Yajnesh Rai

3 Smart Strategies for Investors | Realtor Magazine

Investors can see big returns on real estate, but the most successful tend to have a strong understanding of how to evaluate their options before purchasing. Forbes.com recently highlighted some winning strategies for profitable real estate investing:

1. Focus on potential income, not personal like and dislikes. Purchasing an investment property is different than buying residential real estate. Investments need to center on the numbers—the combination of the purchase price, estimated renovation costs, expected rental income, and market conditions that can support a purchase decision.
2. Don’t buy on future appreciation. You can’t trust that rents and home values in your area will always increase over time. Buy based on current returns, not what you think the future may hold, according to Forbes.com. The best deals are those that can make you money from day one—and where long-term appreciation just happens to be an added bonus.
3. Set aside extra funds. Several smaller ongoing operating expenses will be inevitable. Investors will want to budget for those, as well as possible bigger items, such as a new roof or HVAC unit. These projects can cost thousands or tens of thousands of dollars. Set money aside on a regular basis to cover these expenses as they arise. Also, investors will want to put aside extra money in case there are any vacancies in their rentals.

Most Markets Near Peak; No Signs of Bubble | Realtor Magazine

Home prices in most U.S. housing markets are reaching their peak, but there’s no need to fear a repeat housing bust, according to a new joint analysis by Florida Atlantic University and Florida International University. Throughout the majority of the country, home prices have been rising steadily since 2012, and there are signs the runup may be starting to slow.

“Housing markets are slowing, suggesting that we are nearing a peak in housing markets around the U.S.,” says Ken Johnson, a real estate economist at Florida Atlantic University. “But this is good news, as we are pulling back from the brink, unlike we did in 2007.”

Researchers at the universities created the Beracha, Hardin & Johnson Buy vs. Rent Index, which shows that out of 23 metros areas studied, 13 are slightly to moderately in “buy” territory. That means owning a home is more favorable than renting for the majority of residents in that area. On the other hand, 10 metro areas were slightly to moderately in “rent” territory.

“Our data indicates that prices are above their 40-year trend but not significantly so, as they were in 2007,” says Eli Beracha, co-creator of the index and associate professor in the Hollo School of Real Estate at FIU. “Rather than a crash, I anticipate slower growth in prices accompanied by longer marketing times for sellers and increasing inventories, which should bring prices back in conjunction with their 40-year trend.”

Household Net Worth Reaches Record High | Realtor Magazine

Americans are feeling richer. Household net worth neared $100 trillion in the final quarter of last year, falling into record territory, according to new data released by the Federal Reserve on Thursday. Rising stock markets and property prices were attributed to the jolt in the fourth quarter. (Household net worth is the value of all of a consumer’s assets, like stocks and real estate, minus any liabilities like mortgage and credit card debt.)

Household net worth increased more than $2 trillion last quarter to a record $98.7 trillion in the final three months of last year, according to the report. Households in the U.S. saw their net worth increase to nearly seven times their disposable personal income in 2017.

The impact real estate has had on that increase can’t be understated, economists say. The value of households’ real estate rose $511.2 billion, which reflects recent run-ups in home prices.

But the rate at which consumers are saving is concerning, JPMorgan Chase Economist Michael Feroli told The Wall Street Journal. The saving rate was 3.74 percent in 2017, down from 7.19 percent in 2015.

Report: Average salary needed to buy home in San Jose is over

 

 

SAN FRANCISCO (KRON) – A new report shows that San Jose and San Francisco have the most expensive homes in the country.

According to the report, the average salary needed to buy a home in San Jose is more than $235,000 a year.
 
The average home price is more than $1.2 million.
 
Things are a little bit better in San Francisco.
 
The average salary needed to by a house there is just over $170,000 a year.
 
And the average home price is just over $900,000.
 
In fact, the most expensive cities to buy a house are all in California.

Mortgage Rates Tick Up for 9th Straight Week | Realtor Magazine

 

Borrowers were once again faced with rising mortgage rates this week. The 30-year fixed-rate mortgage continues to be at its highest average in four years.

“The 10-year Treasury yield has been bouncing around in a narrow 15 basis point range for the last month,” explains Len Kiefer, Freddie Mac’s chief economist. “While the yield on the 10-year Treasury is currently below the high of 2.95 percent reached two weeks ago, mortgage rates are up for the ninth consecutive week. The U.S. weekly average 30-year fixed mortgage rate rose 3 basis points to 4.46 percent in this week’s survey, its highest level since January 2014.”

Lawrence Yun commented this morning on the likely impact of the surprising job numbers on mortgages.

“The strong job growth assures at least three interest rate hikes by the Federal Reserve in 2018. Because of the low unemployment rate, further normalization in monetary policy should be expected in 2019 as well, meaning another three or four rate hikes next year. Mortgage rates will therefore rise and rise—that in itself hurts housing affordability,” Yun said. “But factors that can help with affordability are more income to households (possibly a second income earner getting a job) and if home prices can finally moderate. For slower home price growth, more home construction is needed. Job openings in the construction industry remain at historic highs. It is now a matter of providing necessary skills to go into the industry.”

Freddie Mac reports the following national averages with mortgage rates for the week ending March 8:

• 30-year fixed-rate mortgages: averaged 4.46 percent, with an average 0.5 point, increasing from last week’s 4.43 percent average. Last year at this time, 30-year rates averaged 4.21 percent.
• 15-year fixed-rate mortgages: averaged 3.94 percent, with an average 0.5 point, increasing from last week’s 3.90 percent average. A year ago, 15-year rates averaged 3.42 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.63 percent, with an average 0.4 point, rising from last week’s 3.62 percent average. A year ago, 5-year ARMs averaged 3.23 percent.

The Necessary Income For Buying in 15 Cities | Realtor Magazine

As home prices rise, more buyers are finding they need to earn more to break into some housing markets. SmartAsset, a personal finance resource, recently analyzed the salary residents need to buy a median-priced home in 15 of the nation’s largest cities.

In some cities, buyers may need to bring more than just savings from a paycheck. For example, in three big cities—San Francisco, San Jose, Calif., and New York—buyers need to make more than $110,000 to afford a home (including the mortgage, property taxes, and homeowners insurance), which is nearly double the nation’s median household income of $57,617.

However, owning a home is much more affordable in other cities. Researchers found that in 10 of the 15 cities analyzed, the median household income was sufficient enough to afford the median-priced home. For example, in Indianapolis, after making a 20 percent down payment on a median-priced home, residents only need an annual income of $21,955 to afford their monthly home payments.

 

Home Features First-Time Buyers Choose | Realtor Magazine

A living room is considered essential for first-time home buyers, according to a poll of home shoppers conducted by the National Association of Home Builders. Sixty-one percent called the living room a must-have in the home they plan to buy. A laundry room and dining room also ranked high on the must-have list for first-time buyers.

The following are home features that first-time buyers call essential, ranked in order of what they deemed as most important:

1. Living room
2. Laundry room
3. Dining room
4. Garage storage
5. Walk-in closet in master bedroom
6. Shower stall/tub in master bath
7. Front porch
8. Great room
9. 2-car garage
10. Kitchen double sink

Foreign Buyers Coming to U.S. Are Changing | Realtor Magazine

Residents from other countries are increasingly eyeing U.S. real estate as a good investment, and they’re making up a significant portion of buyers in some markets. But who is coming is changing.

Chinese buyers have been the biggest portion, spending the most of any foreign group on U.S. real estate. They spent $31.7 billion on residential real estate in the U.S. between April 2016 and March 2017, according to the National Association of REALTORS®. But mainland China has since tightened restrictions on how much capital residents can spend outside the country. That has caused some markets to see a drastic decrease of Chinese buyers.

“You turn off one faucet, and another one opens,” says Jonathan Genton, the founding partner and CEO of the Genton Property Group.

Buyers from other countries have been coming in to fill the gap. For example, Genton he’s seeing more buyers coming in from Taiwan, Vietnam, and Thailand and more investors from Dubai, Kuwait, Georgia, and Turkey.

“Everyone recognizes the stability and security of the U.S. market more than ever before,” Genton says. He adds that up to 70 percent of a 59-unit Four Seasons Private Residences project in Beverly Hills likely will be foreigners.

Mauricio Umansky, CEO and founder of The Agency, says he’s been seeing more buyers from Great Britain in the luxury L.A. market. Umansky says that foreign buyers purchased about 10 of the 35 homes that The Agency sold in the Southern California market for more than $20 million in 2017.

“At any given point, who the front runners are changes,” says Karmely. For example, in the 1980s, Japanese buyers were accounting for some of the biggest portion of real estate purchases from foreign buyers in the U.S. In 2017, they made up only 2 percent of foreign property purchases.

As the foreign buyer group changes, Karmely says it’s important to note how U.S.-based real estate still continues to expand and accelerate among international buyers. Their searches are broadening too. For example, in Miami, foreign buyers are looking beyond just the beach and downtown locales. “This change has been transformation,” Karmely says.

“Foreign buyers make up a significant presence in the U.S. luxury market that will only increase as generations come here to study and geopolitical and safety factors continue to play a role,” Shahab Karmely, the CEO of KAR Properties, a New York-based development firm, told Mansion Global.

Which Markets Were Hottest in February | Realtor Magazine

Spring may have already sprung in the housing market. List prices have begun their traditional spring climb, reaching the median high from last summer of $275,000, realtor.com® reports.

“Rapid mortgage rate jumps, and confirmation of a brighter economic outlook have inflated the pool of home buyers early in the year, putting an extra squeeze on the mid- and entry-level market,” says Javier Vivas, director of economic research at realtor.com®.

The market is showing signs of being ultracompetitive this spring. Properties are selling 8 percent faster than this time last year, spending a median of 83 days on the market, according to realtor.com®.

San Francisco once again holds onto its top spot in February on realtor.com®’s latest hot market list. Realtor.com® bases its rankings on where homes are selling the fastest and getting the most property views at its site.

California markets continue to dominate in the rankings, accounting for 13 of the top 20 markets. But Midland, Texas, notably jumped from its previous number five spot on the list to number two in February.

 

The following cities made it on realtor.com®’s hot list for February:

1. San Francisco
2. Midland, Texas
3. Vallejo, Calif.
4. San Jose, Calif.
5. Sacramento, Calif.
6. Denver
7. Santa Rosa, Calif.
8. Colorado Springs, Colo.
9. San Diego
10. Stockton, Calif.
11. Santa Cruz, Calif.
12. Dallas
13. Chico, Calif.
14. Oxnard, Calif.
15. Modesto, Calif.
16. Columbus, Ohio
17. Fresno, Calif.
18. Spokane, Wash.
19. Fort Wayne, Ind.
20. Los Angeles

Factors Behind Property Tax Surges | Realtor Magazine

Homeowners may question why their property taxes keep going up, and some owners may be shocked by just how much. Property taxes are crucial funds for schools, libraries, police and fire departments, roads and parks, and more within a community. There are several factors that could cause property taxes to go up; home renovations and revaluations are the two most common reasons, according to an article at realtor.com®.

If homeowners renovate the home and add to its worth, they’ll likely see their property taxes increase. Converting a basement into livable space or a walk-up attic into a new room can all trigger an automatic reassessment, says Rita Patriarca, a real estate professional with RE/MAX Encore in Wilmington, Mass.

A revaluation can also prompt higher property taxes. Communities will periodically reevaluate properties to figure out the current assessed value of homes. These are conducted to ensure the tax burden is spread equitably and accurately. Assessors will factor in a home’s location, size, type, any changes since the last evaluation, as well as other variables like home sales and valuations in the neighborhood and changes in the economy. A revaluation does not mean your taxes will always go up, but it certainly can be one reason behind a rising bill.

Other reasons for an uptick in property taxes may involve new schools. The construction of a new school can come with a high price tag for a community, and an area may increase taxes in order to help pay for school projects.

Homeowners who believe their property taxes are too high can appeal their home’s property assessment.

“Most municipalities have a process to contest your property tax bill,” financial planner David Rae, president and founder of DRM Wealth Management in Los Angeles, told realtor.com®. “I’ve contested the value of my home in the past, and the assessor shaved $150,000 off the taxable value of the home. Definitely worth the effort.”

It’s important for homeowners to ensure property records reflect their home’s amenities accurately, such as the number of bedrooms and bathrooms. For any mistakes, notify the assessor’s office.