Rental Property Investment Resources

January home prices in Chicago fell for the sixth month in a row, approaching lows reached in the depths of the recession in 2009

The Chicago area fared worse than the national average, with the local index reaching its lowest level since 2001. The index for Chicago-area single-family home prices fell 7.5 percent from the year-ago period, and dropped 1.8 percent in January from December.

The Standard & Poor’s/Case-Shiller home price index covering 20 major markets fell 3.1 percent year-over-year, and was down 1 percent compared with December 2010, according to a report released today.

“These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery,” said David M. Blitzer, chairman of the S.& P. index committee in a statement.

Chicago was one of 11 metropolitan areas to hit a new low in January from their market peaks in 2006 and 2007. The Chicago-area price index has fallen 31 percent since its peak in September 2006.

After rebounding nearly 7 percent from its recessionary low, the national price index has fallen more than 5 percent since July and is only 1.1 percent higher than the bottom set in April 2009. As of January, average home prices across the U. S. returned to 2003 levels, the report said.
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Source: http://chicagobreakingbusiness.com/2011/03/january-home-prices-down-3-1-near-09-lows.html

Technorati Tags: real estate, real estate investing, chicago real estate, chicago housing market, chicago housing trends

The Census Bureau revealed that 18% — or 1.6 million — of Florida’s homes are sitting vacant

This vacancy factor is a rise of more than 63% over the past 10 years. Wow!

Having this amount of oversupply on the market will keep home prices depressed and slow any recovery.

How times have changed

During the housing boom, Florida was among the hottest real estate markets in the nation. Homes were snapped up by the state’s growing population as well as hordes of investors confident that prices would continue to soar.

“You’d drive through downtown Miami and see 30 or 40 cranes sticking up in the air,” said Michael Larson, a housing market analyst for Weiss Research.

The bust brought an end to that. Development ground to a halt. Retirees stopped relocating. And prices started falling and vacancies rising.

“Housing went from being the preeminent investment of choice to toxic waste,” added Richard DeKaser, an economist with the Parthenon Group.

The vacancy problem is more dire in Florida than in any other bubble market

• # In California, only 8% of units were vacant
• # In Nevada, the state with the nation’s highest foreclosure rate, had about 14% sitting empty.
• # Arizona had a vacancy rate of about 16%.

Florida’s housing recovery will take years

• # In Florida, the worst-hit county is Collier — home of Naples — with a whopping 32% of homes empty.
• # In Sarasota County, 23% of the housing stock sits vacant.
• # Lee County (Cape Coral) has a 30% vacancy rate.
• # Miami-Dade County has a vacancy rate of about 12%.

It will take about eight years just to put the vacancy numbers back into the single digits

The housing recovery will take years, perhaps many years, to complete, according to Ingo Winzer, a housing market analyst and founder of Local Market Monitor.

The inventory overhang has sent home prices plunging. The median price for homes sold in January was just $122,000, according to the Florida Association of Realtors. That was down 7% from 12 months earlier and less than half the price at the peak of the market.

Winzer thinks prices in Florida will drop even more, another 5% in 2011 and 3% in 2012. “Even after that, they’re not going to rebound, they’ll just sit on the bottom,” he said.

Celia Chen, a housing market analyst for Moody’s Analytics, is also downbeat in her forecasts for Florida. Not only will prices fall another 11%, she said, but the bottom won’t hit until mid-2012, about a year later than the nation as a whole. Some metro areas won’t get back to their pre-recession peaks until long after the present owners are old and gray.

She doesn’t expect Naples, for example, to come all the way back until the late 2030s. Other Florida metro areas with a 20-year wait or longer include Punta Gorda, Palm Bay and North Port.

See just how cheap it is to buy a Florida condo right now!

My 2-cents

If you decide you want to invest in single-family homes/condos, while they are bargain-priced, you’ll have to have a buy and hold strategy. So buy for the cash-flow. Make sure you’re getting a good cash return from your rental rate minus your expenses (PITI, association fee, maintenance budget, vacancy factor).

If you are buying to owner-occupy, if you can own for the same or lower rental rate, then it may make sense to buy now. However, be prepared for the likelihood that prices will continue to decline.

Another option: Consider investing in multifamily buildings, ie, apartment buildings.
Read the advantages of doing so here
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Source: http://money.cnn.com/2011/03/18/real_estate/florida_vacant_homes

Technorati Tags: florida real estate, florida real estate market, florida housing vacancy, florida real estate, florida real estate market, florida housing vacancy, florida census data, florida rental property investment, florida census data, florida rental property investment

Nashville’s suburb, Rutherford County, saw pop of 44-percent in population

Factors that weigh in
Randy Gustafson, director of the Tennessee State Data Center at the University of Tennessee, attributes the boom to the county’s proximity to the state capital 30 minutes north.

County Mayor Ernest Burgess has another view: “We attribute it to the great quality of life in Rutherford County and the great economic opportunities and the opportunity for people to raise their children and send them to excellent schools.

“You don’t have to go out of the county to shop, to find a great restaurant. People like us because we have all these great amenities and we’re still not a major city.”

He says people are drawn by employment opportunities at places such as the Nissan plant in Smyrna and by the education options offered by Middle Tennessee State University.

Tennessee stats for other cities and communities

Nashville, in the center of such growing suburbs, saw a healthy 10% growth in the past decade, a trend also fueled by a rise in immigrant labor and international refugees.

Memphis, the state’s largest city, saw a 0.5% decline.

Overall, Tennessee’s population grew 11.5% to 6,346,105. “The suburban counties that are like a donut around the big cities in Tennessee, especially Nashville, are the ones that show the most growth,” Gustafson says.

Among other large counties, Shelby grew 3% to 927,644, Knox 13% to 432,226 and Hamilton 9% to 336,463. Gustafson said that growth was powered by people moving inward from other parts of the state and outward from the cities.

There were declines in 117 cities. “A lot of those are really small,” Gustafson says. “Most of them are around 1,000 people or less, and they’re mostly rural areas. In some respect, the decline is due to an aging population that doesn’t have as many children.”

The Volunteer State’s expansion was driven largely by immigrants. Tennessee’s Hispanic population grew faster than any other group — 134% to 290,059 — more than doubling to almost 5% of the population.

Resources

# Tennessee local county, city data
# Interactive map shows your state, county, locality census numbers
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Source: http://www.usatoday.com/news/nation/census/2011-03-17-tennessee-census_N.htm

Technorati Tags: rental property investment, tennessee, tennessee census data, rutherford county, tennessee fastest growing cities

Increased demand for rental housing will drive vacancy factors down to 5% and rental rates up to double digits in hot rental markets by 2012

Rent hikes have averaged less than 1% a year over the past decade, according to Commerce Department statistics, adjusted for inflation. Now, Peggy Alford, president of Rent.com, expects rents to spike 7% or so in each of the next two years — to a national average that will top $800 per month.

In the hottest rental markets, the increases will likely top the 10% mark annually for the next couple of years. In San Diego, Alford anticipates rents will rise more than 31% by 2015. In Seattle rents will climb 29% over that period; and in Boston, they may jump between 25% and 30%.

The driving factors

Now that the recession is easing, many of the young people, who moved back home with Mom and Dad, are ready to find new digs, mostly as renters, not owners. Plus, the foreclosure crisis continues unabated, and the millions losing their homes are looking for new places to live.

Apartment developers many not be able to keep up with this heightened demand, which will force prices upwards, according to Chris Macke, a real estate analyst with CoStar, which tracks multi-family housing trends.

“There will be an envelope of two or three years,” said Macke, “when the rise in demand for rentals will exceed the industry’s ability to meet it.”

Plus, Alford added, “there’s been a shift in the American Dream. We’re learning from our surveys that a huge proportion of people are choosing to rent.”

They’ve experienced the downsides of homeownership — or seen friends and family suffer — and don’t want to take the risks or pay the higher costs of homeownership.

Where homeownership costs are particularly high, there are many more renters than owners. In Manhattan, for example, only about 20% own their homes; in San Francisco, about of third of the population does; in Los Angeles, less than 40%; and in Chicago, about 44%.

One factor that could rein in rent increases

The huge number of foreclosed homes that could hit the market over the next few years could put a lid on rental rates.

In many markets, like Phoenix and Las Vegas, there are neighborhoods filled with recently built, single-family homes going for fire-sale prices. When the cost of owning homes falls well below the costs of renting them, more people will buy.

Read Here: Why an investor should consider multifamily investing
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Source: http://money.cnn.com/2011/03/15/real_estate/rent_rise_housing/index.htm

Technorati Tags: real estate investing, rental markets, hot rental markets, demand for rental housing

While most housing markets in the rest of the country continue to struggle with anemic demand and foreclosures—and sales at many other luxury ski resorts are still sluggish—Aspen prices have been climbing.

The average home price in this mountain town has increased over the past four years, to $6 million in 2010 from $5.4 million in 2006, according to multiple-listings data. The median price for single-family homes is now the highest in the country at $4.6 million, says San Francisco-based Altos Research, surpassing the Hamptons, Beverly Hills and Palm Beach.

Sales of luxury Aspen estates have done well, thanks in part to foreign buyers

Of the 25 real-estate transactions recorded by Pitkin County for the week of Jan. 19 to 25, five were buyers from abroad, including three Australians and people from Turkey and Hong Kong.

So who’s buying?

Russian businessman, Alexander Zanadvorov paid $13M for his estate
Last month, a home in the Maroon Creek neighborhood with an indoor heated swimming pool, basketball court and outdoor hot tub overlooking a waterfall sold for $13 million. The buyer was Russian Alexander Zanadvorov, the 40-year-old owner of Sedmoi Kontinent, a chain of supermarkets.

Turkish executive owns a condo
“Aspen is like a small Manhattan,” says Altunc Kumova, a financial services executive from Istabul, Turkey, who bought a fractional condo at The Little Nell in January. “You can find almost all upscale brands for shopping and restaurants are excellent. Apres-ski in Aspen is very glamorous.”

In 2008 Russian billionaire Roman Abramovich paid $36 million for a 14,300-square-foot house on 200 acres. A couple living in London snapped up a $10.5 million ranch in July; a $16 million home with 40 acres and a theater, gym with sauna and steam, private guest apartment, elevator and six-car garage, was purchased by a family from New Zealand.

Chuck Frias, an Aspen developer and broker who has a newly built $24 million home on the market, says the weak dollar has drawn interest in the home from house-hunters in Canada, Australia and Italy; he sold a $7 million house to a Chilean family in December.

In the past few days Aspen agents have reported showing homes to potential buyers from as wide a range as Russia, Brazil, the Dominican Republic, Italy and Australia.

Ski Brasil, a Brazilian ski-tour operator with a winter presence in Aspen, runs three ads a week for 16 weeks in Portuguese in the local Aspen paper now. Eduardo Gaz, the company’s director of operations, estimates some 20,000 Brazilians ski in Aspen every season, some of whom own homes (many of whom won’t talk for tax reasons). Joshua & Co. real estate has taken out ads in Russian offering to show visitors around.

“I have a long list of Australian friends who are coming to visit,” says Anna-Lisa Klettenberg, an artist and investor from Sydney who bought a condo at the luxury Gant Hotel. Ms. Klettenberg had been skiing in Aspen for over a decade; she decided in March to look to buy, put an offer on the condo that day, closed in May and was there for the month of July. She still owns her home in Sydney and has a summer place on Australia’s Gold Coast in Queensland, but she plans to spend four months a year in Aspen now. She’s on the national council of the Aspen Music Festival, a role that gets her invited to lots of parties and events.

Hedge fund manager John Paulson paid $24.5M for an estate
Last year, hedge-fund titan John Paulson paid $24.5 million for a 13,000-square-foot estate with a sandy beach, surrounding ponds, a 35-foot-wall of disappearing glass, views of the four ski mountains and a media room with leather seats.

Chris Reyes of Chicago-based Reyes Holdings paid $31.5 million for his estate
Chris Reyes of Chicago-based food and beer distributor Reyes Holdings paid $31.5 million for a 15,000-square-foot stone mansion with a gym, panoramic views, a caretaker’s apartment and an eight-stall horse stable.

Paul Edgerley, a managing director of Bain Capital, bought an estate for $19.8M
According to public records, Paul Edgerley, a managing director of Bain Capital, bought an estate in the exclusive community of Starwood a couple of weeks ago. The estate sold for $19.8 million after less than three months on the market, says listing agent Brian Hazen.

Interested in a 90-acre estate listed for $48.5M?

A 90-acre Aspen estate just went on the market for $48.5 million, listed by Joshua Saslove of Joshua & Co. Known as Jigsaw Ranch, it includes two main houses, a guest house and a log cabin gatehouse. The 21,000-square-foot main house took nearly 15 years to complete and was designed to look like a perched village. The second main house is 11,000 square feet and has an entrance reached from a walking bridge across a creek.

Why Aspen has held up so well

Analysts point to numerous reasons why Aspen has held up so well. A small market where only 13% of land is able to be developed because of zoning laws and the mountainous landscape, it never suffered the over-development now plaguing other areas. Aspen’s distance from a major city and spotty air service help to keep away day tourists.

It’s also emerged as a place where young professionals can find jobs, particularly at small private finance firms and at nonprofit organizations. The Aspen Young Professionals Association, started in 2003 with nine members, now has 257 active members on its event email list. Obermeyer Asset Management, an independent investment advisory started by the son of sporting-goods magnate Klaus Obermeyer, is one of the older local firms; since its start in 1998 it has gone from managing $50 million to $775 million in investments and from two staffers to nine staff members in two offices.

Burberry and Gucci are here, as are eateries like Rustique, with its locally sourced bistro food, and Montagna with its extensive wine selection. There are also music, film and food festivals, and the Aspen Art Museum is planning a new, 30,000-square-foot building designed by architect Shigeru Ban. The Aspen Institute, which brings in world leaders as speakers for its annual Ideas Festival, has also helped put the town on the international map.

Francesca and Sal Amery, a British international banker, have lived for the past 20 years in the Middle East, New Zealand, England, Tokyo, Hong Kong and Singapore and have owned homes in Malaysia, Singapore and England. They considered buying a home at a ski resort in Europe or New Zealand, but nothing measured up to Aspen when it came to meeting their checklist of wants: comfortable year-round living, a good education system, an airport, access to great medical facilities and an educated and diverse population.

The adage remains true: location, location, location is so important when it comes to real estate savvy.
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Source: http://online.wsj.com/article/SB10001424052748703775704576162553297928260.html