USA New Build property stimulates property growth for investors.

Since 2012 the amount of new homes being built in the USA is on the rise. This has a significant impact on investors, traditional home buyers and renters alike. The increase in new builds is a strong indicator that the property market is well on the way to recovery. After many years of slump there is good reason to believe that things are taking a turn for the better.

The favourable market conditions over the last couple of years have resulted in new builds being snapped up at record prices. Many of these homes are being bought by investors as opposed to the more traditional family units of years gone by. There are a number of reasons for this but one of the main ones is that due to the prolonged economic slump since the late 2000s many traditional homeowners are no longer able to buy due to bad credit or lack of the amount of savings needed to take out a mortgage.

This has resulted in a massive boom in the rental market instead as many families are looking for ever more affordable ways to find their ideal home. While homeownership may no longer be the norm for many families, the increase in the rental market has meant that people are now able to afford good quality housing in decent neighbourhoods.

The other advantage of the boom in investors taking on properties both new and old is that it has prevented many neighbourhoods from falling into disrepair. In the past the large numbers of vacant homes and empty lots had a knock on effect of lowering property prices throughout the rest of the neighbourhood. Now that investors are taking on these properties and renting to families who would otherwise have nowhere to live, the quality of these areas has significantly improved for all who live there.

While there is still a debate over whether it is better to build new homes or to invest in older, vacant properties there is plenty of money to be made for those who are savvy enough to invest while the market is still in the early stages of recovery. Gone are the days of investors buying property at knockdown prices in the hope of a quick sale at a large profit. Instead the financial rewards are slower to accumulate but they present a far greater return than on previous investment strategies.

The advantage of investing in new build, however, means that investors can achieve a far higher rental return on their initial investment. These new homes can be practically custom designed and many make the most of the latest in energy efficient and environmentally friendly technology. For those families who have found that homeownership is not longer an option, having the opportunity to rent a modern, high tech house is an attractive proposition that is worth them paying a premium price for.

The growth in the current housing market might be slow but there is a significant shift from home ownership to investors buying up large numbers of properties across a wider geographical area and renting them to families who have been affected by the change in the market. The investment potential here is almost limitless as the numbers of people seeking bankruptcy advice is on the rise.

Southwest Florida makes Top 10 for housing price increases

The Cape Coral-Fort Myers and Naples areas were both in the top 10 nationwide for home-price increases in the second quarter as Southwest Florida’s battered housing industry came back with a vengeance.

A National Association of Realtors survey showed that the Cape Coral-Fort Myers median existing single-family-home sale was up 36.1 % to $177,900 compared to a year earlier.
Naples was seventh with a 29.3 % increase to $346,600.
Nationwide, home prices continued to rise in the majority of metropolitan areas in the second quarter, with the national price showing the strongest gain in 7½ years, according to the survey.
“The Naples-Fort Myers market was one of the worst beaten-up markets in the downturn,” said Brad Hunter, chief economist for Metrostudy, a national housing data and consulting firm that maintains statistics on residential construction. “And it’s my view that what drove prices to extremely low levels then let them come up from the bottom faster.”
Brett Ellis, head of The Ellis Team with Re/Max Realty Group in Fort Myers, said prices in Lee County are still rising but not as fast as they did at the beginning of the year.
Still, he said, it’s a seller’s market as the inventory of homes for sale continues to decrease: 4,956 in June compared to 5,448 a year earlier.
“We’ve got buyers that are really looking to buy now because they’re afraid,” Ellis said. “They see the price increases, and they’re also afraid the interest rates are going up.”
He expects prices to continue rising throughout 2013 as those buyers get in the market. “It’s all encouraging, but there are not a lot of choices for buyers.”
Lawrence Yun, NAR chief economist, said tight inventory is continuing to drive home prices.
Those trends are in force throughout the country, Yun said in a release. “There continue to be more buyers than sellers, and that is placing pressure on home prices, with multiple bids common in some areas of the country.”
Hunter said rising prices likely will stimulate the purchase of homes as owners find themselves able to sell at a good price.
“The higher prices go, the more people are no longer underwater and can pay off their mortgages,” he said. “I do think you’ll see more sellers.”

Houston’s new home construction remains solid

Houston homebuilders started more than 7,000 homes in the second quarter — the first time that number has been surpassed in five years — but continue to feel pressure from the lack of lots going forward.

New home construction in the area kept up its momentum, with about 7,700 homes started in the second quarter, a 14 % increase from the same period last year, reports Houston-based research firm Metrostudy.

With Houston’s population and employment growth, it is not surprising the Bayou City’s new home construction market is so strong.

“We’ve been on a torrid pace of job growth over the last 12 months,” said Patrick Jankowski, vice president of research at the Greater Houston Partnership. “We’ve created more than 111,000 jobs, and that’s 111,000 potential homeowners.”
For the year, homebuilders have started 26,000 homes in Houston, up 24 % from this time last year, and the highest tally since before the recession.

At the end of the second quarter, there were about 9,800 homes under construction in the Houston area — a 19.2 % increase from the first quarter. In addition, the supply of homes sitting finished and vacant has declined by 6 % and remains at historic lows as builders see their speculative homes purchased before reaching completion, according to Metrostudy.

Closings have increased steadily over the past eight quarters, and in the second quarter, homebuilders closed about 6,200 new homes, bringing the annual total thus far to around 23,700 — a 17 % increase compared to 2012.

Master-planned communities hold about 30 % of the market share of Houston’s new home construction, David Jarvis, regional director of Metrostudy, told HBJ recently.
However, many of the communities are short on lot supply and nearly sold out. In April, lot supply — months left if the community maintains its current rate of new home starts ¬— dipped to 3.4 months, a 13-year low.

In addition, the plethora of new homes is buoying business for local residential real estate brokerages and mortgage lending for Houston banks.

Houston returns to top 5 on economic health index

Houston is back among the top five markets in the Business Journals’ latest analysis measuring the economic health of major metropolitan areas, after slipping down the list in recent months.

Houston took the No. 5 spot in the Business Journals’ On Numbers Economic Index for July, up from No. 6 a month earlier. Since the analysis began in August, Houston made the top five in every month except for September and June.
The index is calculated by an 18-part formula that assesses private-sector job growth, unemployment, earnings, housing-price appreciation, and construction and retail activity for all 102 metropolitan areas with populations of more than 500,000.
Houston had the second-strongest housing-price appreciation over five years of any of the metros, as well as the second-greatest private-sector job growth over the same period.
Meanwhile, Austin — which had topped the list for five months in a row — fell to No. 3, and Provo, Utah, jumped into the top spot. Dallas-Fort Worth climbed another place to No. 2, and Oklahoma City held its No. 4 spot.

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.