Monday, October 29, 2012

New home prices in the USA

New Home prices have turned the corner and forces are driving rising prices in the foreseeable future. In this article, we discuss these forces and reveal the trends that are not evident to those who rely only on publicly-available data to form their views on home prices.
The popular aggregate price indices have shown a modest turnaround in home prices, rising nominally in recent months, but these median readings obscure the dramatic cross-currents that are at work underneath the surface. Effectively, there are two housing markets, each exhibiting distinct price trends. One consists of residential developments that are within a reasonable commute of job centers, with developed shopping and entertainment options and good schools. These are the projects that the builders care about, characterized by strong new-home demand and an increasingly scarce supply of homes and lots. The other “market” is the massive collection of remote lots, struggling subdivisions, and mothballed master-planned communities that were developed during the last year of the boom (2005/2006). Projects with these characteristics are almost completely dormant, and have very little impact on the builders.

Factors that will keep home prices rising in the “A” and “B” (good) locations are:
• New-home inventories are so low that builders who have standing or nearly-finished homes can command higher prices.
• Lot scarcities, expected to worsen in 2013, will force builders to raise prices, and the limited supply of new homes for sale means that builders have more pricing power.
• Rising costs (materials, lot prices, permitting/impact fees, and labor) will force builders to raise prices in order to be profitable.
• Pent-up demand re-emerging (people who were doubling up are now finding jobs and forming their own households, and people who were waiting for prices to bottom are now taking advantage of the buying opportunity and record-low mortgage rates). Household formation rates are forecast to increase by 50% over the next three years.
Meanwhile, in the “D,” and “F” locations, plentiful supplies of bank-owned homes for the moment continue to make new home construction a money-losing proposition. If buyers are willing to commute to those areas (‘drive ‘til you qualify’), they can buy homes from banks, at auction, short-sales, or from investors who bought from the banks or the agencies, and they can often do so at a price that is below replacement cost.

The “C” locations are neither good nor bad at present. While not all “C’s” are created equal, within two years many will rise to “B” status. No builder wants to be “below C level.” (very punny). I like Mike Castleman’s (Metrostudy’s CEO) statement during a presentation to a national builder client that builders will soon be “gnawing at the bone of C lot supplies.”

To invest in the USA please click here

Monday, October 15, 2012

Ottawa neighbourhood values

Many people wonder what neighbourhoods in Ottawa have grown the most over the past five years.  Interesting questions comparing Manotick to Westboro to Hintonburg to Bells Corners.  Ottawa real estate has continued to grow with the historic consistency. 

Bet you can't guess the number one growth area of Ottawa (45.7% increase) and the only negative growth neighbourhood in Ottawa real estate over the past 5 years ....

Check out the actual stats here

USA real estate recovery

The real estate market is in the USA is primed for a quick recovery, completing the rebound by as early as 2015 according to Barclays Capital.

Now is the time to be looking at investing in USA real estate.   

"That turn in the [housing] market is occurring now and it should become a boom by 2015. It will be powerful enough ... to lift the entire U.S. economy," said Roger Altman, chairman of Evercore Partners and former deputy Treasury secretary, in a column for the Financial Times.

Altman said he expects housing will add 4 million jobs to the economy over the next five years, as pent-up demand for home purchases drives building and and home prices higher.


Friday, October 5, 2012

September sales historically on track in Ottawa

“There has been a lot of attention recently on the need to “cool” the real estate market across the country,” said Ottawa Real Estate Board President, Ansel Clarke. “While there may be a need in some areas, we emphasize that real estate is local, and conditions and prospects will vary among major market areas and indeed within market areas. Historically the Ottawa real estate and housing market has not experienced volatility in prices or number of units sold.”
“While average price information does not indicate the value of a specific property, it is useful to identify trends,” continued Mr. Clarke. “Since 1956 the average price in the Ottawa real estate area has decreased only five times year over year and has increased by 15 per cent or more only five times as well. The Ottawa real estate market can be characterized as stable and steady although there are pockets of our market area where we see larger increases in price.”
“As for the number of sales, we are on track this year to match historical levels of activity. Since 1999 the number of sales through the MLS® System in Ottawa has ranged from a low of 11,329 to a high of 14,783. Sales for the first nine months of the year are just under 11,700.”
New mortgage rules and continuing uncertainty about job losses in the public service may have contributed to recent decreases in the number of sales through the MLS® System of the Ottawa Real Estate Board. Members sold 993 units in September 2012, down from a near record high of 1,201 in September 2011. The average price of properties sold for the month was $351,585, up from $347,236 last month and $335,623 in September 2011.

“Some buyers are deferring their decision to purchase until their employment status is clearer. Meanwhile, sellers will want to ensure that their properties are priced appropriately. We encourage buyers and sellers to talk to their Ottawa and area REALTOR® for more information about the housing market outlook where they live, or want to live,” concluded Mr. Clarke.