More investors are taking on the risk of flipping homes, despite sluggish real estate markets across the country. Investors say there are still profits to be made in the house flipping business. Nearly 1 million homes were bought as investment properties in 2010, according to the National Association of REALTORS®, and a record number of buyers purchasing properties with cash currently are flooding the market. In Washington, D.C., Justin Konz of RestorationCapital says his clients are going through four of five properties a month and are making gross profit margins of 35 percent or higher. Flippers mostly are finding their homes through foreclosures auctions, REOs, and short sales. They seek homes at rock-bottom prices that will have low fix-up costs, no more than about 5 percent or 10 percent of the purchase price. In Florida, where investors are finding it more difficult to flip homes because of the drastic drop in prices and high inventories, flippers are targeting inner-city properties that are being sold at steep discounts. For example, some of houses are selling for $30,000 when they once sold for $200,000. Perry Henderson, a real estate agent and investor in Austin, Texas, says the biggest opportunities in flipping are the “ugly” houses that have lingered on the market or "old houses that somebody’s grandma lived in for 40 years and didn’t do anything to. Now, she’s passed away and her family wants to sell quickly." Real estate investor Brian Fuller, who with partners buys and sells more than 200 properties a year in the San Diego area, says he’s drawn to the “biggest eyesore on the block.” He says they then “turn it into the best looking house there. We’re helping pull up values in the neighborhood." Source: CNN/Money.com
A new report from Deutsche Bank notes that housing affordability is presently at an all-time high. (DB’s proclamation is based on figures compiled by the National Association of Realtors.) Bank analysts note that the acceleration in affordability is "unprecedented" and it should help stabilize both housing starts and residential construction. DB believes the chief reason why housing activity has stalled is lending standards. "This is the one area where senior loan officers are still tightening, unlike what they have done for consumer and commercial/industrial loans," the bank said. Its analysts believe when banks and lenders "become willing to make home loans, surging affordability should lift construction—perhaps by a significant amount." Rates are off their historic lows of the fall and early winter, but some lenders report that potential home buyers are becoming more active, believing that rates will continue to rise and want to lock-in now. Source: Source Media
Living downtown is becoming increasingly appealing to college-educated 20- and 30-somethings. In two-thirds of the country’s 51 largest cities, the college-educated population in the past decade has grown twice as fast within 3 miles of urban centers when compared to the rest of the metro area, the USA Today reports. That is a jump of 26 percent, on average, compared with 13 percent in other parts. Young adults with higher education, in particular, seem to be showing a preference for urban living. Young adults with a four-year degree are about 94 percent more likely to live near urban neighborhoods than less-educated young professionals. (In 2000, that number was about 61 percent.) Even floundering downtowns are attracting more young people. For example, Detroit, which has faced a 25 percent drop in its population since 2000, has added 59 percent (or 2,000) young and educated residents during that time, according to Impresa Inc., an economic consulting firm. Looking to keep the young vibe going strong, Detroit even has recently launched a campaign — ”15 by 15” — to bring 15,000 young, educated professionals to live in the downtown by 2015. To do that, they are offering cash incentives: A $25,000 forgivable loan to buy a home in downtown and stay there for at least five years or $3,500 on a two-year lease. Source: USA Today
In an encouraging sign for the housing market, new home construction increased in March, according to a government report. Housing starts, the number of new homes being built, rose 7.2% in March to an annual rate of 549,000 units, up from a revised 512,000 in February, the Commerce Department said. Economists had expected an annual rate 520,000 units, according to consensus estimates from Breifing.com. The report also said there were 594,000 building permits issued in March. That’s up 11% from 534,000 permits in February, and was also better than expected. Building permits were forecast to have increased to an annual rate of 540,000 units. In addition, new construction of multifamily homes continues to outpace construction of single-family units, which are considered the core of the residential housing market. Single-family housing starts increased 7.7% in March, while construction of buildings with five units or more was up 14.7% versus February. Source: CNN/Money
All rights reserved.
This newsletter was posted on Sunday, April 24th, 2011 at 8:14 am.
A new report from Deutsche Bank notes that housing affordability is presently at an all-time high. (DB’s proclamation is based on figures compiled by the National Association of Realtors.) Bank analysts note that the acceleration in affordability is "unprecedented" and it should help stabilize both housing starts and residential construction. DB believes the chief reason why housing activity has stalled is lending standards. "This is the one area where senior loan officers are still tightening, unlike what they have done for consumer and commercial/industrial loans," the bank said. Its analysts believe when banks and lenders "become willing to make home loans, surging affordability should lift construction—perhaps by a significant amount." Rates are off their historic lows of the fall and early winter, but some lenders report that potential home buyers are becoming more active, believing that rates will continue to rise and want to lock-in now. Source: Source Media
Living downtown is becoming increasingly appealing to college-educated 20- and 30-somethings. In two-thirds of the country’s 51 largest cities, the college-educated population in the past decade has grown twice as fast within 3 miles of urban centers when compared to the rest of the metro area, the USA Today reports. That is a jump of 26 percent, on average, compared with 13 percent in other parts. Young adults with higher education, in particular, seem to be showing a preference for urban living. Young adults with a four-year degree are about 94 percent more likely to live near urban neighborhoods than less-educated young professionals. (In 2000, that number was about 61 percent.) Even floundering downtowns are attracting more young people. For example, Detroit, which has faced a 25 percent drop in its population since 2000, has added 59 percent (or 2,000) young and educated residents during that time, according to Impresa Inc., an economic consulting firm. Looking to keep the young vibe going strong, Detroit even has recently launched a campaign — ”15 by 15” — to bring 15,000 young, educated professionals to live in the downtown by 2015. To do that, they are offering cash incentives: A $25,000 forgivable loan to buy a home in downtown and stay there for at least five years or $3,500 on a two-year lease. Source: USA Today
In an encouraging sign for the housing market, new home construction increased in March, according to a government report. Housing starts, the number of new homes being built, rose 7.2% in March to an annual rate of 549,000 units, up from a revised 512,000 in February, the Commerce Department said. Economists had expected an annual rate 520,000 units, according to consensus estimates from Breifing.com. The report also said there were 594,000 building permits issued in March. That’s up 11% from 534,000 permits in February, and was also better than expected. Building permits were forecast to have increased to an annual rate of 540,000 units. In addition, new construction of multifamily homes continues to outpace construction of single-family units, which are considered the core of the residential housing market. Single-family housing starts increased 7.7% in March, while construction of buildings with five units or more was up 14.7% versus February. Source: CNN/Money
All rights reserved.
This newsletter was posted on Sunday, April 24th, 2011 at 8:14 am.
No comments:
Post a Comment