REPOST: 54% of Metros on Pace to Reach 8 Year High in Home Sales

downtown Phoenix skylineThings are looking good for the future of housing—single family home and condo sales through August were on pace for an eight-year high nationwide. This data comes from a recently released RealtyTrac® August 2015 U.S. Home Sales Report, which shows a total of 1,947,028 U.S. single-family homes and condos sold through August in 2015. These numbers are up 5.4 percent from the same time period a year ago to the highest total for the first eight months of the year since 2007, when there were 2,069,963 sales.

The 110 metro areas on pace for at least an eight-year high in home through August included Los Angeles, Phoenix, Dallas, Denver, Riverside-San Bernardino in Southern California, Detroit, Seattle, Tampa, Minneapolis and Portland.

Out of the 204 local markets, 58 (28 percent) were on pace through August to reach nine-year highs in home sales in 2015, and 22 (11 percent) were on pace through August to reach 10-year highs, including Denver, San Diego, the Florida markets of Sarasota, Naples, and Palm Bay, along with Grand Rapids, Michigan and Reno, Nevada.

“The continued strength in sales volume across a wide spectrum of markets in August indicates that shockwaves from recent global stock market instability have not weakened the housing recovery and in fact there is evidence that the instability has fueled more demand for U.S. real estate,” said Daren Blomquist, vice president of RealtyTrac. “The share of cash sales nationwide in August bounced back from a seven-year low in July, and the month-over-month increase in cash sales share was more pronounced in markets that have traditionally been magnets for foreign cash buyers, including Boston, Las Vegas, San Francisco, Seattle and New York.”

Miami, New York, Las Vegas post highest share of cash sales
All-cash sales accounted for 24.5 percent of all single family home and condo sales in August, up from a seven-year low of 23.6 percent in July but still down from 26.7 percent of all sales in August 2014 and down from a peak of 39.6 percent of all sales in February 2013.

Among metropolitan statistical areas with a population of at least 1 million, those with the highest share of cash sales were Miami (48.7 percent), New York (44.7 percent), Las Vegas (42.2 percent), Raleigh, North Carolina (39.6 percent), and Tampa (37.6 percent).

Las Vegas, Riverside-San Bernardino and Baltimore with highest share of FHA buyers
The share of buyers using Federal Housing Administration (FHA) loans—typically loan down payment loans with an average down payment of about 3 percent—continued to increase in August, when 23.1 percent of all single family and condo sales were to FHA borrowers, up from 23.0 percent in July and up from 17.8 percent in August 2014.

“It wasn’t just cash buyers that kept home sales volume strong in August,” Blomquist noted. “The share of buyers using FHA loans in August increased 30 percent from a year ago, and the year-over-year increase in the share of FHA buyers was 50 percent or more in markets such as Nashville, Phoenix, Colorado Springs, Portland and San Diego. Those markets with a solid and fast-growing share of FHA buyers are poised for longer, more sustainable growth going forward than markets that are more dependent on capricious cash buyers.”

Among metropolitan statistical areas with a population of at least 1 million, those with the highest share of FHA buyers were Las Vegas (39.0 percent), Riverside-San Bernardino in Southern California (36.5 percent), Baltimore (32.0 percent), Phoenix (31.8 percent), and Atlanta (30.9 percent).

Salt Lake City, Portland, Minneapolis post biggest gains in home sales volume
Among markets with at least 10,000 single family home and condo sales in the first eight months of 2015, those with the biggest year-over-year increases were Salt Lake City (up 31.6 percent), Portland (up 22.2 percent), Minneapolis-St. Paul (up 19.2 percent), Jacksonville, Florida (up 16.6 percent), and Seattle (up 16.2 percent).

Other major markets with a year-over-year increase in year-to-date sales included Nashville (up 16.1 percent), Charlotte (up 15.9 percent), San Antonio (up 15.9 percent), San Diego (up 12.7 percent), and Tampa (up 11.5 percent).

Cleveland, Baltimore, Cincinnati post biggest declines in home sales volume
The biggest year-over-year decreases among markets with at least 10,000 sales through August were in Cleveland (down 13.8 percent), Baltimore (down 12.1 percent), Cincinnati (down 11.8 percent), Chicago (down 10.4 percent) and New York (down 10.1 percent).

Other major markets with a year-over-year decrease in year-to-date sales volume included San Francisco (down 2.5 percent), Las Vegas (down 1.2 percent), Oklahoma City (down 0.9 percent), Houston (down 0.6 percent), and Cape Coral-Fort Myers, Florida (down 0.3 percent).

Chicago, Milwaukee, Tampa post highest share of distressed sales
Distressed sales, including sales of homes in the foreclosure process and sales of bank-owned homes, accounted for 8.9 percent of all single family home and condos in August, down from 9.3 percent in July and down from 12.2 percent a year ago to the lowest level going back as far as RealtyTrac has distressed sales data, January 2000.

Among markets with a population of at least 1 million, those with the highest share of distressed sales were Chicago (16.4 percent), Milwaukee (16.1 percent), Tampa (15.4 percent), Orlando (15.4 percent), and Jacksonville, Florida (15.4 percent).

Major markets with the biggest year-over-year increase in share of distressed sales were Boston (up 75 percent), Milwaukee (up 27 percent), Rochester, New York (up 22 percent), New Orleans (up 16 percent), and Hartford, Connecticut (up 13 percent).

Tampa, Jacksonville, Charlotte post highest share of institutional investor purchases
Sales of homes to institutional investors — entities that purchase at least 10 properties during a calendar year — accounted for 1.0 percent of all single family home and condo sales in August, up from just 0.3 percent in July but down from 3.2 percent in August 2014.

Among markets with a population of at least 1 million, those with the highest share of institutional investor purchases were Tampa (4.7 percent), Jacksonville, Florida (4.1 percent), Charlotte (3.3 percent), Buffalo, New York (2.8 percent), and Orlando (2.7 percent).

For more information, visit http://www.realtytrac.com/news/home-prices-and-sales/realtytrac-u-s-home-sales-report-august-2015/.

Repost: Real Estate Market to Continue Economic Expansion through 2017

The real estate market is projected to continue expanding at healthy and fairly steady levels for 2015 through 2017, according to a new three-year economic forecast from the Urban Land Institute (ULI) Center for Capital Markets and Real Estate. The latest ULI Real Estate Consensus Forecast, a semi-annual outlook, is based on a survey of 49 of the industry’s top economists and analysts representing 36 of the country’s leading real estate investment, advisory, and research firms and organizations.

Compared to the previous forecast conducted in April 2015, the new Consensus Forecast is slightly less bullish on its outlook; however, it predicts three more years of favorable real estate conditions. The new survey forecasts real estate indicators to be better than their 20-year averages in 2015, with the exception of four indicators expected to be worse: the Consensus Forecast respondents predict that commercial property price growth, equity REIT returns, NCREIF returns for the four major property types, retail availability rates, and single-family housing starts will be worse than their 20-year averages.

“The latest Consensus Forecast has picked up on recent growth concerns and stock market corrections around the world,” says ULI leader and survey participant William Maher, director of North American strategy for LaSalle Investment Management in Baltimore. “The US economy and real estate markets are in much better shape than most other countries, but global economies and capital markets are increasingly inter-related. Still, the vast majority of indicators in the forecast indicate favorable economic and capital markets in the U.S., as well as moderately strong real estate fundamentals and investment returns.”

Other key findings of the Consensus Forecast include:

  • Commercial property transaction volume is expected to increase for another two years and then level off at a robust $500 billion by 2017.
  • Commercial real estate prices are projected to rise by 10.0 percent in 2015 and to slow to a 6.0 percent percent increase in 2016. Price growth is expected to drop to 4.5 percent in 2017, below the long-term average growth rate.
  • Institutional real estate assets are expected to provide total returns of 11.7 percent in 2015, moderating to 9.0 percent in 2016 and 7.0 percent in 2017. By property type, returns are expected to be strongest for industrial and retail, followed by office and apartments, in all three years.
  • Vacancy rates are expected to continue to decrease modestly for office and retail over all three forecast years. Industrial availability rates and hotel occupancy rate are forecasted to improve modestly in 2015 and essentially plateau in 2016 and 2017. Apartment vacancy rates are also expected to decline slightly in 2015 but reverse direction and rise slightly in 2016 and 2017.
  • Commercial property rents are expected to increase for the four major property types in 2015, ranging from 2.0 percent for retail up to 4.6 percent for apartments and 4.9 percent for industrial. Rent increases in 2017 in these four types will range from 2.8 percent for retail to 4.0 percent for office. Hotel RevPAR is expected to increase by 7.9 percent in 2015 and 4.2 percent in 2017.

Additionally, the Consensus Forecast predicts that single-family housing starts will increase to 745,000 in 2015, 842,000 in 2016, and 900,000 in 2017, but still remain below the 20-year average. Home price increases are expected to moderate to 5.0 percent in 2015, 4.3 percent in 2016, and 3.9 percent in 2017. Compared to six months ago, forecasts for housing starts in 2015 and 2016 are more optimistic, while the forecast for 2017 remains unchanged.

Regarding real estate capital markets, commercial real estate transaction volume is expected to remain stable at around $500 billion in all three forecast years. Issuance of commercial mortgage-backed securities (CMBS) is expected to continue to grow steadily through 2017, with projected increases to $110 billion in 2015 to $130 billion in 2016 and to $140 billion in 2017.

Consensus Forecast survey predictions by commercial property type include:

  • Office – Office vacancy rates are expected to continue declining, bringing the vacancy rate below the 20-year average, to 13.3 percent in 2015, 12.7 percent in 2016, and 12.3 percent by the end of 2017. Rental rate growth is expected to increase at a consistent pace of 4.0 percent in all three forecast years. All forecasted rates are above the 20-year average. The forecast for office vacancy rates is slightly less optimistic than the forecasts of six months ago. The outlook for rental rate growth in 2015 and 2016 remain about the same, while the forecast for 2017 is more optimistic.
  • Apartments – Vacancy rates are expected to increase slightly to 4.8 percent in 2016 and 5.0 percent in 2017; however, these forecasts remain below the 20-year average vacancy rate. Apartments are also expected to show consistent rental rate growth above the 20-year average of 2.7 percent. Rents are expected to rise by 4.6 percent in 2015, then moderate to 3.5 percent in 2016 and 3.0 percent in 2017. The outlook for vacancy rates for the next three years are lower, and the forecasted rental rate changes ae all higher, when compared to six months ago.
  • Retail – The Consensus Forecast anticipates on-going improvements over the next three years, with year-end availability rates expected to decline to 11.1 percent by 2015, 10.7 percent by 2016, and 10.4 percent by 2017. Still, these rates remain above the 20-year average. Rental rates are expected to sustain this growth, increasing by 1.5 percent in 2015, 2.5 percent in 2016, and 2.8 percent in 2017.Compared to six months ago, the outlook of availability rates and rental rate growth for the next three years is less optimistic.
  • Industrial/warehouse – Availability rates are expected to continue to decline in 2015 and 2016, with year-end vacancy rates at 9.7 percent and 9.5 percent, respectively, and remain steady in 2017 at 9.5 percent. Forecasts are for healthy rental rate growth to continue, with increases of 4.9 percent in 2015, 4.0 percent in 2016, and 3.0 percent in 2017. These forecasts are all above the 20-year average growth rate. The forecasts for industrial/warehouse availability rates and rental growth rates in 2015, 2016 and 2017 are all more optimistic than the Consensus Forecast of six months ago.
  • Hotel – The Consensus Forecast projects that occupancy rates will improve even more in 2015, reaching 65.3 percent and then nearly plateauing at 65.4 percent in 2016 and 65.3 percent in 2017. Hotel revenue per available room (RevPAR) is expected to remain strong, but at a decelerating rate. RevPAR is expected grow by 7.9 percent in 2015, 5.9 percent in 2016, and 4.2 percent in 2017. These projections are all above the 20-year average.

The market survey, conducted last month, is the eighth in a series of polls conducted by ULI to gauge sentiment among economists and analysts about the direction of the real estate industry. The next forecast is scheduled for release in April 2016.

For more information, visit www.uli.org.

REPOST: Don’t Let a Rental Scam Ruin Your American Dream

apt rentalsWhen it comes to the World Wide Web, there’s one rule of thumb you can’t afford to ignore: Just because it’s on the Internet, doesn’t mean it’s true.

Take your next door neighbors who were duped into renting a cute little two-bedroom apartment, with all the bells and whistles, who learned that the home didn’t even exist—once the moving van was packed and they had departed on their out-of-state journey.

While it may sound inconceivable to fall for a scam regarding something as serious as a fake house, rental scams are becoming more prevalent in today’s tech-driven world.

Before you find yourself daydreaming about kicking your feet up in a space that’s too good to be true, Harini Venkatesan—COO and co-founder of RentalRoost, Inc.—offers the following tips to help you steer clear of becoming a rental scam victim.

First and foremost, before you agree to rent an apartment or home, set up a meeting with the landlord so you can see the property in-person. “Some scammers say they can’t show you the property because they’re ‘out of town’ and they plan on getting the keys to you through a lawyer/agent,” says Venkatesan. “This is almost always a scam, so beware of any properties where you haven’t actually seen the landlord at the property.”

Next, Venkatesan suggests using a reputable website—and doing your homework—to ensure the property is exactly what it says it is. If you stumble across a property that’s listed way below the average rental price for the area, consider it a red flag.

“Some scammers use the story that they are out of town or out of the country so you will have to wire them money before they hand over the keys,” says Venkatesan, who can’t stress just how important it is to never wire money to anyone in this situation. “Even if the deal seems appealing, resist! It’s highly probable that this is a scam, and you’re likely to lose a lot of money in the process.”

It’s also important to trust your gut when it comes to avoiding falling prey to a rental scam. “If your gut instinct is giving you an indication that the landlord doesn’t seem entirely honest, do a quick Google search to see if anyone else has posted a report regarding a scam related to the landlord,” says Venkatesan.

And last but not least, planning ahead is one more way to ensure you don’t become the next rental scam horror story. Not only will having an adequate amount of time keep you from making a hasty decision, it’ll also keep you from ignoring any warning signs that pop up along the way.

REPOST: Are REOs in Vogue Again?

REO_bank_repo_signOnce a stain on housing, REOs and short sales are a reminder of the legacy of the housing downturn. Investors, seeking discount prices, transformed what was once undesirable into fashion-forward, instant cash flow in key markets. While in other markets, distressed inventory still hinders overall prices from getting a leg-up.

With stocks plummeting last week and the global economic impact on our domestic economy and housing markets still unknown, distressed sales continue to be a critical market indicator. Just like in the fashion industry’s iconic September issue, learn to be a trendsetter—from stateside to Puerto Rico—by letting distressed market measures give you full perspective of the market.

Nationwide, quarterly distressed saturation (or the percentage of REOs and short sales to all sales) increased by 0.7 percent in August 2015, from 15.4 percent to 16.1 percent. While we are closer to historic, pre-2008 rates of distressed saturation which hovered around 4 percent of all sales, increases in distressed activity leading into winter could shift momentum towards peak distressed saturation levels of 40 percent. Typically, we see distressed saturation fluctuate with the seasons and increase in the winter season.

“Distressed saturation continues to be a challenge we face in today’s housing market,” says Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital®. “In fact, today’s ‘traditional’ housing market continues to be defined by distressed saturation levels. In Act One, at the start of the downturn, distressed properties were an albatross around housing’s neck. In Act Two, between 2011 and 2013, investors stepped in, buying, rehabbing and selling or renting distressed properties, which gave way to higher demand and rising prices.

“While the overall effect of higher rates of distressed saturation in Act Three of the recovery is unknown, one thing is clear; when it comes to housing, REOs and short sales are not a passing fad. Last week’s crash leaves the economy and housing tenuous at best, especially as we move from the promise of the summer buying season. The last third of the year will reveal whether the housing recovery can withstand broader global volatility. If investors pull out, oversupply of distressed inventory could bring us back to Act One. Or, a renewed source of distressed inventory could be all the rage, reviving demand from investors and traditional homebuyers, alike, in an inventory-starved market. With the summer buying season coming to a close, the maturing housing recovery has encountered an uncertain global and domestic economic picture. The driving factor will be whether traditional consumers will be willing, and more importantly, be able to participate. As the global and domestic economic outlook unravels, we will continue reporting on its effect on housing.”

The West’s and Midwest’s distressed saturation rates have exceeded that of the nation, increasing by 0.9 percent and 1.2 percent, respectively, while we observe the largest gains in distressed saturation in the South, with a 1.5 percent increase from 18.6 percent to 20.1 percent. The Northeast was the only region to experience a decrease in distressed saturation, where rates dipped 0.3 percent from 14.3 percent to 14.0 percent.

For the past three years, distressed saturation in the San Juan (Puerto Rico) MSA has been steadily increasing, having grown eight percentage points, from a reading of 9 percent in 2013 to 17 percent today. This trend is unusual in the current housing environment. Over the same three year period, nearly all of the major metro markets have experienced steady declines in distressed saturation. In terms of pricing, this near doubling of the saturation rate has corresponded with a rapid change in price declines from a yearly loss of 1.5 percent in 2013 to a yearly rate of decline of 10.2 percent.

The Midwest is the only region to see quarterly gains in price appreciation, nearly doubling from 0.4 percent to 0.7 percent. The region still lags behind the West, which experienced declining gains of 0.1 percentage points, yet still continues to report highest quarterly growth at 1.2 percent. The South and Northeast appreciation rates remained stagnant, reporting 0.8 percent and 0.2 percent growth over the quarter.

Regional performance is echoed at the MSA-level. The San Jose, CA and Detroit, MI MSAs both report healthy growth rates of 2.1 percent. While the South did not see accelerated price gains, continued growth through August could be a sign that this region is on firm footing moving forward. Seven of the 15 top performing markets are located in the South, while four of the lowest performing MSAs are in the Northeast.

For more information, visit www.clearcapital.com.

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