70 Percent Say Buying Now is Good
A survey by Fannie Mae shows that 70 percent of Americans believe it is a good time to buy a home.
That is up from 64 percent in January 2010.
Still, 33 percent–up from 30 percent in January–say they’ll rent next time around.
About 67 percent believe housing is a safe investment, down from 83 percent of people questioned in a similar survey in 2003.
Source: Reuters News (09/16/2010)
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Housing Less Likely to Be Wealth Builder
The housing market may stabilize, but some economists believe that real estate will never again be the investment it once was.
Stan Humphries, chief economist for Zillow.com, predicts that in the future housing values will only keep up with inflation. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”
Dean Baker, co-director of the Center for Economic and Policy Research, says it will take 20 years for the market to recover the $6 trillion lost since 2005 and values will never catch up.
Bob Walters, chief economist of the online mortgage firm Quicken, is more optimistic. “You have to live somewhere,” he says. “In three or four years, people will resume a normal course, and home values will continue to increase.”
Source: The New York Times, David Streitfeld (08/22/2010)
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Fannie Survey Finds Home Owners Are Skeptical
The housing crisis has changed how Americans view homeownership, according to a survey of public attitudes by Fannie Mae.
The number of people who view homeownership as a safe investment declined from 83 percent in 2003 to 70 percent in 2009. In addition:
* 48 percent of those surveyed said banks should foreclose on people who don’t pay their mortgages. 53 percent blamed borrowers – instead of banks – for taking out bigger loans than they could afford.
* 15 percent of respondents said it is acceptable for borrowers who are underwater to walk away.
Source: The Washington Post, Renae Merle (04/06/2010)
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Being a Landlord Can Be Increasingly Profitable
Despite falling rents and rising vacancies, the profitability of residential rental property is improving.
Investments in apartment complexes are generating annual returns of 7-8 percent immediately because purchase prices have declined.
Buying a rental property isn’t for everyone. It requires putting down at least 50 percent in cash because banks are reluctant to lend more. And buyers need to be able to hold the property for at least three to five years or more to give the investment time to gain value.
Local Market Monitor, which analyzes real estate investments, identifies these good and not-so-good markets for landlords:
Good Markets
* Columbus, Ohio
* Washington, D.C.
* Raleigh, N.C.
* Greenville, S.C.
* Columbia, S.C.
* Kansas City, Mo.
* Oklahoma City, Okla.
* Fort Worth, Texas
* El Paso, Texas
Bad Markets
* Detroit
* Cleveland
* Wilmington, Del.
* Dayton, Ohio
* Orlando
* Tampa-St. Petersburg
* Boise, Idaho
* Stockton, Calif.
* Las Vegas
* Phoenix
Source: The Wall Street Journal, M.P. McQueen (02/20/2010)
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Lennar Buys Up Bad Loans to Boost Returns
Miami-based home builder Lennar Corp. paid $243 million for a 40 percent stake in a portfolio of 5,500 residential and commercial real estate loans from 22 failed banks at auction Thursday.
Ivy Zelman, CEO of real estate research firm Zelman & Associates, called the buy a smart move, saying that the return on the investment should be at least 20 percent, far more than Lennar is likely to make on other kinds of investments.
Lennar competed against private-equity firms to acquire the loans. Analysts at Citigroup Inc. said they expect the purchase to add $15 million to the home builder’s earnings in 2010.
Source: The Wall Street Journal, Dawn Wotapka and James R. Hagerty (02/12/2010)
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Homeownership Still A Good Investment
The American dream of homeownership is still a good bet, financial advisors say firmly.
Despite the downturn in the last couple of years, homes have still appreciated an average of 4 percent a year since World War II. Plus, it’s a leveraged investment; a 10 percent down payment yields a 1,000 percent return if the price of the home doubles.
There are also valuable intangibles. Owning a home provides independence, security, community, and a roof over the owner’s head. No one can say that about investing in stock.
Source: Associated Press, Dave Carpenter (10/12/2009)
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