Real Estate Trends Archives - First Preston HTFirst Preston HT

28May

Your Mortgage and Your Retirement | First Preston HT

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It’s not uncommon to hear homeowners say one of their financial priorities is to pay off their mortgage as quickly as possible. The First Preston HT Blog team hears this topic discussed all the time from people in their early 30’s to those nearing retirement. The thought of being debt free and owning your home free and clear brings a sense of security and comfort.

The financial crisis that began in 2008 is still fresh on our minds and has led many people to approach their finances, including their mortgage, with a more conservative nature, think along the lines of “pay off all debts and save, save, save.” This seems like fairly logical and prudent advice.

But the decision to refinance into a short-term loan or make extra mortgage payments might not be the best advice for everyone. If you are nearing retirement and don’t have an adequate amount in your retirement funds, directing your money into an illiquid asset (your house) might be a bad decision. Here are a few points to consider before choosing to pay off your mortgage as quickly as possible.

Do you have enough money in savings? It’s very important to have an emergency fund that can cover three to six months’ worth of living expenses. Earlier data from Bankrate.com indicates that only 38% of Americans have enough money in savings to pay for unexpected expenses. This is a goal that everyone should work toward regardless of whether you are a recent college graduate or nearing retirement. If an emergency occurred like losing your job or needing a serious surgery, your home equity can’t pay these bills.

Do you have “bad debt?” You have probably heard the terms good debt and bad debt in regards to your credit score. Bad debt includes high interest credit card balances. Pay off these balances to keep from paying the attached high interest rates. This will get you one step closer to achieving your debt free goals. As a bonus, your credit score should improve which will be helpful if you do decide to refinance to a shorter term loan.

Are you maxing out contributions to your retirement accounts? If you are just starting out in your career it’s a great idea to begin contributing a portion of your monthly earnings to a retirement account. The power of compounding rate of return should not be underestimated! For those closer to retirement, specifically if you are 50 or older, the IRS allows what they call “catch up contributions” to be made to your IRA and 401(k). These contributions are also tax free unless you have Roth accounts these funds are directed to.

If you have a solid emergency fund, have paid off all your bad debt and are maxing out our retirement contributions then you might consider paying off your mortgage in a shorter time frame. If you don’t consider yourself financially savvy, seek financial advice from a profession who can look at your personal financial situation offer customized advice.

First Preston HT hopes you found this information useful and that it will encourage you to plan for your financial future. 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.

22July

Foreclosures Drop Significantly

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The overall health of the housing sector appears to be improving. The foreclosure rate has been declining over the past few years and hit an 8-year low in June according to a RealtyTrac report citing 107,194 U.S. properties filed for foreclosure. This was a 19% drop from the previous 6 months.

Daren Blomquist of RealtyTrac said, “Nationwide foreclosure activity in June reached an important milestone, dropping to levels not seen since before the housing price bubble burst in August 2006. Over the next six to nine months, nationwide, foreclosure numbers should start to flat line at consistently historically normal levels.”

While this is positive news it’s important to note that there is still an abundant amount of distressed inventory in the 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.

14July

Student Housing is Heating Up

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There is a sector of real estate that has quietly been heating up and investors want in; it’s student housing. Forget the image you have in your head of the dorms you lived in while attending college years ago. This isn’t your stereotypical student housing of nondescript rooms with dirty carpet, linoleum floors, and equipped with only the bare necessities. Today’s student housing is all about the comforts of home.

A large group of today’s college students have grown up living with luxury amenities at home and want the same comforts while attending school. Some private investors and REITs (real estate investment trust) have identified this opportunity to build new housing both on and off campus. Universities are welcoming the on campus private investment since budgets have been tightening.

These new student housing buildings could easily be mistaken for a luxury hotel or apartment building and feature flat screen TVs, state of the art fitness centers, and full kitchens and baths. Bill Bayless, CEO of American Campus Communities, the largest student housing REIT in the U.S. commented, “Student housing isn’t just real estate. It’s really creating physical assets that are conducive to academic achievement.” It is estimated that the student housing sector is a $4-5 billion business and still growing.

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.

3July

Will Rental Prices Affect Mortgage Rates?

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It’s no secret by now that the rental market across the U.S. is hot as rental prices are growing at their fastest pace in 5 years. The national vacancy rate was 4.1% during the second quarter of this year and the asking rent increased to an average of $1,099 a month (0.8% increase from the first quarter). So with the cost of renting creeping upward, will this affect those that are looking to buy instead of rent?

Some economists believe mortgage rates could increase as rent continues to rise. Lawrence Yun, The National Association of Relator’s chief economist made a statement, “Given that housing is the biggest weight to overall consumer price inflation, if this rent trend continues, and it could easily because vacancy rates are falling and falling, then the overall CPI inflation will be higher than anticipated, which will then force the Federal Reserve to raise interest rates sooner than later.” There are other economists; however that disagree and feel that interest rate policy will not hinge solely on apartment rents.

Mortgage rates have not seen much action over the past year (30-year fixed rate mortgage rate is 4.17%) but if they were to increase this wouldn’t be beneficial to homebuyers. For housing to grow legs it is important to see job growth and income growth become stronger than it has been. An increase in supply could also help push prices down.

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.

25June

Real Estate Values Driven by Walkability

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Home prices have continued to grow over the past year. The Case-Shiller Index noted an increase of 10.8% in home prices year-over-year ending in April. One of the factors that has been linked to the rise appears to be a city’s walkability.

George Washington University School of Business and Smart Growth America joined together to release a report ranking the walkability of 30 of the largest cities in the US. They concluded there is a distinct correlation between real estate values and walkability for both residential and commercial properties. Chris Leinberger, Research Professor of Urban Real Estate at GWU commented, “Walkable, urban for-sale housing is by far the most expensive housing in the country. The range, depends on the market, between 40% and 200% greater than driveable, suburban housing. Twenty-five years ago that relationship didn’t exist because walkable (cities back then) was not valued.”

The younger generation of Millennials tend to prefer transportation via car ride-shares, walking, bike shares and rapid transit in an effort to be more environmentally conscious. Washington, D.C. was ranked number 1 as the most walkable city. Those cities boasting more walkable neighborhoods have seen home real estate values bounce back quicker and higher than those with less.

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.

19June

Housing Bubbles Abroad?

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With the run up in home prices in the U.S. some people are concerned about a possible housing bubble again. But several economists have popped a hole in this belief based on market fundamentals. Lending standards having gotten tighter and the size of down payments have increased from the pre-housing bubble burst. However, the story aboard seems to be different. The Deputy Managing Director of the International Monetary Fund (IMF), Martin Zhu, noted in a recent speech that housing prices were climbing in several countries.

Canada is experiencing strong home and apartment construction and has high price-to-rent and price-to-income ratios making affordability tighter. It is also experiencing a lot of foreign investing from China. Real home price appreciation has almost hit 20 percent.

The country of Norway has reported around a 30 percent jump in home prices since the worst of the Global Recession which is partly due to surging population and incomes as a result of immigration. A large portion of the consumer’s wealth is sitting in illiquid real estate and household debt is high, so a housing downturn could hurt the country.

Since the beginning of 2009, Switzerland’s home prices have increased more than 20 percent and mortgage debt has jumped to 140 percent of GDP, which for some analysts is a warning sign. There have been efforts to tighten lending standards, as we have seen here in the U.S. after the housing collapse, and increased bank reserves. For these countries and several others real estate is still booming but are there bubbles looming?

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.

3June

Summer Real Estate in the Hamptons

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For years the Hamptons has been a hot summer destination for New York City dwellers to escape to, along with other vacationers from across the country. The recession took its toll on the summer destination spot along with the real estate market, but this summer the Hamptons look to be coming back strong.

The summer of 2007 was the last big boom the Hamptons saw and this summer is shaping up to be even bigger. So far the high-end real estate has seen a remarkable amount of activity as vacationers seek to rent houses during their stay and investors look for investment properties. The colder and longer than normal winter left potential buyers and renters putting off planning for their summer vacations and now they are scrambling to pin down their plans.

Prices have been on the rise and the Corcoran Report cites increased closed sales were up 38% in the first quarter of the year along with sales volume jumping 27%. The lack of available land in some of the hot spots has contributed to higher prices and some recent big home sales in the area have encouraged other homeowners to put their properties on the market while it’s hot.

What is the Hamptons buyer looking for today in a property? Lots of natural light, open floor plans, plenty of square footage and a combination of indoor and outdoor living space.

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.

13May

Home Prices are Hot

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Home prices continue to rise in what is undoubtedly a seller’s market. According to Zillow, prices have increased so quickly that about 1,000 local housing markets have reached records in new home prices.

Real estate brokerage firm, Redfin, noted that 40% of the sellers it surveyed plan to price their homes above market value when they list during the second quarter this year. This is a 33% increase from the start of the year. Fannie Mae reported in April that 42%, an all-time high, of their 1,000 surveyed homeowners and renters believe that it is a good time to sell.

Home sellers are more likely to receive the asking price from the buyer that pays in all cash. In markets with fewer cash buyers, home sellers have indicated they are willing to hold out if it doesn’t sell quickly. For some homeowners they need to get their full asking list price in order to pay off a current mortgage.

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.

6May

Homeownership Hits a 19 Year Low

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The American dream used to entail owning a home but has this traditional dream shifted? The U.S. Census Bureau reported that homeownership rates have dropped to 64.8% in the first quarter of 2014, which is the lowest rate since 1995. Home prices have soared and home sales have not been keeping pace as first-time homebuyers, in many cases, have been priced out of the market and are still finding it hard to gain access to credit. Investors are still playing a large role in the single-family real estate market.

Robert Shiller of the S&P/Case-Shiller Home Price Indices commented on this topic, “This institutional investor dynamic is a whole new era I think. As institutional investors start to play in the single-family market, that just changes it fundamentally.” Those who aren’t buying are renting instead which isn’t necessarily a worse scenario. Some prefer not having a large mortgage to worry about and not being saddled with repair costs when something in the home breaks down.

Trulia’s chief economist, Jed Kolko, pointed out, “Ironically, adding renter households could cause the homeownership rate to fall, even though these new rental households are a sign of recovery and will spur more construction starts.”

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.

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.