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Texas wins for renting or buying vs California and Florida
3114 Views ::
7 Comments ::  :: Gulf Coast, Investment, Second Homes |
Are you renting and thinking of buying?
If you have been listening to the news you might be aware that home prices throughout the nation are currently disconnected from the basic fundamentals that rule the real estate market. This may apply for the rest of the nation, except for the State of Texas.
 In situations where average rental rate for the year is close the mortgage payment, it's almost always better to buy. Using a buy vs. rent calculator, like the one referred to below, can help you determine if you should buy or rent a specific property. Also the rental demand and direction of the market should be taken into consideration.
Although the real estate market is depressed in many parts of the U.S. (notably the east and west coasts), at least one state, Texas, continues to defy the naysayers predicting a big bust.
In Texas we’re still seeing gains in the market at all levels, from home appreciation in nearly all areas of the state to active buyers’ and sellers’ markets in many communities. The overall market has slowed down, but not nearly to the degree of the rest of the country. Texas even has areas on the highly coveted coast where oceanfront property has strong rental demand and relatively low prices - where average rental rate and mortgage payments are about the same.
According to recent figures from the Office of Federal Housing Enterprise Oversight, home prices in Texas increased 6.9% during first quarter 2007, well above the 4.3% national average.
“Despite the national slowdown, Texas is still strong,” says James Gaines, Ph.D., research economist with the Real Estate Center at Texas A&M University. “There’s no reason prices shouldn't continue to rise despite the increase in foreclosures and the slowdown in transactions, construction, and new-home starts.”
By comparison, home sales are down in Miami and median prices are falling throughout the state. In January sales were down 27 percent across the state of Florida compared to last year, and condo sales were down by 30 percent as well. Miami posted a 9 percent decline in single family home sales and a 27 percent decline in condo sales.
The San Francisco Bay Area of California has been plagued by a housing affordability crisis for some time now. In January of 2005, the California Association of Realtors found that only 20 percent of the people within Solano County could afford to buy a median priced home of $389,000. The median price of homes has risen since then and based on the difference between incomes and local home prices, Consumer Reports recently rated this market as the second most overpriced market in the San Francisco Bay Area, and ninth in the country.
Within Texas, there is a wide variation in appreciation rates in the 25 metropolitan areas. Combined with low interest rates, strong job growth and limited supply on new housing in many markets, Gaines says some of the appreciation rates are astounding.
“Among the state’s large metro areas, Austin and San Antonio are seeing the strongest rate increases at more than 10 percent,” he said. “With low levels of inventory and building permits off by over 20 percent in each community, it’s easy to see why these two markets are humming.”
“Interest in Texas real estate has been magnified by the declining markets elsewhere across the nation,” said Dr. Mark Dotzour, the Center’s chief economist, citing the current Texas housing market as one of the strongest in the United States.
“Texas housing is still very affordable,” he said, “and the low tax structure and pro-business climate makes Texas a destination for corporate relocation for firms that are striving to compete in the global marketplace.”
Dotzour said population growth is another key factor contributing to the state’s healthy real estate climate.
| City | Single Family Homes Sales
(median prices) | | 2006 | 2007 | | Miami | 376K | 396K | | Solano County | 470K | 430K | | City | BEACHSIDE
2007 | OCEANFRONT
2007 | | South Padre | 350K | 750K | | Galveston | 350K | 500K | | Bolivar | 160K | 350K | | Port Aransas | 230K | 425K |
“The latest figures show Texas is growing by about 400,000 each year,” he said. “All of these people need homes or apartments in which to live.”
Job growth is also strong, with Texas outperforming the national average and likely to continue doing so for the foreseeable future.
Let’s take a look now at the different rates among the East, West and Gulf Coasts.The Chart to the left depicts the Median Sale Prices of Single-Family homes for the different areas. As you can see the Bolivar and Port Aransas areas have a fairly low median price. Bolivar and Port Aransas are two areas of the Texas Gulf Coast where average rental rates and mortgage payments are about the same.
The Texas Gulf Coast resort areas are located just a few hours drive from major metropolitan areas such as Austin, Dallas, Houston and San Antonio, creating a strong and steady demand for vacation home rentals and purchases.
Major developers have already seen the potential for these developing areas and are investing in new communities such as Cinnamon Shore in Port Aransas, Audubon Village in Gilchrist, Laguna Harbor in Bolivar, Palisade Palms in Galveston and Wild Sands on South Padre island's new north-end.
Below you will find short term rental numbers on the different areas mentioned above:
| Galveston, TX | | # of Bedrooms | Nightly | Weekly | | 1 | 118 | 417 | | 2 | 135 | 665 | | 3 | 510 | 1698 |
| | South Padre Island, TX | | # of Bedrooms | Nightly | Weekly | | 1 | 116 | 598 | | 2 | 215 | 883 | | 3 | 258 | 1966 |
| | Bolivar, TX | | # of Bedrooms | Nightly | Weekly | | 1 | 314 | 786 | | 2 | 469 | 990 | | 3 | 593 | 1606 |
| | Port Aransas, TX | | # of Bedrooms | Nightly | Weekly | | 1 | 122 | 665 | | 2 | 196 | 1066 | | 3 | 257 | 1491 |
| | Miami, FL | | # of Bedrooms | Nightly | Weekly | | 1 | 145 | 977 | | 2 | 206 | 1450 | | 3 | 377 | 2241 |
| | Solano County, CA | | # of Bedrooms | Nightly | Weekly | | 1 | 169 | 1057 | | 2 | 248 | 1283 | | 3 | 432 | 2766 |
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| City | 1 Bedroom | 2 Bedrooms | 3 Bedrooms | | South Padre* | 1008.00 | 1891.00 | 1983.00 | | Galveston | 1190.00 | 1220.00 | 3016.00 | | Port Aransas | 1225.00 | 1832.00 | 3472.00 | | Single family home long term rentals *Amounts based on data gathered from VRBO.com season. |
When looking at long term rentals on the Texas Coast it was difficult to gather data for areas such as Bolivar, Port Aransas and South Padre Island. These areas are mainly vacation spots and property owners prefer to rent their places in the short term during the high season and only offer monthly rentals during the low season.
Bolivar does not have any major hotels, so the residential homes are the primary rental market, making demand very strong and short term rental rates higher than the other coastal markets. In fact, the Bolivar short term rentals are so strong that you have a hard time finding a property to rent at long term rates or during the summer season. SwedesRealEstate.com has over 275 vacation home rentals on Bolivar and operates like a motel.
Terabitz analysis tool also shows Texas' advantages
How do you determine what is the best option in your case?
We recommend using the calculator available at http://www.dinkytown.net/java/MortgageRentvsBuy.html. Or download this free investment calculator spreadsheet investmentcalculator.xls
Below is an example of the calculator you will find in which you can adjust the different variables that suit your particular situation and it will help you decide on the best option for you.
Also check out the government's rent vs buy tool at: http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp
And Texas Gulf Coast Sales Analysis at: http://www.texasgulfcoastonline.com/Sales.aspx
and the Bolivar-Best-Bet-on-Texas-Gulf-Coast Article
Interested in finding out your home's value?
This site, http://www.biggerpockets.com/house-value-comps.html offers a list of resources for finding your home's value in your local market. Beware that many of these services aren't as accurate as using a professional, but they will help to give you an idea of your home's worth.
How to buy a rental property:
Investing in rental property should be treated like a business decision. Once you have identified a property that could be a good investment, you need to:- Estimate the property’s current value
- Project its future value based on the local market’s appreciation outlook
- Make a realistic assessment of rental income and expenses
- Get expert advice on benefits from depreciation and tax write-offs
Your calculations should be based on how long you plan to own the property and whether you think you can personally manage the property or will need to hire a property management firm.
Texas is also a winner in price appreciation and sales volume
Vacation Home Rental Advice
 Most investors are focusing on the fundamentals that guided the market before the housing boom, especially cash flow -- the ability to actually make money from, say, rentals, rather than from quickly selling the property. They are sticking with properties that turn a profit (or at least break even) after factoring in interest payments, taxes and other expenses.
The stock market goes up and down, but real estate continues to be a bright spot in the U.S. and Texas economies. Nationally recognized second-home expert and EscapeHomes CEO Clark Thompson says the current climate represents a unique opportunity to purchase a vacation home. "Interest rates are low, and there are still a number of undiscovered places where the housing prices are a steal," Thompson says.
Thompson’s list of advantages of owning your own vacation home:- Buying a vacation home today is like buying California property in the 1970s. Vacation home prices now are low relative to where they are expected to be once the baby boom generation begins to retire in force.
- Families who own vacation homes take more family vacations.
- The 1997 tax law changes allow couples to avoid paying capital gains taxes on profits of as much as $500,000 on the sale of a primary residence. Equity in your primary residence can help purchase a retirement home.
- It’s a good idea to get a head start on retirement living. Your favorite location might be a lot more expensive in 10 to 15 years when 73 million baby boomers begin retiring.
- Owning a second home allows another mortgage interest write-off.
- Vacation homes are a great way to alleviate stress. It’s good for the soul, says Thompson.
- A second home is a great way to spend your inheritance. Trillions of dollars are trickling down from the "saving generation" to the "spending generation."
- Vacation living equals more exercise. More and more people are buying locations close to ski slopes and golf courses.
- The stability of real estate value makes it a good choice to diversify the non-aggressive portion of your portfolio.
- Finally, a vacation home is more fun to use than a stock certificate.
If you already own a second home and are considering renting it out when you’re not using it, make sure you are aware of what your customers are looking for.
Swimming pools, hot tubs, proximity to the beach/bay, shopping districts or restaurant areas as well as number of bedrooms and number of beds are all factors that attract renters to your property. Additional features such as wireless internet access, plasma screens and DVD players also help attract more business.
If you want your property to not only be a great place for family vacations but also a good source of income, then you may want to consider investing a little towards adding those additional features that will attract more renters. They could make the difference between renting it for a couple of weeks during the year to having it booked consistently throughout the year. |
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ByNational Association of Residential Real Estate Investment Advisors @
Thursday, July 19, 2007 |
Long Term Rental Property
Long term rental property is perhaps the first real estate investment vehicle that comes to most people's mind. I cannot tell you how many times I've heard, "I don't want to become a landlord. I don't want the headaches of being called with a broken air conditioner at two in the morning. Tenants are all low-lifes who can't afford to own a home." This usually comes from the same people who ask me how I've been so successful in real estate investing, and the answer is long term rentals.
The fact of the matter is that you can own rental properties and you don't have to be a landlord. There are many reliable property managers who, for a small fee (about 7-10% of the rent), handle the headaches for you. It might also surprise you that most tenants are very good people. Many people rent because they want to get to know a city before they plant roots. Others have jobs for only a year or so and don't want to buy a house. Others are in a flat market where the cost of renting is much less than the cost of owning so they choose to rent. Fortunately for the professional real estate investor, these misconceptions keep many people out of the market, leaving the good stuff for us.
Investing vs. Speculation
There are two main objectives when buying rentals. One is to buy a property where your rent exceeds your costs which results in a monthly passive income. This is the more traditional investment and is what most people think of when it comes to rentals. Another is to buy a house hoping that it will appreciate aggressively. While you still must consider the monthly pre-tax cash flow scenario, you may be willing to accept a neutral or even negative cash flow if the appreciation is exceptional. This type of investment is more accurately classified as speculation.
Many prominent investment advisors strongly recommend investors avoid any property that will not generate a positive monthly pre-tax cash flow. While I respect their opinions, it comes down to different strokes for different folks. Consider the investors that purchase vacant land. Their objective is to buy it at a low price today and hope that as the area develops, the value of the land will appreciate, and they will be able to one day cash in on this appreciation. In the mean time, unless they have a unique situation that they can make use of the land and get some kind of revenue to offset the monthly payments and taxes, they are certainly in a negative cash flow situation. (If they paid cash for it and don't have monthly payments, they should read the section on leverage below.)
If this is acceptable to most investment advisors, how is a slight negative pre-tax monthly cash flow unacceptable? In my opinion, if you purchase a property that is appreciating 1% a month and you're seeing a monthly pre-tax negative cash flow of 0.1%, aren't you at least deferring the majority of the financing liability to the rent? How is this not an advantage over owning vacant land?
Certainly there is less risk involved in owning property that has a positive pre-tax monthly cash flow, but as a rule of thumb, the more the risk, the more the reward should be. If you truly analyze the different markets, you'll realize that in some markets the rent for a standard house will exceed the cost of owning, while in other markets, the rent will fall short. In 2004, rent in Dallas is about 1% of the purchase price, while in Las Vegas it's about 0.5%. Not coincidentally, the annual appreciation in Dallas is lucky to be 3% while in Las Vegas, the houses appreciated an insane 52% (July 2003 to July 2004). So typically, unless you catch a market just before it booms, you will have more trouble making the pre-tax cash flow positive in aggressively appreciating markets.
One thing that most people forget to consider is the annual post-tax cash flow scenario. Frankly, this is more important to me than the monthly pre-tax cash flow. There are five criteria that drive how you can take passive losses, but I'd like to point out the two most significant. You can only deduct $25,000 of passive real estate losses against other income. Any further losses must be deferred to future returns. The second is if your adjusted gross income exceeds losses. You may be someone whose W-2 shows you receiving over $100,000, but it's your CPA (and everyone in any form of investing should be using a CPA) who will do their best to bring that amount down as low as possible so you can pay as little tax as legally possible. You'd be surprised how little you report (legally) to the government. If you still make more than $100,000 adjusted gross income, you can still write off your losses, but only 50 cents on the dollar, and once you exceed $150,000 you must defer all of your passive real estate losses to future years. (Real Estate Professionals, those who work more than 750 hours a year on real estate projects and who work more than any other income producing job they may have, can write off unlimited passive losses each year. If you feel you might fit this criteria, discuss this with your CPA.)
I like to view negative cash flow as an installment of the down payment. For example, you might put 20% down on a $200,000 property and have a neutral cash flow. You might, however, put 5% down on the same property and have a negative cash flow of -$500. So instead of putting $40,000 down, you only put down $10,000. That $30,000 difference will mean you could pay for 60 months (5 years) before you caught up to your initial investment. This isn't even considering that once you have 20% equity in the property you can remove the PMI, which will cost you about $163 a month. Taking this into consideration, and assuming a 7% appreciation so that you'll have 20% equity in 2 years, you'd be able to make 77 payments, or just over 6 years, before you caught up to your 20% down payment.
You Don't Have to Be Mr. Roper
"I don't want to be a landlord!" is perhaps the biggest objection our advisors hear. The good news is that you can be an owner and not be a landlord. There is a sector of the real estate industry called Property Management, and these professionals handle the day-to-day management of property for owners who would rather own real estate passively. For 7-10% of the monthly rent, Property Mangers can provide a range of services. From the very basic of just making sure the property is maintained, handling emergency calls, and collecting rent to more advanced tasks such as accounting for the property, Property Managers can make property ownership virtually passive.
Property Managers also provide another very valuable service: tenant placement. For a fee, which ranges widely from around $350 to as high as 75% of the first month's rent, they will advertise your property, probably list it in the local MLS for rent, interview prospective tenants, verify credit, work, and renting history, and arrange for the transfer of possession. Realize that if your property is listed in the MLS or other listing service, you will likely have to pay a small fee (around $250) to the agent that brings the tenant that moves in. This is usually part of the Property Manager's tenant placement fee, but be sure to determine this before signing an agreement with them.
Show Me the Money
As previously stated, there are two main objectives when buying a rental property. You can invest and find properties that will generate a positive cash flow, or you can speculate and look for rapidly appreciating markets. Regardless of your objective, every thing else about this investment vehicle is the same.
Because rentals are a long term investment, this investment vehicle is most affected by the concept of leverage. Leverage is often referred to as the OPM principle, or Other People's Money. If you have $10,000 to invest and you purchase stock, for the most part you purchase $10,000 of stock. In real estate, however, you can leverage yourself by buying $200,000 of property. (You can frequently roll the closing costs into the mortgage. Additionally, there are loan programs out there that allow investors to put zero down meaning you can leverage 100% of the investment.) So if stocks go up 10%, you get a return of $1,000, but if real estate goes up 10%, you realize $20,000 in appreciated equity, which is 20 times greater than the stock market returned. Even if real estate goes up only 1%, you double the return of the stock market with $2,000 increased equity.
Of course, the less you put down the more you owe. This is significant when determining if a property will have "positive cash flow" or not. Most investment advisors that preach you must have positive cash flow are from an era that 20% down or more was required on investment properties. Putting less than 20% down on non-owner occupied properties has only been around for the last 5 years or so. This concept is very crucial, so you are encouraged to read the detailed section on Leverage.
It is very critical that you perform an analysis on each and every property you purchase. You need to understand how much you must put down. Know how much the closing costs are going to be. Will you be able to roll them into the loan? What kind of loan program are you qualified for, and which is the best for you? What is the rental market doing, how much will rent be, and how long will it take to place a tenant? What are the associated fees such as Home Owners Association (HOA) fees, PMI (Private Mortgage Insurance usually required when putting less than 20% down), assessments, Property Management fees, taxes, and insurance? What is the anticipated appreciation for the area and what is the market trend? What will be your pre-tax monthly cash flow, and can, will, and should you tolerate a slightly negative cash flow on this deal?
That may seem like a long list of financial concerns, and it is. This is why it's very important to work with a Realtor who is already familiar with these factors. Additionally, once you register for free, you can access the worksheet that will allow you to analyze a property in a matter of seconds. If you are already registered, you can see the very detailed explanation of how to utilize the worksheet.
Going Condo?
A popular question is what type of real property should investors buy for rentals: Single Family Residences (SFRs), Condominiums, or Town Houses. Condos and Town Houses are very similar and are usually lumped together. The main difference is that in a Condo, you will usually have someone live above or below you, as in a typical apartment complex. This is not usually the case in a Town House. Because of this, Town Houses usually have a yard and frequently have an attached garage.
The main distinction between an SFR and a Town House is the Town House is usually (but not always) attached to another Town House. I say usually because there are Town House communities that have a few units that are actually detached from the other units. What really matters is what the local government, usually the Tax Assessor's office, has classified the property as.
Historically, SFRs have appreciated more than Condos and Town Houses, but in 2003 and 2004 they appreciated as much or more than SFRs in many markets. This was due in large part to the large difference in price per square foot that had built up over the years. As the price of the entry level SFRs continued to escalate, the Condos and Town Houses became more and more attractive and affordable.
Selecting Ideal Rental Properties
When selecting potential rental properties, there are several factors to consider. For an SFR, you'll likely want a minimum of three bedrooms, four being ideal. Realize that in many age-restricted communities (like the Del Webb senior communities), two bedrooms may be the standard. Always go for a two car garage and at least two bathrooms. These factors lend to the industry jargon 3/2/2, which means "Three bedrooms, two bath, and two car garage."
Unless the deal is smoking, do not purchase below 1,000 square feet. I try to not buy below 1,200 sf, and ideally target homes between 1,500 and 2,000 sf. Much larger than that and they get too expensive for the rent. Much smaller and you'll have trouble renting and selling it.
If you have a choice, you want four bedrooms over three or even three and a den. Consider a very average family: Mom, Dad, three kids. That's one master bedroom and one bed for three kids, for a total of four. Three bedroom families can use a four bedroom, but families requiring four bedrooms cannot accept a three bed. Not only does this apply to the rental market, but it's a great thing for the resale of the property.
In the Western U.S., there is a trend in the last decade to have lot sizes near 4,000 sf or smaller. There are actually communities that are designed around 1,800 sf lots. These are frequently called "cluster homes." I highly encourage that unless it's a deal you can't refuse, avoid anything below 4,000 sf in Southern Nevada. Properties like these are incredibly hard to sell in slower or neutral markets.
Pools are frequently shunned for rental properties. I will personally acquire pool properties (in Vegas/Phoenix), but I won't pay much of a premium for the pool. There is a legal consideration with regard to responsibility for security, insurance implications, and maintenance concerns, but these are issues that can be dealt with. If the deal is right, I'll buy a house with a pool, but given the choice of several investments, I'd try to buy without.
Given a choice, select a one-story over a two-story. Like the three and four bed discussion, people who can live in a two-story can easily live in a one-story, but if they need a one-story, they can't accept a two-story house. Again, this is significant in both the rental and resale market. While that's an ideal concept, if you have a good price on a two-story, you shouldn't pass it up.
Ask your advisor about any localized issues that may steer you toward or away from particular properties. In the Las Vegas valley we have a pig farm that has raised a big stink, both literally and politically. The pig farm has been there for decades and was once in the middle of nowhere. The booming growth of the valley has caused houses to be built nearby, and to no one's surprise, there have been complaints. This causes the value of the houses to remain depreciated. Airport noise, train tracks, and flood zones all can be insidious factors that you forget to investigate.
One thing to keep in mind is that investing is mostly numbers. While the neighborhood and floor plan will help on the resale, you are not going to live in the property. Avoid becoming emotionally attached to a property. You may prefer the great room concept or two-story homes or green paint. Don't let your preferences steer you away from a good deal. If the neighborhood works, there is nothing fundamentally wrong with the floor plan or color schemes, let the numbers to the talking.
Once you have identified a viable rental, you must proceed through the steps of the Property Acquisition Process. Then it's time for the Property Manager to take over.
"Pacific Heights," Anyone?
Ask your NARREIA Advisor for referrals for Property Managers. Some Property Managers are sole proprietors who do all of the work themselves. Others work for large management firms. Select one that fits your style. The Property Manager should place the tenant, keep an eye on the property, and handle anything that may come up. They can even accept the rent check and pay your mortgage for you.
One thing to consider is Section 8 Housing. This is where the government subsidizes all or some of the rent for a tenant. Some people do not want to work with lower income tenants because they feel they will not take care of the property as good as more middle class tenants might. Because Section 8 Housing is a privilege that tenants do not want to lose, they tend to be better tenants than most. Besides, you can count on the government's portion of the rent always being on time.
There may be some maintenance issues that occasionally pop up. Most issues will be covered by the Home Warranty, something you want to purchase for every property you will own. Home Warranties cover items such as the dishwasher, air conditioner, and many other appliances. You can get extended coverage for your washer, dryer, and refrigerator as well as for the pool and spa. The basic plan costs about $350, and you only pay $35-$50 total for each visit.
You should understand your rights as a landlord. Some states, such as Nevada, are very landlord oriented. If they don't pay on the 1st, you serve them notice on the 5th, and they can be evicted on the 16th. Other states are more tenant oriented. Just don't watch the Michael Keaton movie "Pacific Heights" if you have any reservation about owning rental properties.
As Time Goes By
Constantly evaluate how your rental property is doing. Keep on your Agent and your Advisor to determine the value of your property. Do this at least every six months. I like to do this every three months for my own properties. This will allow you to maximize your portfolio by identifying weaker investments and moving that capital into a better performing property.
One thing landlords like to do is to write in the lease agreement that they can enter the property every three months to change the air filters on the air conditioning. This gives the landlord the ability to view the inside of the property without it being an official inspection.
As the months go by, if the tenants are good and pay on time, offer to upgrade the property a little. For instance, offer to put a ceiling fan in the auxiliary bedroom. It's pretty cheap, it upgrades your own property, and it goes a long way in the owner/landlord/tenant relationship.
One of the things I like to do in my rentals is to install glass shower enclosures, and this is especially true in upstairs bathrooms. These enclosures, like sliding glass doors for shower/tubs, cost less than $500 to buy and have installed. I don't care how conscientious a tenant is, a shower curtain is just not reliable. To prevent mold and other water damage, this precaution could save you thousands in the long run and is a very cost effective upgrade for the resale.
Developing an Exit Plan
You will eventually want to sell your property. Realize that when a property that has a tenant is sold, the lease agreement is still valid. This was significant in mid-2004 in Las Vegas. Properties that were purchased for $180,000 and had tenants in them for $1,200 with a positive cash flow were worth $325,000 a year later. When the tenants resigned their lease for another 12 months, it made selling the property very hard. Few investors would want to buy a property for $325,000 with a lease of only $1,200 on it, or less than 0.5% Rent-to-Sales Price ratio. Families couldn't buy it because the tenants were in it for another year. This is a stark comparison to property in Dallas that is getting 1% Rent-to-Sales Price ratio. In this case, you would want a long term renter in there. When establishing your exit plan, strongly consider how you want to program your leases.
Another consideration for your exit plan needs to be the tax implications. Ideally, you'll roll your profit into another real estate investment. This is ideal because you can defer taxes indefinitely if you keep moving them into other investment properties. This is due to the 1031 Tax Exchange, or Starker Exchange process. If you don't do this, you will definitely have a tax liability to deal with. If you hold the property for less than a year, you will owe tax on your profit at your marginal tax rate. This means that if you're paying 39% taxes, you'll owe 39% of your profit on your next tax return. Why not wait to sell until you've owned the property for at least a year? If you do this, you're subject to long term capital gains, which is taxed at a flat rate of 15%. |
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By
CNNMoney.com @
Saturday, July 21, 2007 |
Sixty-five of the nation's 299 biggest real estate markets are severely overpriced and subject to possible price corrections. Yet there are still some markets that are undervalued, most notably in Texas.
That's according to the latest Housing Market Analysis conducted by National City Corp, a financial holding company, in conjunction with Global Insight, a financial information provider.
Undervalued markets in Texas dominated the discounted markets list with nine of the 10 most undervalued housing markets.
National City arrives at its estimates of what the typical house in these markets should cost by examining the town's population densities, local interest rates, and income levels. It also factors in historical premiums and discounts for each area. |
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By
ORANGE COUNTY BUSINESS JOURNAL STAFF @
Monday, July 23, 2007 |
Local California Real Estate Investor Eyes Texas for Future Deals
Chase Merritt has been focusing on acquisitions in Texas during the past year, including Austin, Houston and Dallas.
The company—which is an outgrowth of Newport Federal, a 35-year-old real estate investor in Newport Beach—is said to be eyeing up to $110 million worth of properties in Houston. |
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By
Eliot J. Schechter Bloomberg News @
Tuesday, July 24, 2007 |
Miami condo market busts after 4-year housing boom
Glut of high-rises and decline in sales forces Florida’s economy to brink of recession
Although there is a excess of nearly 23,000 condos on the market in Miami, 37 new high-rise condos are currently being built.
IN THE MIDDLE of the biggest glut of condominiums in more than 30 years, Miami developers keep on building.
The oversupply will force prices down as much as 30 percent, the worst decline since the 1970s and help push Florida’s economy into recession as early as October, said Mark Zandi, chief economist at West Chester, Pa.-based Moody’s Economy.com, who owns a home in Vero Beach, Fla.
‘‘Florida is the epicenter for all the problems that exist in the housing industry,’’ said Lewis Goodkin, president of Goodkin Consulting Corp. and a property adviser in Miami for the past 30 years, who also foresees a recession. ‘‘The problems we have now are unprecedented and a lot of people will get burnt.’’
Thirty-seven new high-rise condos and 20,000 new units are being built in Miami’s 1,040-acre downtown, where sales fell almost 50 percent in May, according to the Florida Association of Realtors. The new units will join the 22,924 existing condos in Miami-Dade County that were for sale in April, according to Jack McCabe, chief executive officer of McCabe Research & Consulting LLC in Deerfield Beach, Florida. That’s the most unsold units since McCabe began tracking sales in 2002.
‘‘Have you been to Miami lately?’’ Florida Governor Charlie Crist said at a homebuilders’ conference last week in Orlando, Fla. ‘‘It’s like we have a new state bird: the building crane.’’
By Bob Ivry, Bloomberg News |
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By
Dean Calbreath UNION-TRIBUNE STAFF @
Tuesday, July 24, 2007 |
Real estate, construction woes slow Calif. job growth to a crawl
Hiring in California was hit by a bad case of June gloom last month as the effects of the real estate slowdown seeped into the job market, according to data released yesterday by the California Employment Development Department.
Statewide, employers added only 400 jobs in June, after adjusting for seasonal fluctuations, compared with a jump of 29,700 in June 2006. Sharp declines in home construction and financial activity – such as mortgage lending – put a crimp in last month's job growth.
“Things are looking pretty bad,” said Alan Gin, an economist at the University of San Diego. “It's conceivable in the next couple months that we might see negative job growth – a fall in jobs.”
Economists pinned the blame for slow job growth on the local housing market. In the past year, home sales declined 24 percent, meaning less work for mortgage and real estate brokers. And applications for residential-construction permits have declined in nine of the past 10 months, meaning less work for builders.
“It really is the real estate market that's causing this,” said Kelly Cunningham, an economist at the San Diego Institute for Policy Research. “Even though job growth in the visitors industry and the professional business sector is still positive, we're losing as many jobs as we are adding.”
Cunningham added that if the number of real estate foreclosures begins to increase substantially – which he doesn't think will happen – a recession could be more severe.
For both the county and California, many of the job losses over the past year were involved in real estate.
Statewide, construction companies shed 5,300 workers last month, contributing to a loss of 12,000 jobs since June 2006. Financial activities – including mortgage and real estate brokerages – lost 5,700 jobs in June, or 7,000 from year to year.
By Dean Calbreath UNION-TRIBUNE STAFF WRITER |
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ByBryan Pope, Associate Editor @
Friday, August 03, 2007 |
Texas Surpasses National Home Appreciation Rate
COLLEGE STATION (Real Estate Center) – According to recent figures from the Office of Federal Housing Enterprise Oversight, home prices in Texas increased 6.9 percent during first quarter 2007, well above the 4.3 percent national average.
“Despite the national slowdown, Texas is still strong,” said Dr. James Gaines, research economist with the Real Estate Center at Texas A&M University. “There’s no reason prices shouldn't continue to rise despite the increase in foreclosures and the slowdown in transactions, construction and new home starts.”
By comparison, home appreciation slowed to 1.2 percent in California and 3 percent in New York. Nevada price increases virtually disappeared at just .6 percent. Even rapidly growing Florida and Arizona reported value increases of 4.3 percent and 5.2 percent, respectively.
Within Texas, there is a wide variation in appreciation rates in the 25 metropolitan areas. Combined with low interest rates, strong job growth and limited supply on new housing in many markets, Gaines says some of the appreciation rates are astounding.
“Among the state’s large metro areas, Austin and San Antonio are seeing the strongest rate increases at more than 10 percent,” he said. “With low levels of inventory and building permits off by over 20 percent in each community, it’s easy to see why these two markets are humming.”
Meanwhile, the energy industry is fueling strong housing markets in some smaller metros. Home prices are up more than 21 percent in Midland and 16 percent in Odessa. Victoria prices are up 8.3 percent.
Gaines said some border communities are on fire as well, thanks to a surge in government hiring and business activity. Laredo is up 16.6 percent, while El Paso is up 11.2 percent.
While Texas seems to be bucking the national trends in home price appreciation, the Lone Star State shares the national phenomenon of increasing foreclosure rates.
“Texas is no longer making headlines as having the most foreclosures in the country,” Gaines said, “but rising foreclosures is still a source of concern for all industries related to the housing market.”
The Real Estate Center (recenter.tamu.edu) has been providing solutions through research for 35 years. Funded primarily by Texas real estate licensee fees, the Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public. |
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Bypools and spas west chester @
Friday, August 13, 2010 | |
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