U.S. New-Home Sales Climb to 1 Million Rate, Fastest Since 2006

/in , /by

Sales of new homes in the U.S. unexpectedly advanced for a fourth month in August to the highest level in almost 14 years as record-low mortgage rates continued to entice buyers into a market with ever-shrinking supply.

Purchases of new single-family houses increased 4.8% to a 1 million annualized pace, led by a flurry of demand in the South, after an upwardly revised 14.7% surge in July, government data showed Thursday. The median selling price decreased from a year earlier to $312,800 and the number of homes for sale dropped to an almost three-year low. Economists expected an 890,000 pace, according to the median estimate in a Bloomberg survey.

U.S. new-home sales surprise in August, rise to fresh 14-year high

The data are the latest to highlight momentum in the housing market, driven by low borrowing costs and a desire for new property during a pandemic that’s led to many more Americans to work from home. At the same time, it’s difficult to gauge how long such robust demand will last, given the scale of layoffs and the potential for future job cuts without a federal fiscal aid package.

Sales rose in two of four regions led by the South — the largest region — where purchases surged 13.4% to the highest level since 2005. Demand also increased in the Northeast.

The supply of new homes continued to fall. At the current sales pace, it would take 3.3 months to exhaust the supply, the shortest time frame in records to 1963.

Builder Backlogs

It’s the same picture for backlogs: the number of properties sold for which construction hadn’t yet started jumped to 342,000 in August, also the highest since 2006 and a sign builders will be busy for months to come.

Buyers are opting for new homes as fewer homeowners seek to sell their own properties. Mortgage rates are set to remain at historically low levels amid stimulative Federal Reserve monetary policy aimed at shoring up economic activity.

Other figures corroborate the high demand for real estate. Existing home sales strengthened in August to the highest pace since the end of 2006, following a record jump in July. Homebuilder optimism is also at an all-time high, reflecting strong current sales, the demand outlook and increased prospective buyer foot traffic.

The new-home sales report, released jointly by the Census Bureau and Department of Housing and Urban Development, tends to be volatile: it showed 90% confidence that the change in sales last month ranged from a 5.7% decline to a 15.3% increase.

US housing supply reaches nearly 40-year low

/in , /by

 

The number of single-family homes on the market hit historic lows in July, driving prices up (iStock)

The coronavirus pandemic has exacerbated the severe housing supply shortage in the U.S., with the number of homes on the market reaching historic lows.

At the end of July, the National Association of Realtors found that there were 1.3 million single-family homes on the market, the lowest figure for any July since 1982, the Wall Street Journal reported. And in the week ending Sept. 12, the number of available homes was down 29.4 percent from the same time last year, according to Zillow Group.

The post-pandemic shortage is a case of supply and demand: There are more buyers looking for homes, and fewer sellers listing them. The high demand for contractors, painters and other home-improvement workers has led to delays in getting homes ready to sell, said Beth Traverso, managing broker at Re/Max Northwest Realtors. Once homes list in her Seattle suburbs market, they find buyers quickly, she told the Journal.

But the lack of homes for resale has led to increased demand for new-build homes. Single-family housing starts were up 4.1 percent in August, according to the Commerce Department. [WSJ] — Akiko Matsuda

Five reasons to invest in income-producing real estate in the USA

/in /by

Most of us are constantly looking for what to do with our money and savings, what the best and most worthwhile investment is.  The main thing guiding us is simple: An investment that is secure and that generates a return.

The real estate market certainly provides an option that meets these criteria, but the opportunity to purchase real estate in Israel is growing less and less affordable, and less feasible.  The best alternative these days, in my opinion, is to be found abroad – in the US, where the price of an old three-room apartment in Givat Olga can buy you two new villas in Florida with double the return.

Data show that more and more Israelis are looking positively at investing in American real estate, but there are many possibilities, and it is important to choose the best investment for you.  There are many varied options, including investing in a private rental property, a plot of land, a rental apartment, or a commercial property.  I recommend investment in a private home in the US, which will generate monthly rental income.  Why?

1. Many foreclosures on large homes due to the crisis in the US.  Due to the housing crisis, many homeowners were evicted from their homes and have not yet been able to purchase a new property.  Therefore, there are many more renters in the market.  This creates an optimal situation for investors to purchase income-producing properties that will be easier to rent out.

2. An investment that pays for itself.  Assuming that the property is occupied most of the time, and that it does not stand empty at all (or just very briefly) between tenants, the monthly rental income will cover the cost of a mortgage, taxes and maintenance.  This means that you, the investor, have no additional expense beyond the initial investment.  Over time, the mortgage on the property will get paid off, your income will increase, and the cash flow will enable you to use the investment money for an additional new investment.

3. The trend of rental prices is skyrocketing.  In view of the demand for rentals, there is a marked increase in monthly rental prices.  According to a report on the rentals market, 88% of property managers raised rental prices during 2015, and by the end of 2016, a further increase of 8% is expected.

4. People are interested in returning to their previous lifestyle.  Many tenants who lived for years in their own private home lost their homes in the crisis.  These tenants will find it difficult to move to an apartment, and will prefer to maintain their existing lifestyle.  Thus, the demand for private homes for rent will increase.  These people will also make better tenants, since they are used to living in a private home and will make sure to maintain it as they did their own home.

5. Tax deduction. The thought of dealing with taxes on the purchase of an additional property meant for investment, and on rental income, could be off-putting.  But it is important to know that there are many tax incentives that property owners can take advantage of in order to offset costs. Depreciation, maintenance, repairs, interest (on mortgages) and payments to accountants are just a small part of all the expenses that the owner of an income-producing property can claim in a tax refund.

In summation, every investment must obviously be examined according to specific criteria in order to make an informed decision and to maximize the return on investment at minimal risk.  But it is important to remember what the optima type of asset is for you.

Investing in real estate in the USA – here are 5 reasons why

/in /by

Many people ask me why I chose to invest specifically the US real estate market.  What makes this market the most attractive?  My answer is in the search for a market with the highest potential for investment that will generate maximum income at minimum risk.  My objective is to continue creating income and to put my cash flow to the best possible use.  While prices are climbing steadily in Israel and this dream is growing more and more distant, the search for good investment options in real estate led me straight to the land of endless opportunity – the US.  Why?

1. Real estate prices in the US are low.  Due to the housing crisis in the US, prices in many real estate markets are relatively inexpensive.  The markets where it is now worthwhile purchasing real estate include Florida, Georgia, Texas and Arizona.

2. The interest on mortgages is again low.  The supply of real estate is high compared to the relatively low demand for purchases.  Therefore, with the aim of encouraging real estate purchases, the banks are offering relatively low interest rates for mortgage borrowers wishing to purchase a property in the US.

3. Investment in real estate is a way to diversify your portfolio.  Many financial consultants talk about the importance of diversifying the investment portfolio in order to provide long-term security.  Adding real estate to your portfolio will allow you to create a source of accessible cash for when you need it, and to increase your income for retirement. Moreover, it is always possible to sell the property when you need to.  Purchasing in the American market will provide you with a property at a cost lower than its true price, and allow you to take advantage of future increases in value.

4. Real estate is an excellent long-term investment.  Crisis or no crisis, in the long term, investment in real estate is still a good investment.  If we look over the past 30 years, the value of real estate is still significantly higher than it was back then.  And if you have tenants who will cover the cost of your mortgage, then the investment is even more worthwhile, and in the current US real estate market, demand for homes among tenants is high.

5. Equity.  One of the most important things in purchasing properties is the fact that we are creating equity for ourselves.  The equity will allow us to benefit from a housing loan, thereby giving us economic freedom.  The loan we obtain will give us breathing space and the ability to maneuver economically for additional investments.

Why invest in real estate in Florida?

/in /by

The US is large, containing 50 states, and it is very important to choose an area that is fit for investment, the type of property, character of the tenants, etc.  We look at many criteria, but we focus on the four major criteria for investment:

1. An area with proven positive migration over the past few decades.  The pleasant climate, variety of services offered in the area, and the low costs compared to other areas, makes Florida very attractive for a variety of population groups:

       1. Golden agers who are looking for a place to live during their retirement.

       2. Many renters from around the world, who choose to spend half the year in the area.

        3. Many tourists with means from various countries around the world choose to spend some part of the year in their permanent homes and another part in a different attractive place with the appropriate conditions.  Florida is one of the preferred destinations for many such people.

2. An area with a strong and stable labor market.  Many young people choose their place of residence based on a market that can provide them with employment.  In recent years, some parts of Florida have become attractive areas for many companies to relocate their offices and factories.  At the same time, many public facilities are opening in the area, providing employment, in places such as Cape Coral.

3. An area with demand that exceeds the existing supply.  Florida is the most rapidly growing state in the US, particularly cities like Cape Coral, which is growing at double the rate of the state as a whole.  Cape Coral was hard hit by the crisis, and many were forced to leave their homes, as prices dropped.  As a result, there is a large supply, but in view of the attractive conditions in the area, Cape Coral has become one of the first cities to show recovery and amazing growth.

4. An area providing “added value” to residents.  Florida in general offers residents a convenient residential area with a good climate, in parallel with a variety of medical and public services that are developing rapidly.  Certain areas, such as Cape Coral, offer quality of life and high added value a cost significantly lower than other areas.  For instance, in Cape Coral it is still possible to buy a house on the water and to tie up a boat for about 250,000 dollars, while the same property on the east coast of Florida would cost 3 times as much or more.