When Wall Street Buys Main Street
Source: Center for Progress
During the recession and the housing market’s deep decline in prices, institutional investors purchased more than 200,000 single-family homes at bargain prices and converted them into rental homes. In fact, in many parts of the country, especially areas that experienced steep declines, investors bought more than half of all homes for sale. It remains to be seen how these investors will serve as new landlords in terms of responsiveness to their tenants, maintaining affordable rents, or properly caring for their properties.
Making sense of the story:
• Concerns remain about the implications of investors crowding out potential owner-occupants or artificially inflating home prices.
• Questions linger about what will happen to neighborhoods with a lot of investor activity if these investors withdraw, particularly if they leave the market as quickly as they entered it.
• In late 2013, an institutional investor created the first triple-A-rated, mortgage-backed security supported by revenue from single-family rental properties. This development could lead to even lower-cost financing to institutional buyers in comparison to what has been available through bank credit lines.
• The private equity firm Blackstone took out a $479.1 million loan from Deutsche Bank that was secured by a pool of more than 3,000 single-family rental homes. When turned into a security, investors now receive monthly rental cash payments from the homes.
• Analysts predict that the funding of single-family rental acquisitions through securitization will likely become a dominant model quickly.
• The market for this new asset class is expected to top $70 billion per year by 2016, on par with the bond financing for apartment buildings, casinos, and commercial real estate for this year.
In other news …
Spring Home Buying Season Starts Outside Polar Vortex
Source: Investor’s Business Daily
The spring home buying season, typically the busiest of the year, is now under way, and activity is brisk in many markets. Geoff McIntosh, managing broker and co-owner of Main Street REALTORS®, said, “We continue to see an extremely active marketplace. We’ve had a lot of pent-up demand and incredibly short inventory.” McIntosh is treasurer of the CALIFORNIA ASSOCIATION OF REALTORS®.
Why You Can’t Find That Home For Sale on Zillow or Trulia
Source: Seattle PI
According to a recent study, large website portals have fewer real listings and display far more duplicates and expired listings. Consumers who rely solely on these avenues for listings are missing a huge portion of the market.
Why a boost in pickup truck sales means the housing market is in for good news
Source: Washington Post
Reportedly, there is a strong correlation between the real estate market and auto sales, particularly the pickup truck since they are related to the construction industry. With an increase in home building activity, more workers buy pickup trucks when they are hired by construction companies.
Obama administration says housing agency won’t need Treasury aid
The Federal Housing Administration (FHA) has adequate reserves and will not need a second subsidy, according to the most recent budget proposal from the White House. When the fiscal year closed on September 30, the agency ended up drawing $1.7 billion in aid from the Treasury to shore up its finances.
Can Listings Be Used to Predict Home Prices?
Source: Wall Street Journal
Now that there are growing volumes of price and listing data collected by web sites and real estate agents, economists are hopeful that such data produce real-time price indices in the same vein as liquid assets like stocks. Using real estate listings to predict final sales would allow those in the industry to get an earlier read on where prices are going.
What’s hot, what’s not in the American home
Source: LA Times
Bigger is better in the eyes of American consumers, according to a report from the National Assn. of Home Builders, as new houses grew larger last year to an average of 2,679 square feet. Walk-in closets in master bedrooms, dedicated laundry rooms, and open-concept great rooms are also popular with consumers while laminate is out.
Americans Shut Out of Home Market Threaten Recovery: Mortgages
The housing market’s three-year recovery is said to be hurt by disappearing first-time homebuyers who can’t compete with rising prices and tougher credit standards. First-time buyers accounted for only 26 percent of purchases in January. Leslie Appleton-Young, chief economist for the CALIFORNIA ASSOCIATION OF REALTORS®, commented, “We have a ladder of homeownership and need first-time home buyers beginning the process of owning, building equity, and trading up to have a healthy housing sector.”
Talking Points …
• Zeal for home renovations may serve as a promising sign for the market’s rebound, according to Bloomberg. Concerns about the housing recovery and sluggish job growth are not evident in demand for appliances, flooring, and paint.
• Home-renovation stores like Home Depot and Lowe’s both topped their initial sales forecasts for last year. Home Depot topped fourth-quarter earnings estimates yesterday, marking six straight years of meeting or beating projections. Lowe’s forecasts 5 percent annual sales growth.
• Sales at Home Depot rose 5.4 percent to $78.8 billion last year, more than twice the 2 percent growth rate the company had initially expected. At Lowe’s, purchases above $500 have been the biggest source of sales gains, and in the latest period, those kinds of orders rose 8.9 percent.
Thanks for reading!
David S. Wilfert
RE/MAX R.E.O. – The Wilfert Group
12341 Newport Avenue, Suite A-100, North Tustin, CA 92705
Real Estate Broker – BRE# 01861699
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Direct: (714) 963-8000 or Email: David@WilfertGroup.com