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25April

U.S. Home Builder Focuses on Entry-Level Homes

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The current housing market’s supply of homes continues to be tight with the majority of homes available for sale being higher-end properties. This leaves those who would be first-time homebuyers with fewer choices. But the nation’s largest home builder (by market value), DR Horton, is shifting its attention from high-end homes to building entry-level residences.

The company’s new line of homes, Express Homes, will start at $120,000-$150,000 and will be be rolled out in Texas, Georgia and Florida. Executives of the company see a strong demand for this market segment that is lacking in supply. D.R. Horton CEO Donald Tomnitz said, “We wouldn’t be getting into Express Homes if we didn’t think it was the next segment of the market to recover… As we move into this recovery we’ll see some encouragement from the government in terms of trying to get more people into entry-level homes.” Pictured above is an Express Home in Dallas, TX and below is another located in Houston, TX.

Outside analysts also see this shift in the market place. Stephen East from research firm ISI Group commented, “We view it as the right move. Horton’s cost structure and operational experience at the entry level makes them one of the few builders that can do this profitably. Also, we are firmly convinced the first-time-buyer segment is getting access to more credit, which will lead to more demand for this low-entry level product.”

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

18April

Best Markets for First-Time Homebuyers

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Spring is in the air and with that brings the beginning of home buying season. Everyone knows the three most important things about real estate are location, location, and location. So what are the best markets for first-time homebuyers to purchase in?

Realtor.com compiled a list of the top 10 markets for first-time buyers to purchase residential property in and based it on median listing price, inventory, unemployment rate, and age of inventory:

Pittsburgh, PA
Tampa – St. Petersburg – Clearwater, FL
Philadelphia suburbs in New Jersey
Fort Worth-Arlington, TX
Orlando, FL
Jacksonville, FL
Philadelphia suburbs in PA
Dallas, TX
Raleigh-Durham Chapel Hill, NC
Phoenix-Mesa, AZ

Steve Berkowitz, CEO of Move, Inc. the operator of realtor.com said, “As we head into home buying season, these markets show favorable conditions for first-time buyers, which is encouraging because these buyers are crucial to the housing market. First-time buyers have a widespread impact on the local housing markets. In transitioning from renters to owners, new buyers pay property taxes and other fees and taxes associated with home ownership that benefits local schools and services.”

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

14April

Castle Peak Homes Gives New Life to Older Properties

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Last year the housing market was mostly dominated by cash investors, many planning to flip properties or lease them out. So far during 2014 investors still play a large role in the market although to a lesser degree since interest rates and prices have continued to rise. Today we are taking a break from the housing market’s latest news and economic data reports to focus on a part of our business that brings new life to properties in need of a facelift.

Castle Peak Homes takes pride in improving the neighborhoods where we purchase properties by completing renovations that bring back the original glory of structures while including modern updates. Each neighborhood has its own charm and style and keeping this intact is important in preserving these areas. Castle Peak Homes embraces the original architectural style of each property and enhances them with modern day elements such as hardwood floors, granite counter tops and updated bathrooms.

One property Castle Peak Homes recently purchased and renovated was in Ft. Worth, Texas. From the outside this duplex looked worn down and tired. A fresh exterior coat of paint and bright new shutters helped transition this house to a home. The existing hardwood floors were refinished, new interior paint throughout added, and a privacy fence in the backyard was installed along with some beautiful landscaping. One of the kitchens was tiled to give it an undated feel as well. The ‘before’ pictures first and and the ‘after’ pictures are next.

2713 exterior before

Another purchased property, also situated in Ft. Worth, received a facelift. This house had worn carpet and out-dated dark wood paneled walls. A complete interior paint job, removal of the carpet and refinishing of the hardwood floors helped bring this house back to life. A highlighted area of transformation was in one of the homes bedrooms which featured a fireplace.

Fire Place Before Fire Place After

Castle Peak Homes is proud to add value to neighborhoods through the renovation of purchased properties and, at the same time, maintaining the character of each home as well as the charm and style of the neighborhood.

Please visit Castle Peak Homes for more information on our properties. For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

4April

Housing Market Thawing Slowly as Supply Increases

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The Federal Reserve’s recent two-day policy meeting painted a picture of sluggish growth in the economy for the first quarter of the year, mostly attributed to colder than normal weather which hindered economic activity. Federal Reserve Chair, Janet Yellen, commented on labor conditions being tougher in some ways now than in any other recession and stressed the Fed’s “extraordinary commitment” to aid recovery in the form of massive bond-buying and super-low interest rates for some time to come. The economic data has not been improving as quickly as many would have hoped for but there have been some positive reports that still point to a rebound. This should have a positive impact on the housing market. It’s time to put the first quarter behind us now and look for signs of growth during the second quarter in jobs, home supply, and home prices.

The U.S job’s report released Friday helped paint a brighter picture for the coming months. The economy added 192,000 new jobs during March and the unemployment rate held at 6.7 percent according the Bureau of Labor Statistics. These numbers came in around consensus but still do not point to a robust rebound. Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, said, “Undoubtedly, there was some catch up in hiring following the inclement weather this winter. Still, the underlying hiring trend is encouraging, with more good news expected this spring and summer.” As the employment picture brightens up, this will help strengthen the housing market as more people will look to purchase homes.

Housing supply has been on the rise since January, an important factor in getting the housing market to thaw out and eventually start booming. The noted monthly supply in February was up slightly from January’s five month supply, citing 5.2 months of supply. Six months of supply is considered a healthy housing market. As more homes are built to increase inventory numbers, analysts believe this will help spur growth in the housing market. Homeowners looking to sell their property will have an easier time looking for a new residence, which should encourage sales and purchases.

As discussed in previous blog posts, the continued increase in home prices have made this a seller’s market, but have priced some potential buyers out of the market. While prices have continued to grow, they are increasing at a decreasing rate (January noted a slight drop of 0.08% in the Case-Shiller 20 City Home Price Index). This points to a possible retreat in gains, reflecting a more normal range in prices over the next few months. This will open the door to more market participants and will help get some momentum behind the housing market.

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

13March

Housing Geared Up to Grow this Spring

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The mercury is rising and springtime is just around the corner. Regions hit hard by winter storms are starting to thaw and analysts are predicting the housing market will do the very same in coming months. A tight housing supply continues to keep home prices high making this undoubtedly a seller’s market. The overall housing market for the year is positioned for continued growth.

Housing industry and home construction real estate concept as two gears or cog wheels shaped as family residential structures as an icon of neighborhood cooperation and community network connections. Demand for housing is still strong and expected to stay this way through the spring according to some analysts. The Conference Board, a nonprofit association of businesses, found the percentage of consumers who intend to buy a home within the next six months is the highest it has been since 2000. One reason for this rising demand is young people who are still facing a tough job market. A housing analyst with Moody’s Analytics predicts the economy will expand enough this year to enable these young people to move out of their parent’s home. While they may mostly rent, a decrease in vacancy rates should put upward pressure on rental prices prompting interested home buyers who currently rent to make a real estate purchase.

The rise in home prices is great news for millions of homeowners who have been underwater on their mortgage. Rising values should encourage owners to put their property on the market, helping to ease the tight housing supply. CoreLogic reported almost 3.5 million homeowners were lifted out of negative equity between the end of 2012 and mid 2013. Zillow estimated even more borrowers are back above water, citing 3.9 million homeowners. Chief Economist Stan Humphries, of Zillow stated in a recent release, “We’ve reached an important milestone as negative equity has fallen below 20 percent nationwide, which has helped free up marginally more inventory and contribute to further stabilization of the market.”

During the past year, existing home and condo sales have increased 11 percent almost topping the highest level in four years. The National Association of Realtors (NAR) predicts sales will remain about the same during this year.

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

4March

New Home Sales Reach 2008 Highs

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Good news surrounding the housing market was released this week. It looks like the effects from abnormally cold weather hasn’t kept the housing market down as formerly suspected. January sales of new single-family homes was reported at a seasonally adjusted annual rate of 468,000 units. This number showed a huge jump in sales, surging to a 5 ½-year high since July 2008.

Previously reported, December home sales were down 7 percent from the month prior. This number was revised upwards from 414,000 to 427,000 sighting just above a 3 percent increase. This revision equates to only a 4 percent drop in new home sales in December showing that the housing market might not have been hit as hard by the cold temperatures as mentioned last week.

The 9.6 percent jump in new home sales in January exceeded what economists had forecast; 400,000 units. The Northeast, which has been bearing the brunt of the cold weather, actually recorded a 73.7 percent increase, hitting a seven month high. The South reported a five-year high sighting a 10.4 percent rise in sales. Sales in the Midwest dropped 17.2 percent and the West recorded an 11 percent increase.

New home sales numbers reported from the Commerce Department are based on signed contracts with the house being in any stage of construction. Existing home sales data is provided by the National Association of Realtors (NAR) and they report once the sales contract has closed. Given this difference, new home sales usually lead existing home sales by a month or two as it can take 30-60 days for a closing on a house to occur. Pending home sales, which are also reported on from time-to-time in this blog, overcome the lagging effect of existing home sales and center around existing home sales where the contract has been signed but not currently closed.

Housing prices still continue to ramp up. The Case-Shiller composite index reported a 0.8 percent increase in prices in December from the prior month, which was higher than economists predicted. Year-over-year, the index reported a 13.4 percent rise. Higher costs of labor and construction materials have been attributed to the increase in home prices.

As we move closer to the spring season it will be interesting what the trend in new home sales along with existing and pending home sales will be.

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

25February

Home Affordability Harder to Find

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Today’s housing market is witnessing tight inventories, high prices and tighter credit requirements, making homes less affordable for Americans. The proof can be found in the pudding, or more specifically, in the U.S. mortgage applications report from The Mortgage Bankers Association (MBA) and in the home price report from the National Association of Realtors (NAR).

Applications for U.S. home mortgages dropped 2 percent to 397.2 as purchase and refinancing application decreased the week of February 7th. The index recorded its lowest level since December 2000 at the end of last year. The MBA’s refinancing index reported a .2 percent drop while loan requests for home purchases dropped 5 percent. Some analysts attribute the drop in applications to the extreme winter weather much of the country has experienced but the data points to the theory of home affordability dropping.

NAR recently released its data showing home prices increase 10.1 percent year-over-year in the fourth quarter of 2013. The third quarter of 2013 reported 12.5 percent year-over year gains. NAR chief economist Lawrence Yun in a release stated, “The vast majority of homeowners have seen significant gains in equity over the past two years, which is helping the economy through increased consumer spending. At the same time, home prices have been rising faster than incomes, while mortgage interest rates are above the record lows of a year ago. This is beginning to hamper housing affordability.” Although home prices have pulled back some, affordability is still waning.

Interest rates might also be playing a hand in this situation. Income levels have remained flat while interest rates have crept upward. The expensive home prices, caused in part to lack of supply and higher rates, have knocked out several potential buyers from the market. As rates increase, the amount of house one can afford drops, leading to issues of affordability. “Pricing is still reacting to demand outstripping supply, and until we see an increase in inventory, you’re going to continue to see price increases that will be higher than what has been anticipated,” said Richard Smith, CEO of Realogy.

Housing supply has been impacted by the harsh winter weather touching most of the country in the past several weeks. Builders can’t build new homes in these harsh conditions which keep the supply tight and buyers don’t want to venture out in these conditions to shop. Once the weather warms up, the market could experience pent-up sellers looking to buy which would be reassuring of the housing market recovery.

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

6January

The Granny Flat Revolution | Back to the Future

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Granny Flat 0x600 Remember the in-law suite? The concept has been re-imagined and re-engineered and is now so cool — it’s hot. Dressed in new energy- efficient upscale designs and finishes, some look more like honeymoon suites than in-law suites.

How hot is the in-law suite movement? A Google search for the term returned over 86 million results in .29 seconds. In-law suites often referred to as Granny flats, facilitate a growing trend toward multi-family households, common decades ago.

NAR’s 2013 Profile of Home Buyers and Sellers indicates “fourteen percent of recent buyers purchased a home for a multi-generational household…” This is due in part to our economic climate. A Wall Street Journal article by Neil Shah supports a different theory. Shah maintains that the increase in foreign-born seniors relocating to the US is a big factor. Shah stated “Foreign born seniors are four times more likely to live with their children”. Regardless of reason, the trend is global. Many extended families are capturing additional living space via additions such as granny flats; while others choose new construction with self-contained secondary living suites.

Australian designers appear to be leading the industry with modular dwellings. Some are built as stand-alone properties while others are integrated as secondary (back yard) structures designed to complement the architecture of the primary residence. They are so advanced; think of them as in-law suites’ on steroids.

Added quarters accommodate returning graduates, retired in-laws, art, photography or yoga studios, rentals, care-givers for children or elderly parents, etc. In some communities, granny flats are evolving into stand-alone affordable housing. Austin’s Alley Flat initiative is one such venture.

Australian entrepreneurs have found great success with the back yard villa or granny flat. The Japanese version is the tiny house. The British know them as garden cottages. In Fort Worth watch for accessory dwelling units (ADUs).

In his book, In-laws, Outlaws and Granny Flats: Your guide to Turning One House into Two Homes, author Michael Litchfield, explains the six types of in-law flats. The link above showcases “10 Chic Granny Flats” from Litchfield’s book, posted on Forbes.com. Houzz.com spotlights 40,605 granny flat home design photos. Most resemble upscale resort suites or pool houses with functioning kitchens and sleeping quarters. Take a minute to scroll through. They are energy-efficient, and stylish.

Major metros around the country are amending housing ordinances, while establishing zoning and construction specs for this evolving category of dwellings. Multi-family homeowners are evaluating whether to expand current homes or opt for custom new construction.

For 2014 and beyond expect to see more builders offering multigenerational floor plans. Consider developing a niche by focusing on multigenerational housing options. Bernice Ross with Inman News acknowledges this as a “prime opportunity in 2014”.

Watch for self-contained granny flat modules, fabricated domestically or imported from abroad. Check out local policy and valuation history for in-law suites. Keep a list of the best multi-family residential builders in your area. Use social media to ensure that your sphere of influence is aware of your special expertise.

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

Photo Courtesy of : In-laws, Outlaws and Granny Flats: Your guide to Turning One House into Two Homes

17December

The New Year Brings New Changes in FHA Loans

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House prices continued to grow during 2013 and it appears the housing market is on the road to recovery. While more than one-third of the housing market is still being supported by cash investors, home sales and mortgage numbers increased during the first half of the year. Foreclosures are also down due to fewer homes being foreclosed on by the banks. As homebuyers gain more confidence in the market by a show in rising home prices, interest rates have also accelerated (30-year fixed rate was 4.48% last week) making home affordability harder to find. With all these changes, the Federal Housing Administration (FHA) is rolling out some new plans of their own.

Starting January 1, 2014, FHA is lowering its lending limits across the board. FHA Commissioner, Carol Galante, said in a release, “As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play. Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved.” The new limit on less expensive loans is being lowered by over $75,000 to $271,050. More expensive loans are being reduced by more than $100,000 to $625,000. This is expected to affect approximately 650 counties in the U.S.

FHA also announced it would further increase the fees they charge to lenders starting in March of the coming year. Earlier this year FHA raised premiums and fees. Unfortunately, the increased costs will end up being passed along to the borrowers in the form of higher interest rates. “The new pricing continues the gradual progression towards more market-based prices, closer to the pricing one might expect to see if mortgage credit risk was borne solely by private capital. These changes should encourage further return of private capital to the mortgage market,” noted the FHFA’s acting director, Ed DeMarco, in a release.

The economy and job market are still struggling to really make big leaps and the new FHA regulations could make it harder for first time homebuyers to purchase. FHA has had financial struggles of its own, and increasing fees and lowering their risk is the prudent thing for them to do. As home prices continue to rise and mortgage rates increase, purchasing power will lessen and those looking for an FHA loan might have to consider private financial resources.

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.

3December

Home Prices Soar Due To Investors

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The housing market looks to have picked up some traction recently with new data report numbers released this past week showing growth in permits and home prices, which helps boosts the U.S. outlook. But Robert Shiller, Case Shiller Index co-founder and Yale University professor of economics, cautions this recent pickup might not be fundamentally sustainable and notes “we can’t trust the momentum in the housing market anymore.” Is the housing market in a solid recovery state or does it appear to be a bubble lacking fundamental support?

Permits for construction on future homes hit a new 5-1/2 year high in October. Building permits increased 6.2 percent to a seasonally adjusted annual rate of 1.03 million units, the highest rate since June 2008. Multi-family permits surged 15.3 percent while single-family home permits increased .8 percent after dropping 1.9 percent in September. The lack of supply has still not caught up with the strong demand of housing. This has contributed partially to the rise in home prices and should continue to aid in increasing numbers for construction, rent and prices.

The price of single-family homes recorded big gains in the month of September. The Case Shiller composite index reported solid increases in several regions across the U.S. The index jumped 13.3 percent in September from a year ago. This is the strongest gain recorded since February 2006. Home prices were up 0.7 percent in August from the prior month; the tenth monthly increase in a row. But this continued increase in home prices may not be maintainable. Investors, specifically institutional investors, have helped push home prices to new highs and these investors are starting to pull back on their acquisitions. These all-cash investors pushed home prices up more than 13 percent over the last 12 months which has priced out regular homebuyers.

Of all home sales in October, 6.8 percent were institutional investors according to RealtyTrac. This was a significant drop from the month before which boasted 12.1 percent of all sales. Anika Khan, senior economist at Wells Fargo Securities, told “Street Signs,” “In a lot of those hard-hit markets, we continue to see the greatest price increases. … A lot of this increase is exaggerated. However, the underlying fundamentals are still very positive, especially in those markets that have strong household formations, strong population growth and strong job prospects. … We are seeing a recovery in the housing market.” As investors exit their investments and slow their acquisitions, home prices will drop back to levels centered on supply and demand of non-investor homebuyers. This could result in a pricing “bubble” pop.

For information on effective ways to manage institutional and individual portfolios nationwide, or to shop for real estate visit First Preston HT. Like us on Facebook. Follow us on Twitter.