Archive for August, 2009
Short Sales Increasing
August 23rd, 2009
Over the last year, many of my clients have asked me about the feasibility of short sales…both from a seller’s perspective, as a way out of an upside down property; and from a buyer’s perspective, as a way to acquire properties below market rate. Up until recently I have advised most of my clients away from short sales…as a buyer or as a seller. The reason was simple: lots of time invested, small chance of success. As a rule, since the housing bubble burst and the credit crunch began, banks have been overwhelmed with defaults and the departments in charge of evaluating and approving short sales have been notoriously slow and inefficient. Trying to negotiate a short sale with the bank often resulted in frustration for all parties involved with a very low success rate.
As a result, I have advised my investor clients to seek out REOs as the best buying opportunity here in Las Vegas. Time, however, are changing. My recent articles on the Las Vegas housing marketing have highlighting the dwindling supply of bank-owned REO properties available. Each month the demand for these REOs and the closings exceed the fresh supply of foreclosed homes coming from the banks. This has resulted in bidding wars across the Las Vegas valley as investors and primary residents eager to capitalize on the best real estate buying opportunity in decades flock to purchase the REOs that make their way on to the market. But with the percentage of homeowners behind on their mortgages still at all time highs, why is the number of foreclosures entering the market declining? The answer may be the increase in short sales.
Brian Wargo of the Las Vegas Sun recently wrote an article discussing this increase in short sales. In it, he quote Larry Murphy, president of the real estate monitoring firm SalesTraq, who says that of the 35,742 closings through the first three quarters of 2009 75% were foreclosures and only 10% were short sales. However, of the 11,249 contingent sales currently in place in Las Vegas, 71% are short sales and only 21% are REOs or foreclosure homes. This represents a dramatic shift in banking policy.
Murphy believes banks are becoming much more willing to consider short sales because they are finally realizing that short sales generate a higher sales price for the banks than REOs. Data supports this. The median price of homes sold through foreclosure is $116,900, while the median price for homes sold through short sales is $150,000.
The federal government has also adopted standardized rules for short sales, simplifying the process. This, combined with the pressure being exerted by the Obama administration to keep homeowners out of foreclosure, is creating a much higher approval rate for short sales. This, in turn, is keeping the flood of foreclosures that we had been expecting here in Las Vegas off the books and creating the progressively lower inventory monthly of bank-owned REO homes.
All-in-all, whether you are a seller looking to get out of an upside down situation or a buyer looking to capitalize on low home prices, now may be a great time to consider the short sale as an option.
Real Estate Finance Overseas
August 21st, 2009
After the technology bubble burst back in 2000 the stock markets suffered a bleak period of decline and investors chose to place their focus on bricks and mortar rather than falling share prices and they began investing heavily into real estate.
As a result the second home and the buy-to-let real estate markets in many countries around the world such as in the UK, US and Australia boomed. However, as the real estate affordability gap continues to widen in these nations and fewer first time buyers can even get onto the first rung of the real estate ladder, property price increases have begun to cool off and the ability to generate impressive rental yields and strong capital appreciation has slowed right down for at least the short term.
At the same time the stock markets around the world remain volatile and so now many more investors are looking overseas for alternatives to cooling domestic housing markets and bumpy rides on the stock market. Many are finding that there’s an abundance of real estate opportunity in emerging countries around the world which has created a strong demand for real estate finance overseas.
For those considering joining the jet-to-let real estate investment set here are the three main options available when it comes to raising real estate finance, loans or mortgages to buy property abroad.
1) In many of the nations that were the first to boom the property markets are now stagnant and because lenders have fewer customers to provide finance for they are actively targeting those who have yet to upsize, release equity or take out a second mortgage and offering them increasingly favourable terms, conditions and interest rates.
For anyone thinking about buying real estate overseas in a country where they believe it will be difficult for them to secure local finance or where interest rates are unattractive, the option may exist for them to re-mortgage their existing property or take out a loan secured against the equity in their primary residence.
The negative side of this option to raise real estate finance to buy overseas property is that the purchaser’s primary residence will be the security against the loan and naturally this introduces an element of risk.
2) The second option available to buyers looking for real estate finance overseas is getting a mortgage locally in the country in which they want to buy. Some countries such as Spain, Germany and France for example offer attractive interest rates and payment schedules to buyers from other European nations and many countries offer mortgages to international purchasers who can provide a decent sized deposit.
Anyone thinking about buying abroad would do well to also research which banks and lending institutions exist in that country, whether they are allowed to lend to foreign buyers and if so, are the criteria for getting a loan and the terms and conditions of the loan favourable?
3) The final option available to the majority of real estate investors looking to finance the purchase of a property abroad is an international mortgage provided by an international lender who usually has experience in the country from which the borrower heralds and also in the country in which they wish to invest which can make the whole finance process so much simpler…but the downside is that arranging such mortgages can be far more expensive than the first two options available to those contemplating their real estate finance options.
The availability or applicability of any type of mortgage or finance raising scheme discussed in this article is something that needs to be determined on an individual basis therefore this article does not constitute advice. Anyone hoping to raise finance to purchase real estate overseas should seek expert financial advice.
Top 7 Countries That Invest In U.S. Real Estate
August 20th, 2009
Despite a recent slowdown, the U.S. real estate market continues to be a popular investment destination for foreign investors. Attracted by a desirable return on investment, many foreign nations continue to invest heavily in the U.S. residential and commercial real estate markets. In fact, in 2005, foreign investment in U.S. real estate reached 1.83 trillion.
To evaluate the impact of foreign investment on the U.S. real estate market, the National Association of Realtors (NAR) produced a 2006 report entitled ‘Foreign Investment in U.S. Real Estate: Current Trends and Historical Perspective.’ The report provides insights into the trends in foreign real estate investment, its impact on the U.S. economy, and the major countries that participate in U.S. real estate investment. Below are some highlights from the NAR report.
According to the U.S. Department of Commerce, the top seven countries that had significant holdings in U.S. real estate as of 2005 were:
Germany – 13 %
Latin America – 13 %
Australia – 11 %
Japan -10 %
United Kingdom – 10 %
Canada – 6 %
Netherlands – 6 %
The U.S. economy is wide open to foreign investors. Both investors and Americans significantly benefit from all this foreign investment. The NAR study estimates that without foreign investments in the securities market, the long-term lending rates would be four percentage points higher than the current rate, which would adversely impact the U.S. real estate market.
Foreign direct investment into the U.S. not only creates more jobs but also contributes to the demand for U.S. real estate. In fact, foreign investment may be responsible for creating two million U.S. jobs by the end of 2006, which further bolsters the demand for U.S. real estate.
Permanent and temporary immigration of foreign-born workers into the U.S. further bolsters the demand for real estate. According to the Joint Center for Housing Studies at Harvard University, 1.2 million net immigrants are expected to arrive in the United States annually. This immigration pattern is expected to offset the decrease in housing demand by post baby-boomer generations.
In summary, the impact of foreign investment and immigration into the U.S. will continue to play a major role in the U.S. real estate market.
Posted in Real Estate | 
Tags: Foreign Investments, Historical Perspective, Percentage Points | 
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Buyer’s Market: Know its Latest Condition
August 20th, 2009
Real estate industry is one of the most volatile businesses. It is greatly affected with the latest issues that are going on in the global market. This can be seen in the buyer’s market current condition. In the early portion of this year, the demands for real estate properties have gone down. Thus, sellers are forced to offer big discounts and cheaper prices to be able to go with other competitors. As for home buyers, this is the best time to push through their plans of investing.
Lenders have been very conservative in granting loans. This is due to the volatility of the economy. They want to secure that their applicants are financially able. Hopeful home buyers are striving hard to be approved to be able to fulfill their dreams. Majority of them find for more ways to finance their endeavor.
The actual scenario has a domino effect to other parts of real estate sector. Prices have gone down that prompted the sellers to be innovative in marketing their house. They give huge discounts and adjust their prices. In fact some of them have low ball offers just to eliminate their property as soon as possible. If you really evaluate what is going on right now, everything is beneficial to the buyers.
Moreover, sellers made major home improvements and other upgrading. By doing this, they can emphasize the best features of the houses which can possibly attract more buyers. Some even went out to perform further research on how to manage their finances in times of crisis. Income has been too slow for almost all investors during these times.
But in the case of buyer’s market, everything has been favorable to them despite the recession. Instead of experiencing the negative effects, buyers are indeed grabbing every opportunity they can get. The real estate industry is starting to lose their dreams for their business. However, there are other institutions who continue to remain composed despite the issues going on around them. One of these organizations is the lending companies. They continue to offer various marketing strategies just to entice more clients to avail their loans.
With everything that is happening right now, it is the buyers who have been enjoying the situation. Thus, do not hesitate if you have plans of buying a house. This is the ideal time for acquiring your dream house. If you have not yet decided, then do not be too hasty. Consider every option that you have. As soon as you have set your mind about your endeavor, everything will follow.
New Residential Scheme In Greater Noida
August 17th, 2009
Noida Real Estate: Luck of the Draw
A new residential scheme for lower and middle income groups has been introduced by the Greater Noida Authority providing 2,256 constructed houses in four different categories, and covering an area of 70, 90, 120 and 250-sq. m. that will be priced at Rs. 12.33-lakh to Rs. 36.48-lakh.
Launched through a lucky draw by the Greater Noida Authority, the allottees lucky enough to win the draw, will be permitted to make additions according to the approved building plan, copies of which are available with Greater Noida’s Planning Department, while constructions that do not conform to it, will need to be approved.
While, a 70-sq. m. house in this housing complex will cost Rs. 12.33-lakh, houses measuring 90, 120 and 250-sq. m. are priced at Rs. 14.96, 20.14 and 36.48-lakh respectively. The 250 and 120-sq. m. houses will come with two bedrooms, a drawing, dining, kitchen and bathroom, whereas, those measuring 90 and 70-sq. m. will consist of one bedroom, a drawing room, kitchen and a bathroom.
Housed in Greater Noida’s new sector, Omicron near the village Mathurapur and Ghori Bachhera, the housing complex will have a swimming pool, park, community centre, post office, hospital, shopping complex and a parking space.
This time round, the Greater Noida Industrial Development Authority has followed a different initiative from its earlier practice of inviting tenders on a two bid system for Group
Housing Societies in 300-acres for different sectors.
This scheme of the Greater Noida authority provided the developers with an opportunity to participate in the development of a smartly slick city, where at all stages of development, supply precedes demand.
Holding many attractions for buyers and end-users in the form of a constant supply of drinking water, uninterrupted power supply, green areas, proposed metro, airport and world’s fourth night safari, this Greater Noida residential scheme saw many participating in the draw.
Further, the permissible area for plots, commercial and commercial facilities is said to be 65% of the total area as per population norms permitted in the master plan of 2021, with the rest to be according to building regulations.
There will also be provision in this housing complex for other facilities, such as, nursery school, senior secondary school, nursing home, convenience shopping, commercial sector, milk booth, auto-taxi stand, secondary shopping and community centre, provided by the developers, while the green belt will be developed according to the authority’s zonal plan.