Low Inventory, Rising Rates and a Bustling Spring Market

Low Inventory, Rising Rates and a Bustling Spring Market

RECBL - Real Estate News

Spring is here, and, with it, a busy home-buying and -selling season. While real estate markets can vary widely by region, housing is currently seeing similar developments across the country.

The Kiplinger Letter, an online source for personal finance advice and business forecasts, recently shared spring market trends. According to Kiplingers David Payne, staff economist, and Rodrigo Sermeño, reporter, REALTORS(R) can expect tight inventory, increased buyer competition and a rise in interest rates across the board this spring.

The biggest obstacle? Not enough homes, particularly in heavily-populated areas and others that are growing quickly.

"Buyers should expect tight inventory of existing homes across the nation, particularly in fast-growing metro areas such as Denver, Dallas, Seattle and Portland-but also most major metros in the West and in the South," say Payne and Sermeño.

Buyers are out in full-force, and with less inventory to choose from, they are flocking to any available homes in their price point and submitting aggressive bids.

"Buyers should expect more competition for entry-level homes, both existing and new," Payne and Sermeño say. "Tight inventories of existing homes will likely lead to bidding wars in many markets."

What the industry sorely needs right now is new construction, and that’s where the South is prospering.

"The South is seeing strong growth in residential construction, including starter homes," say Payne and Sermeño. "Builders are gradually adding entry-level homes in certain markets in the South, such as Dallas, Phoenix and Atlanta. Some builders are focusing on peripheral areas around these cities, where it is cheaper for them to build entry-level homes."

According to The Kiplinger Letter, buyers in the South and West can expect new homes on the market later this year, especially duplexes and townhomes; however, new-construction growth is generally slow across the U.S. due to high costs and insufficient land to build.

"Builders will continue to gradually bring starter homes to the market, but the rising cost of labor and building materials will make it difficult," Payne and Sermeño say.

While skyrocketing prices have been a concern with tight inventory, REALTORS(R) can breathe a small sigh of relief, as growing home prices seem to be slowing down, if only slightly, for the foreseeable future.

"Home price growth will slow a bit, to 5 percent from 6.5 percent last year," say Payne and Sermeño. "Price appreciation has been strong for a while, and some areas are seeing demand hurt by affordability problems, especially for high-end homes; however, the slowdown this year will only be modest because of continuing lack of inventory, especially at the low-to-middle price ranges."

REALTORS(R) are watching the market closely, as one factor could change the status of todays market. Rising interest rates are homebuyers biggest concern, and contributing to this springs flurry of home-buying activity.

"The prospective rise in interest rates this year and next is actually boosting buyer demand to purchase before rates rise further, according to REALTOR(R) surveys," Payne and Sermeño say. "Next year, once it appears that mortgage rates will be stabilizing, then the higher rates will have a somewhat depressive effect on prices and demand."​


Jason Grace is AZ Social Realty's content editor. Email him your real estate news ideas at jason@cashbuyerslists.com.





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Active investing crucial in 'buy high, sell higher' market: Investor

Active investing crucial in 'buy high, sell higher' market: Investor from CNBC.


With valuations stretched, it's crucial to actively pick stocks and sectors when investing, says David Schiegoleit of US Bank Private Wealth Management.

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Unprecedented Surge: Foreign Buyers Snap Up U.S. Real Estate

Unprecedented Surge: Foreign Buyers Snap Up U.S. Real Estate

RECBL - Real Estate News

Foreign investments in U.S. real estate have surged nearly 50 percent as of late, according to the 2017 Profile of International Activity in U.S. Residential Real Estate from the National Association of REALTORS(R) (NAR).​

Access and download report here. No email address required.

The report shows that between April 2016 and March 2017, foreign buyers and recent immigrants purchased over $150 billion in residential property-$153 billion, to be exact. Marking a new survey high, this boost is a 49 percent increase from last year’s $102.6 billion rank.

"In the face of global economic and political uncertainty-that is, Venezuela upheaval, Brexit, Syrian refugees, Russia meddling, and even the very nasty U.S. Presidential election campaigning-people with money were searching for something very safe," says Lawrence Yun, NAR chief economist and senior vice president of Research. "As a consequence, both the demand for U.S. Treasury bonds and U.S. real estate rose."

While the report shows an influx of buyers from the top five countries...
Learn More> International Real Estate Investors

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Top Foreign Buyers: Chinese, Canadians, and Mexicans

Top Foreign Buyers:  Chinese, Canadians, and Mexicans

RECBL - Real Estate News

The following information is provided by the Center for REALTOR(R) Development (CRD).

The terms "international" or "foreign" clients encompass two types of clients whom real estate professionals may serve. One type are non-resident foreigners, who are non-U.S. citizens with permanent residences outside the United States, and who typically purchase property for investment, vacations, or other short visits.

The other type of foreign clients are resident foreigners who are non-U.S. citizens and are recent immigrants or temporary visa holders.

Despite the slowdown in Chinese economic growth and tighter regulations on outflows of foreign exchange, Chinese foreign buyers remained as the top foreign buyer of U.S. residential property, according to NARs 2017 Profile of International Activity in U.S. Residential Real Estate.

Chinese buyers accounted for 14 percent of all foreign buyers, followed by Canada (12 percent), Mexico (10 percent), India (5 percent), and the United Kingdom (5 percent).

The percentage of Chinese buyers to all foreign buyers has considerably increased (9 percent in 2010 to 14 percent in 2017) while the combined share of Canadian and U.K. buyers have greatly decreased (32 percent in 2010 to 15 percent in 2017).

Strong economic growth in China fueled by exports and foreign direct investments and the appreciation of the yuan from 2008 through 2015 likely account for the sharp increase in Chinese foreign buyer purchases.

For the fifth consecutive year, Chinese foreign buyers were the top buyers in terms of dollar volume, purchasing $31.7 billion worth of residential property. Canadian buyers purchased $19 billion of residential property; U.K. buyers, $9.5 billion; Mexican buyers, $9.3 billion; and Indian buyers, $7.8 billion.

By type of foreign client, Chinese buyers, along with Asian Indian and Mexican foreign buyers, were mostly resident foreigners (buyers who are recent immigrants or in the United States on work, student, or other visas and who reside in the United States). Among Chinese buyers, the share of non-resident buyers declined somewhat, possibly because of tighter regulations on capital outflows from China.

Canadians and U.K. buyers were mainly non-resident foreigners (buyers whose primary residence is abroad). Among Canadian and U.K. buyers, the share of non-resident foreign buyers decreased, which means a higher fraction of purchases came from resident foreign buyers.

The decline in the share of non-resident foreign buyers among all U.K. and Canadian foreign buyers is likely related to the weakening of the pound (in the wake of the United Kingdom vote to leave the European Union) while stronger economic growth and slower growth in house prices may have drawn in more resident Canadian buyers.

Respondents have reported fewer Canadian foreign buyers due to the weakening Canadian dollar, which has stabilized in the last year after weakening notably from 2014 to 2015.

Read the full report, press release, and infographic. (NAR member login required.)

To learn much more about expanding your business internationally, consider taking one of the six individual international online courses or six online bundles developed by the Global Business and Alliances division of NAR. All of these online products can be used towards earning NARs Certified International Property Specialist (CIPS) designation.

Scholastica (Gay) Cororaton, research economist, writes about real estate market conditions and home-buying activity of international clients using data collected from the REALTORS(R) Confidence Index Survey, the Survey of International Home Buying Activity, and publicly available statistics. She has an MS in statistical science from George Mason University and a MA in economics from the University of the Philippines. She holds a Certified Business Economist (CBE) designation from the National Association for Business Economics.

A version of this article originally appeared on NARs Economists Outlook blog.

For more information, please visit onlinelearning.realtor.


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FOREIGN REAL ESTATE INVESTORS NOT DISSUADED BY INTEREST RATES, NEW ADMINISTRATION

Foreign Real Estate Investors

Cash Buyers Lists News​​

Foreign investors continue to view U.S. real estate as a sound investment, with an astounding 95 percent of those recently surveyed by the Association of Foreign Investors in Real Estate (AFIRE) reporting they plan to "maintain or increase their investment" in 2017. U.S. real estate was ranked No. 1 by respondents for both security and stability, as well as opportunity for capital appreciation.

Foreign investors’ perceptions of U.S. real estate, with the incoming administration and rising interest rates, are overwhelmingly positive: 60 percent of survey respondents reported an unchanged opinion about the market from last year, citing its stability and security.

The top five cities for real estate investment this year, according to the survey, are New York, N.Y., Los Angeles, Calif., Boston, Mass., Seattle, Wash., and San Francisco, Calif. 2017 marks New Yorks seventh year at the top of the list.

Washington, D.C., notably, slipped from the top five for the first time since 1992-a misleading move, according to Catherine Pfeiffenberger, AFIRE chairman.  "Washington, D.C. is a global gateway city with good leasing activity and a growing economy bolstered by a young workforce," says Pfeiffenberger. "The combination of those stable fundamentals will continue to attract capital from around the world. The new administrations focus on the defense and aerospace industries is also expected to benefit the D.C. area in the coming years."

Investment opportunity in U.S. real estate has widened, according to the survey, with industrial properties moving ahead of multifamily properties as the No. 1 investment type; Multifamily, office, retail and hotel round out the top five. The shift has strengthened foreign investors’ confidence in emerging markets, such as Charlotte, N.C. and Nashville, Tenn.

Fifty percent of respondents, in addition, believe Brexit will be beneficial for U.S. real estate. (London fell to the No. 3 spot globally in the survey, as a result.) The most secure and stable countries this year behind the U.S., according to respondents, are Germany, Canada, Australia and the U.K; the countries with the best opportunities for capital appreciation are Brazil, Germany, the U.K. and Australia. Impending economic and political changes in the U.S., still, have given some foreign investors pause; the survey shows-a cue for real estate professionals to offer comprehensive data to their investor clients.

"As uncertainty rises with a new government in Washington and interest rates that have risen dramatically, it is no surprise that investors have signaled a note of caution," says James A. Fetgatter, CEO of AFIRE. "Previous, comfortable spreads between cap rates and interest rates have narrowed, making the investment criteria more selective and difficult. Increased market research and discipline will be required."

Source: Association of Foreign Investors in Real Estate (AFIRE) 

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