Recent Real Estate News

West Coast drives home prices to new highs

http://www.usnews.com/news/articles/2016-12-27/west-coast-drives-home-prices-to-new-highs

Foreign investors seeking “plain vanilla” real estate

http://www.wsj.com/articles/plain-vanilla-real-estate-gains-clout-with-chinese-1482848314

5 trends that will shape the housing market in 2017

http://fortune.com/2016/12/29/real-estate-trends-2017-2/

Happy Investing!

Impact of AirBnB

Want to purchase a Non-Owner Occupied investment property to use for Airbnb or VRBO?

Keep in mind that you will have to qualify for the purchase without using the income that this may generate.

 And be aware of backlash from the hotel, hospitality and multifamily sectors regarding the explosive popularity of short-term rentals through Airbnb.

 From GlobeStreet.com:

CHICAGO—The war of words between traditional hotel operators and the Airbnb site has begun to escalate. Airbnb has become a popular option for travelers seeking short-term rental housing, but the American Hotel & Lodging Association claims that the service increasingly provides cover for commercial operators using it to avoid paying taxes and securing the proper licenses. Read more here.

It looks like Airbnb is here to stay, but expect a backlash of regulations from disgruntled hoteliers and apartment owners.

This article published after I wrote this blog:
http://www.seattletimes.com/seattle-news/politics/seattle-may-slap-new-rules-on-airbnb-to-ease-rental-crunch/?utm_content=bufferdb314&utm_medium=social&utm_source=facebook.com&utm_campaign=owned_buffer

Happy Investing!

Attracting Millenials

Millennials are generally defined as those born from 1980 or 1981 to 2000. Recent studies by UCLA and the University of Michigan showed an increase in the proportion of students who consider wealth a very important attribute, from 45% for Baby Boomers  to 70% for Gen Xers, and 75% for Millennials. This is not a surprising concern, given that millennials have benefited the least from the economic recovery following the Great Recession, as average incomes for this generation have fallen at twice the general adult population's total drop and are likely to be on a path toward lower incomes for at least another decade.

Some studies predict that Millennials will switch jobs frequently. Newer research shows that Millennials change jobs for the same reasons as other generations — namely, more money and a more innovative work environment. Millennials also have similar career aspirations to other generations, valuing financial security and a diverse workplace just as much as their older colleagues
  
Most millennials prioritize flexibility over money. They care more about engaging work and receiving solid mentorship than many senior leaders are giving them. If they aren't getting it, they leave to find greener pastures -- and in case you haven't been paying attention, big companies like Google are creating very enticing pastures.

High housing prices, the rising cost of higher education, and the relative affluence of the older generation are among the factors driving the trend among millennials to delay some adulthood rites of passage such as marriage or buying a house.

Census figures show that the share of 18-34 year-olds who are married is 30%, down from 47% in 1983. Just 29% of them live with children, compared to 39% three decades ago. Since more people in the age range are single and childless, Trulia looked at the number of homeowners who are also identified as the head of their households. After adjusting for these population shifts, the share of people under 35 years old who own homes is the same as it was for 1997.

Standard Census data, which aren't adjusted for these factors, show that the ownership rate among those younger than 35 has declined to 36.2% from 38.6% in 1997. Slightly less than 65 percent of the country owns a home, down from a peak of 69% in the middle of 2006.

Principally, jobs and student debt have impacted millennials' ability to purchase homes. By contrast, Trulia found that homeownership really lags among a different age bracket: the middle-aged. After adjusting for demographic changes, it found that their ownership rate was the lowest since 1976, a clear casualty of the housing bust.

So can we expect homeownership to pick up again as millennials marry and start families? or is this a new "normal" for the housing market?

What do you think, dear reader?

Happy Investing!

Where to Invest Now?

Successful investors need to be able to make an educated prediction about which way markets and economies are moving.

Champion hockey player Wayne Gretzky explained the secret to his success like this:  “I skate to where the puck is going, not where it is.”  The same advice applies well to real estate investing.  If you are willing to make a prediction where the economy is going and you are willing to take action on what you know, you can make a lot of money.

The economy and the real estate market have trends.   There are times to buy real estate,  times to sell, and times to just hold on.  Real estate prices move up slowly and come down quickly.   Fortunately, real estate trends are easy to spot and make a prediction on if you know what to look for.  Unfortunately, by the time most people recognize the trend, it is too late for them to get into the game.

The real estate market is trending and I am going to spell things out for you in the simplest terms I can.  

Here is my best prediction and action steps to making money in real estate over the next ten years:

PREDICTION 1: Inflation will cause prices to rise substantially as the dollar devalues. This issue has finally made its way into the mainstream media as retailers are raising the cost of food, fuel, and finished goods.

ACTION STEP 1: Acquire income producing real estate with as much fixed interest rate debt as possible.  Do not skim over this statement too quickly.  Having both debt AND income to service the debt are vitally important.  The income will inflate with the currency and the debt will devalue with the currency.   As an investor, you need to prepare to win from inflation by having both of these financial tools in your arsenal (fixed rate debt and rental income).

PREDICTION 2: Invest in cities and markets that will dominate job growth and population growth in the United States. Texas is certainly a popular state in which to invest. Personally, I am bullish on Seattle (see previous post in my blog).

ACTION STEP 2: Acquire income producing real estate near major metros within a short drive of major job centers.  The scarcity of land in the major metros is an emerging trend for you to capitalize on.  People need jobs and houses.   You should own houses near major job centers so there is a constant demand for your housing.  A major job center will have at least 1,000 employees and will create a good or service that imports revenue from as far away as possible (e.g. a business with a local and world wide customer is more economically stable than a business who only has a local customer).   

PREDICTION 3:  Hispanics will dominate population growth throughout the US and especially in Texas.  The Hispanic market is the fastest growing segment of the middle class. 

ACTION STEP 3: Invest in real estate and businesses that would appeal to a middle class Hispanic market.  Make sure your property managers speak Spanish and advertise in Hispanic media.  Hispanic families often have more children, have multiple generations and families that occupy a single home.  Buy properties with several bedrooms, but modest square footage to be price competitive. Real estate prices go up when more people compete for a limited supply of inventory.  Own the types of property that the maximum number of people would like to live in – single family houses with 3 or 4 bedrooms and 2 bathrooms.   A master bedroom is essential.  Game rooms, lofts, and media rooms are a non-recoupable expenditure to a cashflow investor.

PREDICTION 4: Domestic military spending will contract.  As the US becomes further entrenched in foreign wars, the US will spend less money keeping troops inside its borders.

ACTION STEP 4: Do not invest in military towns.   If a military base represents more than 10% of a local economy, put your dollars somewhere else.  It isn’t worth the economic risk if the military downsizes or eliminates the military base that is the lifeblood of your town.

PREDICTION 5: Fewer people will be attending college and more people will return to manufacturing.  The US economy is globalizing and many white collar jobs are headed overseas.  As the dollar devalues, it will be more competitive for the United States to manufacture things and export them to emerging markets in Asia and South America.

ACTION STEP 5: Invest in areas of the country where there is a tremendous amount of manufacturing infrastructure already in place. Large manufacturing centers need transportation logistics such as heavy rail, trucking centers, highways, and cargo airports. Manufacturing centers also need a very cost effective workforce and real estate prices. 

PREDICTION 6: States with a favorable business climate and a low income tax burden will enjoy the most prosperous economies.  Formerly prosperous and business unfriendly states such as California will raise taxes, lower wages, and default on government pensions to cover their economic shortfall.  In areas where big business feels constrained by taxation, labor relations, and environmental regulations, expect declines in government services, poor quality public education, and weak transportation services as a result of unparalleled shortfalls in revenue and a declining business environment.

ACTION STEP 6: Examine the financial well being of any state, county, and city in which you decide to invest.   Live where you want to live, but invest in areas where local and state governments embrace responsible business growth.

PREDICTION 7: Interest rates will rise as the US government receives foreign political pressure to stop buying its own bonds and mortgage backed securities.  The stock market will see unexplained and radical fluctuations in value as the government manipulates stock prices through covert buying and selling of public traded stocks.

ACTION STEP 7: Do not invest your IRA in the publicly traded stock market.  Cash investors can get in and out of the stock market when times are turbulent while IRA funds are often “stuck” in the market with no place to go.  Evaluate options for investing your IRA in private placement investments, businesses, notes, or the indirect ownership of real estate.  I do not recommend buying real estate directly inside your IRA, but there are great strategies for getting your IRA funds into the indirect ownership of real estate. There is no one size fits all investment / financial strategy. 

To your success! Happy Investing!

With thanks for his contributions to this blog to :

David Campbell
Professional Investor, Developer, and Financial Mentor

David@HasslefreeCashflowInvesting.com

Zillow's Real Estate Forecast

Zillow CEO Spencer Rascoff was interviewed yesterday on Bloomberg TV. His remarks covered:

The importance of mobile applications in the sale of real estate today, which is fueling huge growth in profits for Zillow;

The increase in premier agents advertising on Zillow (I am one of those 53,000 agents around the country);

The introduction of Zestimate forecasts which show what houses will be worth in twelve months;

The rate of increase in housing prices and trends for the future;

The booming luxury home market, and the importance of foreign buyers in this market.

Please see the link to the Spencer Rascoff interview here:


Happy Investing!

Housing Market Predictions

Barring any economic crises, the housing market should continue to normalize. Here are 5 ways that Jed Kolko, Chief Economist for Trulia, expects the 2014 housing market to be different from 2013:

1. Housing Affordability Worsens.
2. The Home-Buying Process Gets Less Frenzied.
3. Repeat Buyers Take Center Stage.
4. How Much Prices Slow Matters Less Than Why And Where. 
5. Rental Action Swings Back Toward Urban Apartments. 

For the complete article and a free download, please see:
http://pro.truliablog.com/tools-trends/free-download-5-housing-market-predictions-you-need-to-know/?ecampaign=tnews&eurl=pro.truliablog.com%2Ftools-trends%2Ffree-download-5-housing-market-predictions-you-need-to-know%2F 

Happy Investing!