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The Slippery Slope of Holiday and Winter Home Buying

Jan 16

Posted by admin in Credit, Real Estate

There’s no doubt that the economic crisis facing many countries has taken its toll on the housing market. Residential home sales are at a 50-year low. The number of winter home purchases is even worse. Too many people are finding themselves in financial trouble due to job loss, overextended credit cards or stock crashes. The number of foreclosures is at a 70-year high in the United States alone. Jobs are at a minimum, while job seekers are lining up for interviews for even the simplest of jobs. The housing market isn’t likely to show an increase in sales until the economy begins to show promise.

In Florida alone, the housing market has seen a drastic negative impact over the last few years. In 2005 home sales increased by 23 to 27 percent across the board. All counties reported at least minor increases in home sales. Only three years later, in the first half of 2008, Florida reported a 54 percent decline in home sales over the previous year. The first quarter of 2009 saw a 30 percent decline in sales as compared to last year’s totals. If the first quarter is the first building block, it offers a bleak outlook for the remainder of the year.

Over in Europe in February, the Balearic Islands reported a lower unemployment rate than other Spanish regions. The Balearics are a major hot spot for vacation properties and winter homes. Millions of people take holidays in Majorca, Ibiza and Menorca every yeat. Forecasters project between 0.2 and 0.5 percent economic growth in the Balearic Islands for 2009. While this doesn’t seem like a lot of economic growth, it overshadows the negative impacts of the economy in other parts of the world.

Buying a Vacation or Winter Home
What do Florida and the Balearic Islands have in common? Besides fun, sun and sand they share commonalities in vacation properties and winter homes.
In the United States and Canada, many elderly retire to Florida or buy a winter home there. Northern winters can be brutal for elderly people with limited income to heat their home. The current economic situation makes it even more difficult for those living on a fixed income to afford to purchase a winter home or to travel the distance if they do own one.

Like Americans and Canadians buy winter homes in Florida, Europeans often purchase winter homes on the Balearic Islands or the Canary Islands. In the Balearics, Majorca is the most popular residential island, with Menorca and Ibiza following close behind, with plenty of airlines who have Menorca flights on offer.

The most popular residential island of the Canaries is Lanzarote with Fuerteventura a close second. Low cost airfares makes it a little more convenient for Europeans living on a fixed income, but money is still an issue world-wide.

The Balearic Islands, Canary Islands, Florida and other locations that are considered “vacation hot spots” are ideal places to buy investment property. Why? It’s simple, people cherish their yearly vacation. Several recent polls have shown that even in a poor economic situation, consumers would cut back on unnecessary items to afford one vacation per year. Intelligent investors who purchased investment property in a hot spot have the opportunity to make a lucrative income but still offer great deals on accommodation for others.

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How To Make Money in Real Estate – In a Recession!

Jan 15

Posted by admin in Real Estate

Pending US home sales fell to the lowest level on record in 2008, according to the National Association of Realtors. With home prices dropping, and that market following Wall Street down the slippery slope, it stands to figure that the apartment market is up. With so many displaced former homeowners, they have to live somewhere. With educated apartment building investors enjoying higher occupancy rates and reaping higher rents, the only remaining question is ‘How do I cash in?’

Steve Steadele, author of Multifamily Millionaire: How To Get Wealthy Buying and Selling Apartment Buildings from New Wealth Publishing, can tell people how to get their share of a booming apartment market the way the pros do. Not a scam, not a gimmick – simply a solid market opportunity.

“What’s really exciting about this is that novice investors can be just as successful as seasoned pros,” Steadele said. “I own lots of properties and was able to get into them easily, without a lot of cash. One seller even paid me $20,000 to take his building. Today Sellers want out of their rental property because they bought at the wrong time in the wrong place. Some guru told them to mortgage their house and buy an apartment building at the top of the cycle. Those same Buyers are today’s Sellers. They lost a lot of money and in some cases they lost the property. Many have other investments that are tanking and they need to liquidate assets to stay afloat. It’s unfortunate. Had they been properly educated, they could have avoided this mess. Now their losses can be your gain.”

Most real estate investment ideas are faced with a natural cynicism, primarily because there are so many hucksters out there pitching their “secrets” to buying and selling real estate without capital and without experience. The old axiom of “buyer beware” usually accompanies these programs, because many people ask the legitimate question of, “if this was so easy, why isn’t everyone doing it?” Steadele offers no such illusions when talking about the burgeoning apartment market.

“The controversial part about this is that most gurus talk about how easy it is to do,” he said. “It’s not easy – but it’s not prohibitively difficult, either.”
Like all high-priced business deals, there is a strong component of research, planning and sweat equity that goes into being successful, which answers the cynic’s query. It’s not easy, but it is feasible.

The general clarion call here is that apartments make sense. They’re one of the best long-term investments a person can make. Steadele teaches people when, where and how to buy apartment buildings so they can do what they want, when they want.

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A Mixed Picture for Home Sales

Dec 12

Posted by admin in Real Estate

Unsold homes rose in November, but other data remain surprisingly strong. Will 2006 be the year analysts’ gloomy predictions finally come true?

Existing home sales fell 1.7%, to a 6.97 million rate, in November, following a 2.7% decline in October, to 7.09 million. The pace is a little slower than expected, and is below 7 million for the first time since March. Both single-family home and condo sales were soft, down 1.9% and 0.8%, respectively. Declines were registered in every region. The supply of homes rose to five months’ worth, a multiyear high. Median existing home sale prices fell to $215,000 from $218,000.

The sales rate of 6.97 million units is still solid, however, and remains well above the previously lofty 6.72 million rate of 2004 and 6.11 million in 2003. Indeed, since reaching the “6 handle,” economists have viewed the existing home sales rate as unsustainable, so it will be interesting to see how these figures behave when we enter the seasonally important second-quarter period of 2006.

The rise in the month’s supply in November suggests a weaker path in 2006 than in the prior three years. But all of the housing data are generally trending higher at a rapid clip in this expansion, and this makes the larger inventory figure for the sector hard to interpret.

TURN SIGNAL?  Also, prices have exhibited virtually none of the seasonal weakness typical for each fourth-quarter period for these nonseasonally adjusted data from the National Association of Realtors. Existing home sales prices have historically revealed a fairly consistent seasonal pattern of fourth-quarter declines at a 6% rate. But this year, we’re seeing an atypically small fourth-quarter decline at only a 2% rate, which is in stark contrast with market fears that a correction in housing prices is under way.

Real estate activity is showing a seasonal slowdown that’s being viewed by some as a signal of a turn, with all the usual characteristics of falling prices, reduced transactions volume, and multiple bid situations, etc. However, because of the strong seasonal patterns usually seen in these metrics of housing-market performance, there’s actually little evidence in reported data after adjustment for seasonal variation of an atypical adjustment in the sector.

If we look at the long-term price patterns for the existing home sales report, price gains for homes in the Northeast and West have been historically large, but not unprecedented. Prior boom periods have extended well beyond the emergence of public perception that prices in these markets are “too high.”

ONGOING CYCLE.  Though such an assessment is likely correct for some urban markets, calling the top for the national market as a whole won’t be easy until we see signs that seasonally adjusted price declines are actually emerging. Any pop in the bubble may not occur until late 2006, or even 2007, depending on the course for Fed policy and market interest rates.

Overall, most market economists entered 2005 (and 2004 and 2003…and 2002…) expecting a drop in housing activity for the year, given the enormous “overshoot” of activity through the recession. But the sector keeps setting new highs, and the sequence may well be emerging again in 2006.

We do expect 2005 to mark the peak in the housing sector, as we expect some moderation in the new year. But as with prior years, when we bucked the trend and projected outright increases for the sector, the 2006 jury is out on where demand and supply will meet in the new year until we enter the seasonally important spring housing market.

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Will the hot real estate market result in mortgage interest rates going up

Nov 24

Posted by admin in Real Estate

Here is an article that the Bank of Canada raising interest rates to slow the real estate market down. While we have seen prices go up in the Vancouver real estate market I have noticed in the areas that I track that the number of listings each day has increased in the past month. If the inventory of homes were to grow it is likely that the real estate market will get back to a more balanced position which should see prices stabalize.

At this time it does not appear that we will see mortgage interest rates in going up in the short term.

TORONTO (Reuters) – Excessive real estate strength in Canada from ultralow mortgage rates could push the Bank of Canada to raise interest rates sooner or more aggressively than forecast, according to a TD Economics report on Tuesday. The possibility is worth watching closely, the economics arm of Toronto-Dominion Bank argued, although it also said the most likely scenario is that the real estate market will moderate and inflation will remain in check. The Bank of Canada has pledged to keep its interest rates unchanged at 0.25 percent until mid-2010, unless it sees a threat of inflation spinning out of control. TD pointed to recent statements by the central bank that hinted that it would seek to lean against signs of emerging asset bubbles and that it is also monitoring developments in home prices. In a recent speech, Bank of Canada Governor Mark Carney deemed the strength in existing home sales as “temporary”, reflecting “pent-up demand” and improved affordability.

“The (Bank of Canada’s) view at the moment is that the recent resurgence in real estate is temporary, but if it does not moderate in the coming year — or worse still if price growth accelerates — it could lead to an earlier and more substantial tightening in policy than currently anticipated,” TD economists Craig Alexander and Grant Bishop said in the report on Tuesday. The economists stressed that the central bank targets the rate of consumer price growth and does not target asset values. “The key issue is whether the low interest rate environment is creating an economic imbalance that requires a rebalancing of monetary policy,” the TD economists said. Canadian real estate markets have staged a stunning turnaround this year from the end of 2008 when sales and prices retreated sharply. The latest Canadian Real Estate Association data showed August home sales were up 18.5 percent from a year ago, while prices rose 11.3 percent nationally from a year earlier to an average C$324,779 ($306,395). TD expects sales will cool in the coming months and for price growth to return to a mid-single digit pace after months of pent-up demand and tighter mortgage pricing. “The base-case economic forecast does not anticipate that hot real estate markets will force the Bank of Canada’s hand, but it is a risk worth closely monitoring,” the TD economists said. TD expects the Bank of Canada will begin to gradually lift the benchmark overnight interest rate in the fourth quarter of 2010.

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