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US home prices rise 6.3%

Based on CoreLogic, a real estate research firm, real estate prices across America rose 6.3% year over year. This is the largest increase since June 2006. Mark Fleming, chief economist at CoreLogic said: "The housing recovery that started earlier in 2012 continues to gain momentum."
Of the top 100 Core-Based Statistical Areas measured by population, 17 showed year-over-year declines in October, four fewer than in September.

Source: Reuters, December 2012

Pending US home sales surge

Pending home sales (measured by contracts that will be signed to buy residential houses) is up 13.2% compared to last year. Pending home sales is a forward-looking indicator for transactions that will happen one to two months in future.
Lawrence Yun, Chief Economist for National Association of Realtor said: “We’ve had very good housing affordability conditions for quite some time, but we’re seeing more impact now from steady job creation and rising consumer confidence about home buying now that home prices have clearly turned positive"
Pending home sales are now at the highest level since March of 2007 and have risen, on a year-over-year basis, for 18 consecutive months. The sales activity, however, varies from region to region.
The Northeast saw a 0.1 percent drop in sales month-to-month due to the Hurricane Sandy.
The West had only 0.9 percent increase in pending home sales from a year ago. The West is suffering from a lack of supply, as investors have been searching for a decreasing inventory of distressed properties.
Pending home sales surged in the Midwest - up 15.6 percent month-to-month and up 20 percent from a year ago.
Sales in the South were up 17.4 percent from a year ago.
Real estate agents indicate that while this housing recovery seems to be gaining momentum, changes to the mortgage interest deduction, as well as other potential hits to the economy from the so-called “fiscal cliff,” could derail the momentum.

Source: CNBC, November 29 2012

Overall US Home Price Index Improves

Overall, the US real estate market continues to improve. As of October 2012, year-on-year prices are up 6.3%. All but fives the states have experienced year-over-year price increases. This is based on a report prepared by CoreLogic, a provider of real estate information and analytics.
“We are seeing an ongoing strengthening of the residential housing market,” said Anand Nallathambi, CEO of CoreLogic. “Reduced inventories and improving buyer demand are contributing to stability and growth in home prices which is essential to the long term health of the housing market and the broader economy.”

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The following is an overview of the price trends across different states in the USA (as of October 2012) (data includes distressed sales)
The states with the highest home price appreciation were: Arizona (+21.3 percent), Hawaii (+13.2 percent), Idaho (+12.4 percent), Nevada (+12.4 percent) and North Dakota (+10.4 percent).
The states with the worst price depreciation were: Illinois (-2.7 percent), Delaware (-2.7 percent), Rhode Island (-0.6 percent), New Jersey (-0.6 percent) and Alabama (-0.3 percent).

The research also evaluated the price performance across all the states from the peak of the real estate market to the current price level. The following states noticed the largest peak-to-current decline of prices: Nevada (-53.5 percent), Florida (-44.5 percent), Arizona (-40.2 percent), California (-36.6 percent) and Michigan (-35.3 percent).

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Source: CoreLogic

The top US real estate markets for foreign buyers

Cash-rich foreign buyers are continuing to take advantage of the low America's real estate prices and are buying a large number of US homes. They consider US real estate a good investment and see the US as a safe haven for some of their assets. Other reasons include housing for their children who will go to study in the USA, vacation or retirement. Lastly, foreigners often buy US homes in conjunction with buying a US business. American legislation allows anyone who invests 1MM USD in a company and creates 10 jobs could qualify for an EB-5 visa which could result in a greencard.
NAR indicates the following states in the US as particularly liked by foreign buyers: Arizona, Texas, California and Florida.

Arizona

Canadians are the most prominent among the foreigners buying property in Arizona. The reason is that Arizona has a mild climate which allows Canadians to get away from their cold winters for a few months per year.

Texas

Mexicans are the driving forces behind foreigners buying in Texas. Cities such as Houston and San Antonio are preferred.

California

Foreign buyers from Australia, China, South Korea, Japan and India are buying a significant amount of properties in California. They are interested in the good climate as well as the relatively lower prices compared to their home country. Neighborhoods such as Beverly Hills, Bel Air and Pebble Beach are well preferred but also Alhambra, Pasadena, San Francisco are in high demand.

Florida

Foreigner are taking up 26% of all real estate transactions in Florida. Most of them are coming from Latin America and Europe. The reasons for their interest are the climate, close proximity to their home country and the stability of America. Cities that are among their favorites are the Gulf Coast's big cities, Miami and Sarasota.

Source: The Street.com Nov 7 2012

Investing In the Sun, Sand and Surf – Long Term Security

There are some locales where properties, no matter how the real estate industry is performing, are always going to be popular hotspots. Properties in Florida – especially along the waterfront – are always in demand. With Florida being one of the hardest hit markets (along with Michigan) during the recent real estate market bust, many people are surprised to know that these days things are looking up for the region.

Just a few weeks ago there was an inaccurate report in the US media, alleging that prices in Florida have jumped up as much as 14%. This inaccuracy was due to the misconception of overall home values going up based on the influx of sales in one specific market segment – the high-end properties. The spike in high-end sales resulted in the perception that housing values also climbed.

With almost 1,200 miles of coastline, nearly 2,00 miles of tidal shoreline, 660+ miles of beaches plus over 11,000 miles of rivers, streams and waterways – Florida is a luxury property haven. For those choosing to make the state their primary residence the climate offers year-round mild temperatures and a lot in terms of amenities, attractions and things to do. For investors that want to avail the fantastic waterfront property buying opportunities, there are plenty of ways to get a good return on investment. Since the climate is so pleasant all months of the year, many property owners offer the home on rent. Peak months being June, July and August – oftentimes rental income received from these three months can carry a property through until the following spring.

Currently, prices in Florida remain very low. Though sales in the upper-end markets have recently shot up, limited inventory presents an opportunity for great deals during negotiations with sellers of the relatively few properties that are listed for sale. Condominiums and gated community homes are still experiencing a situation of oversupply, an ideal situation for the international investor since sellers are competing for buyers in the current soft market. Vacant land lots are also a good investment opportunity as their prices have seen a slight decline from last year as compared to this year. The only market where a property price increase is being seen is with the lower priced single-family home segment, a market not particularly attractive to foreign investors in the first place.

At the end of the day, property values in popular markets tend to increase in value every ten years. With current prices as low as they have been, when the increases begin to occur with the Florida market – anyone who has smartly invested in such properties will enjoy a huge return on their investment.

Forecasting the US real Estate market

According to Urban Land Institute, almost every area of the US real-estate sector will show improvement in the coming year, but a slow economic recovery marked by limited job and income growth will continue to weigh on the sector.

The Urban Land Institute’s Emerging Trends forecast is an annual survey of some 900 of the group’s 30,000 members. The report, which covers the US residential, commercial and industrial real estate markets, makes forecasts for the next 12 months. Some of the key predictions are:

• Vacancies will decrease in the office, industrial and retail sectors (due to limited supply)
• Demand for rental housing will remain strong despite increased construction of multifamily buildings.
• The housing market will continue to improve, even in markets like Las Vegas and Southern California.
• Real estate developers will remain cautious in starting new developments

Source: Urban Land Institute

Buying real estate in New York at the waterfront

For decades, buying a property located at the waterfront in New York City has been considered an icon of exclusivity. Typically, real estate that is in close proximity of water was being sold at higher prices than properties located more inland. After the devastating effect of storm Sandy, the question is arising whether this will change

Although real estate experts indicate that real estate values are unlikely to suffer in the long term, it is possible that new regulations and expectations of buyers could affect how housing along the water is built and sold.
Despite the destruction caused by the storm, real estate experts agree that waterfront properties will continue to retain its allure.
Dottie Herman, chief executive of the real estate brokerage Prudential Douglas Elliman said in a recent interview: “If you love living on the water, and you’re willing to take the risk, waterfront properties always go for a higher premium. Those who buy on the water know the risks ahead of time.”
Jonathan J. Miller, the president of the Miller Samuel appraisal firm agreed and said: “there may be a lag or delay in that market, but I am extremely skeptical that once this crisis is past there is going to be some sort of structural impact to values. I’m always struck by how quickly we forget — the collective memory, whether it’s politics or real estate or anything else. When people are looking at property on the water with beautiful views, all that gets rationalized away. Even after the devastating effects of the 9/11 terrorist attacks, Lower Manhattan is one of the best-performing markets a decade later."
However, some real estate brokers reported that some buyers were expressing concerns about the waterfront properties. They are also anticipating new questions from buyers regarding waterfront property.

Source: New York Times, Nov 2 2012

Miami leads US real estate recovery

Based on the latest data provided by Miami Association of Realtors, Miami is experiencing a significant increase in real estate prices. Prices have been increasing for 14 consecutive months for a total of 28%. The average sales price for a condo in Miami- is USD 283,497, and USD 408,810 for a single-family house. Overseas investors and Americans who are planning to migrate are the two reasons for this price increase.

New York City construction numbers are at historic lows indicating a potential opportunity for real estate investors

The number of construction permits for new housing in New York that have been issued so far is one of the lowest number recorded. During the first two years in the current decade (2010 and 2011), New York City issued only 15,663 new housing permits. At this rate, this decade will only create 78,315 new housing units; which would mean the lowest number of housing since the 1990s.

Below are the details of permits issued over the last decades::
• In the 1960’s, NYC issued permits for 368,700 new housing units.
• From the 1970s through the 1990s, permits for new housing units declined steadily and fell to a very low of 70,204 units in the 1990s.
• From 2000 until 2009, New York City issued a significant increase in housing permits; namely a total of 231,228 permits.
• Based on the first 2 years of this decade (2010 and 2011), the number of new housing units is estimated to be 78,315 in this decade

While we cannot forecast accurately the number of permits that will be issued in the remainder of this decade, it is unlikely that developers will have access to sufficient capital soon to start a construction boom. However, there are some factors that could produce a more favorable future for housing construction. New York continues to see its population grow and the recent pick up in sales data indicates that New York is and remains a safe and attractive investment for high-income households.. Also, the steady increase in rent for residential units and the lack of inventory could be a catalyst for new housing construction.

Q3 Manhattan report – real estate sales and prices are flat

Based on the Q3 Manhattan real estate reports, sales in Manhattan are flat and prices are stable.

Inventory is at its lowest level since 2005 with approximately 7000 listings. Based on Corcoran, a large real estate brokerage firm in New York, resale condo prices increased 1% year over year while the median price of new condo developments increased 18%. (Foreign investors typically purchase condo apartments - and not Coop apartments which require extensive applications, background checks and Board approvals)

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