Indians bought $ 3.5 billion US realty in year ending March 2013

WASHINGTON: Indian buyers accounted for nearly $ 3.5 billion of the $ 68.5 billion that foreigners spent on purchasing homes in the United States during the 12 months ending March 31, according to the National Association of Realtors.

Although the falling rupee appears to have dampened some enthusiasm for foreign properties, buyers from India once again made the Top Five foreign customers who have historically accounted for a bulk of realty purchases in the United States. Canada, China, Mexico are the top three countries buying into the United States, followed by India and the United Kingdom.

In the latest NAR survey, these five countries accounted for approximately 53 % of the reported international transactions. Buyers from 68 countries across the world purchased homes in the US, where it is relatively easy for foreign buyers to purchase homes.

While Indian buying peaked in 2009 when they accounted for 9 % of all foreign purchases, Chinese, who accounted for only 5 per cent that year, have surged ahead to buy 18 % of all realty sold to foreigners during the year ending March 2013. At a median price of $425,000, the Chinese are also buying more expensive homes than other foreign buyers, who spent a median of nearly $276,000 on US homes.

The median price of homes bought by Indians was $ 300,000. It was lower than the median price of Chinese homes but higher than what Britons ($ 250,000), Canadians ($ 183,000) and Mexicans ($ 156,250) paid for their homes. The median price of homes bought by Americans is only around $ 220,000, attesting to the wealthy Chinese and Indian footprints in the U.S market.

According to the NAR report, international non-resident clients are likely to be substantially wealthier than the median domestic buyer, and are usually looking for a trophy property abroad after having met essential living needs in their home country.

The survey shows that among the reported destination states for buyers from India, the top states were California, Tennessee, Connecticut, and New Jersey. According to information from realtor.com, as of March 2013, the five markets of greatest interest to potential Indian buyers are Los Angeles, Orlando, Chicago, Dallas, and Houston. Indian buyers include those on temporary guest worker visas such as H1-B, but exclude Indian-Americans or American citizens of Indian origin.

Based on data from the survey, the bulk of properties purchased by Indian buyers were in the suburban area. Approximately 90 per cent of reported purchases were detached single-family properties and 7 per cent were commercial properties. Approximately 21 per cent of the reported purchases were all-cash.

According to the NAR, international purchasers typically buy detached single-family homes, which they intend to use for primary residence and for longer than six months. International students enrolled in US colleges and universities (usually funded by wealthy parents), recent guest workers and potential immigrants intending to settle down in the U.S, and professional and managerial employees of businesses and institutions who are in the US on a temporary but extended visit may plan on using the property year round for primary residence.

Since non-resident foreigners are limited to 6-month stays in the US, such international buyers generally expect to use the property for vacation/rental purposes and as an investment, the NAR report says. About 42 per cent of reported international transactions were intended for primary residences.

Did You Miss the Best Real Estate Buying Bonanza in Decades?

Has your best chance at getting a great deal on your dream home or investment property passed you by?

The answer is no. But you certainly did miss the bottom — the intersection of low home prices and rock-bottom mortgage rates.
But it’s still a bonanza out there for prudent buyers! Real estate is still incredibly low priced, mortgage rates are still reasonably low and great wealth still can be earned from owning quality properties for the long term.
Long-term ownership
The most likely scenario where a real estate buyer increases his or her wealth — and “increasing wealth” is the reason most people desire to own real estate — is by holding property for the long term. When you own long term, you pay down your mortgage along the way, the property’s value hopefully will increase over the years and you skip the exorbitant transaction costs that go along with buying and selling real estate over and over again. So don’t buy a home or investment property unless you are virtually positive you will own it for years. You generally have to own a property for around 7 years to start earning any equity.
And keep this in mind: If you have that long-term ownership goal, the recent uptick in property prices shouldn’t be big a deal for you, because in 10, 15 or 20 years, the values should be much higher. In fact, in 15 years you’ll hardly remember what you paid today; you’ll just be bragging about how it was the best investment you ever made.
Buy good quality real estate
Beware: You can’t just buy any property and expect it will add wealth to your financial picture. You have to buy nice properties that are affordable to you — no get-rich quick schemes.
Many properties are wealth-draining, not wealth building. It’s usually the ones that sound like incredible deals, but they end up being too good to be true. A few types of properties that usually diminish your wealth are fixer-uppers, fancy prize properties, second homes, vacation rentals, land, properties in mismanaged homeowners associations, rent-to-own deals, and properties in bad areas. Most of those are going to be wealth-destroying for a variety of reasons.
To sum it up
The bottom has passed — a perfect storm of low prices and low interest rates is gone, gone, gone — but it’s still a buying bonanza out there for savvy buyers.
If you are buying a personal residence, buy a home you can afford. If you are buying rental properties, buy properties that pay for themselves.
Interest rates and home prices are still very reasonable — as long as you have a long-term ownership perspective.
Most importantly, don’t worry about what the news says and all the negative or positive commentary on the airwaves. Buy a great property for yourself, and you will hopefully enjoy the rewards down the road.

Builders Raising Prices, Limiting Supply

Those looking to buy new homes will likely start to see price hikes, and possibly a smaller selection. Many of the nation’s builders say they’ve had to increase prices due to the rising costs of land, labour, and materials.

For example, Pulte’s sale price, on average, has increased 10 % to $287,000 in the first quarter of this year. Meanwhile, the average existing home price was $233,200 in March, according to the National Association of Realtors.
“Builders are feeling pinched by rising costs of key building components which is causing home construction costs to rise at a faster pace than appraised values,” says David Crowe, chief economist of the National Association Home Builders.
Some builders are limiting sales in order to keep prices higher.
“We are pricing our homes and limiting the number of lots we’re releasing for sale in some communities to better manage our order volumes relative to our production capacity, and to maximize our profit from those communities,” Meritage CEO Steven J. Hilton wrote in the company’s quarterly earnings report recently.

Lennar’s New-Home Orders Soar 27%

The nation’s No. 3 home builder is reporting stronger-than-expected gains in revenue and home sales during the spring selling season.

With rising home prices, Lennar Corp. saw a 53 % increase in second-quarter revenue. The company also reported new-home orders climbing 27 %, signalling a “solid housing recovery,” says Chief Executive Stuart Miller.

Miller says that buyer demand has continued to outpace supply, which has allowed Lennar to increase its selling price 13 % and average $283,000 during the second quarter.

Lennar has been actively purchasing land to try to meet increased demand. The company’s backlog of ordered homes that have not yet been completed rose 55 % in the second quarter.

In January, the company announced it would also be entering into the apartment rental business to take advantage of the booming rental market as well.
Lennar’s rival Toll Brothers, a luxury home builder, reported in May that its second-quarter profit soared 46 %, due to higher demand among buyers and higher selling prices.

New Home Sales Rise

New-home sales rose 1.5 % in March, and economists predict more increases ahead as housing likely remains a consistent driver of economic growth this year, The Associated Press reports.

“With increasing signs of a softer U.S. economy springing up in the spring, we can take comfort in the resilience of the housing recovery,” Jennifer Lee, senior economist at BMO Capital Markets, told The Associated Press. Record low mortgage rates and steady job creation are attributed to helping lifting home sales.

The Commerce Department reported Tuesday that sales of new homes reached a seasonally adjusted annual pace of 417,000 in March. The pace marks an 18.5 % gain compared to last year, but the numbers are still far below the 700,000 pace that most economists consider healthy for the sector.

“At this point, we are about halfway back to what would be considered a ‘normal’ level of sales activity as challenges related to supplies of credit, building materials, lots, and labor are slowing the pace at which builders can build and sell new homes,” says David Crowe, chief economist for the National Association of Home Builders.

Regionally, new-home sales rose the most in the Northeast by 20.6 % in March, followed by a 19.4 % gain in the South. Sales dropped 20.9 % in the West and fell by 12.1 % in Midwest, the Commerce Department reported.

Inventories of new homes remain tight, but did rise 2 % in March, marking a second consecutive monthly gain. Inventories are at about a 4.4 month supply at the current sales pace.

The tight inventories are causing home prices to rise. The median price of a new-home increased to $247,000 in March — 3 % higher than a year ago.
The low inventories are spurring more construction of homes, with homebuilders having started work on more than 1 million new homes and apartments in March.