ve become a landlord to recoup an investment, one way or another, and you won’t be able to do that unless you actually collect rent. 4. Find a Good Tenant Application Having an application system in place before you even put out a yard sign for your vacancy will make your rental process go more smoothly. We find that an online rental application is much simpler to use than a paper form. You can collect all the information you need – including references, driver’s license number, credit check approval and a new tenant’s contact information – and keep it safely in one place online for future reference. Even if you don’t choose to go online with the process, make sure you have an application ready as soon as tenants start calling. 5. Choose Tenants Wisely If you’re desperate to start generating income from your property, you may want to place the first person who shows an interest, but that is not the best idea. Screen your tenants, run a credit check on your tenants, interview your tenants, call your tenants’ landlords. Make sure they are trustworthy people who are not likely to destroy your property and run off in the middle of the night without paying rent. Of course, being a landlord is not as simple as five easy tips, but keeping these tips in mind as you venture into the world of landlord-hood should make your new role a little easier. Source: http://www.noradarealestate.com/blog/5-tips-for-new-landlords/ Thursday, June 21 2012
Until recently, reverse mortgages were considered the “Wild West” of retirement planning, writes a Wall Street Journal article published this week. But today, many more planners are using them to create a stream of income or a cushion against market declines. WSJ speaks with two financial planners including Harold Evensky, co-author of a study at Texas Tech that has brought reverse mortgages into recent headlines. The article writes:
Wednesday, June 20 2012
While design, color, and surface appeal are important considerations, you’ll also want kitchen flooring that can live up to your lifestyle and provide the comfort and durability you need. Here are some favorites, with their pros and cons: Natural StoneDurable and easy to clean, stone offers a timeless appearance suited to most any kitchen decor. Choose larger pieces to create a more seamless look with fewer grout lines. Cons? There’s no denying the look is impressive, but you’ll likely need a strong subfloor and some big bucks to get the job done. Tile and stone can also be cold and uncomfortable if you stand in place for long. (One solution is to place a cushioned mat where you most frequently stand to reduce feet and leg fatigue.) CorkThis often-overlooked natural material comes in various colors and patterns and is sustainable, warm, and slightly cushioned. Seal it to prevent water damage and clean the same as you would a hardwood floor. LinoleumEasy-to-clean linoleum is available in sheets or tiles in a broad range of colors. Many consumers confuse linoleum with vinyl, but vinyl is a synthetic material with a pattern imprinted on the surface, while linoleum is all-natural with color throughout. VinylThis budget-friendly material (about $10-$13 per square yard) keeps upping its image as new technology helps it more closely imitate the look of stone, wood, tile, and leather. Vinyl is available in 6- or 12-foot wide sheets or as 12- to 18-inch tiles that are ideal for DIYers. Easy to clean, vinyl is also soft underfoot. HardwoodImprovements in products and sealers make wood a viable flooring material in kitchens. That’s good news for people with open floor plans, who wish to use the same material in adjoining living areas. Additionally, wood adds a sense of timelessness and warmth that suits any style, from urban loft to cozy cottage to traditional home. Source: http://www.zillow.com/blog/2012-06-18/options-abound-for-kitchen-flooring/ Tuesday, June 19 2012
When my Evansvilleclients set out to buy a home, one of the elements that has been steadily moving up their list of important considerations is energy: how much will a property cost to heat and cool?
Big, drafty houses are being edged out, replaced by green, eco-consciously-designed homes. Listings able to boast prominent cost-saving features like solar heating can provide a huge advantage to a seller. For prospects looking to buy a home in the Evansville area, the tradeoff between the higher price tag they can expect from a solar-equipped home and the anticipated long-term energy savings is tilting toward the latter.
What are the actual savings in dollars and cents? That’s the tricky part. Because every region is different (in Evansville, for instance, the number of clear, sunny days makes the calculation different from averages elsewhere in the country), the amount of solar energy that a typical homeowner can harvest varies widely.
Solar’s renewed prominence has a lot to do with the recent spikes in energy costs. Anyone who set out to buy a home within the past year has certainly seen the writing on the wall…energy prices may be dipping momentarily, but the future shows every sign that nasty raises lie ahead, sooner or later. To the extent that a solar installation serves to offset those fears, it can be thought of as a long-term energy insurance policy. It’s a subtle ‘peace of mind’ factor that can cinch the decision to buy a home.
Energy-saving features are only one of the many considerations that make a home purchase decision more than simply an emotional one. If you are preparing to buy an Evansville home – whether or not you prioritize those standout green features – give me a call. Now is a good time!
You can reach me on my cell phone at 812-499-9234. |