Tag Archives: rental demographics

Buying Is Better Than Renting in Most Markets…but for How Long?

Source: RISMedia

Buying a home is more affordable than renting one in 66 percent of housing markets in the U.S., with Cook County, Ill., Maricopa County, Ariz. and Miami-Dade County, Fla. among those with the highest buy affordability, according to ATTOM Data Solutions’ 2017 Rental Affordability Report. Renting a home, to compare, is more affordable than buying one in 34 percent of markets, with Dallas County, Texas, Kings County, N.Y. and Santa Clara County, Calif. among those with the highest rent affordability.

Predominantly impacting affordability are stagnant wages, which have lagged at a growth rate of 2.2 percent since one year ago, compared to home prices, up 5.7 percent, and rents, up 4.2 percent.

Rising mortgage rates, according to ATTOM Senior Vice President Daren Blomquist, could deal another blow to affordability. Average rates, which retreated since charging forward following the election, are currently above 4 percent.

“While buying continues to be more affordable than renting in the majority of U.S. markets, that equation could change quickly if mortgage rates keep rising in 2017,” says Blomquist. “In that scenario, renters who have not yet made the leap to homeownership will find it even more difficult to make that leap this year. Additionally, renting may end up being the lesser of two housing affordability evils in a growing number of high-priced markets.”

Home price growth outpaced wage growth in 79 percent of the counties analyzed in the report, while rent growth outpaced wage growth in 62 percent. Both percentages include Harris County, Texas, and Los Angeles County and San Diego County, Calif. Wage growth, however, outpaced home price growth in 21 percent of the counties analyzed, and outpaced rent growth in 38 percent.

A monthly house payment on a median-priced home will require 36.6 percent of average wages, according to the report; a monthly fair market rent will require 38.6 percent.

The most affordable rental markets in 2017, based on the percentage of average wages needed to pay fair market rent, are:

  1. Madison County, Ala. (23.9 percent)
  2. Allegheny County, Pa. (24.4 percent)
  3. Fulton County, Ga. (24.8 percent)
  4. Anderson County, Tenn. (25.1 percent)
  5. Rock Island County, Ill. (25.3 percent)

The least affordable rental markets in 2017:

  1. Marin County, Calif. (77.3 percent)
  2. Spotsylvania County, Va. (73.7 percent)
  3. Monroe County, Fla. (72.2 percent)
  4. Honolulu County, Hawaii (70.7 percent)
  5. Maui County, Hawaii (70.6 percent)

Source: ATTOM Data Solutions

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Chinese Residential Purchasing Power Pushes over $150 Billion into U.S. Real Estate

Source: RISMedia

Over the last 5 years, Chinese nationals have invested over $150 billion into the U.S. housing market, pouring in $28.6 billion in 2015 alone, according a new report released recently by Asia Society and the Rosen Consulting Group.

Currently the biggest foreign buyers of American homes, this immense push from Chinese buyers has been extremely beneficial in aiding the success of the U.S. housing market recovery.

While Chinese nationals have been purchasing both residential and commercial properties, the study shows more purchasing power going toward residential homes than commercial buildings, with $23 billion funneled into U.S. commercial real estate and a stunning $127 billion into housing.

A 2015 study by the National Association of REALTORS® showed that buyers from China made up 16 percent of all international buyers locking in single family homes in the U.S., jumping from 12 percent in 2013, inching above the long-standing top foreign real estate buyer, the Canadians.

“Chinese buyers are buying real estate in the U.S. and they are buying lots of it,” says John Yen Wong, Founding Chairman of the Asian Real Estate Association of America (AREAA), a Strategic Partner with the recently released study. “These property purchases are broadening across the country and communities benefit from the infusion of capital into the neighborhoods.”

So where are Chinese nationals buying real estate, and why? In 2015, 35 percent of these home purchases were made in California, with New York following suit. Top hot spots, according to the study, include Los Angeles, San Francisco, New York, Seattle, Chicago, Miami and Las Vegas. These high-end locations mean buyers are purchasing high-end homes. The study shows that in 2015, Chinese buyers paid an average of $832,000 per home, doubling the average of other foreign purchases landing at $499,600.

Motivations vary. Wong comments, “Three of the key drivers for these buyers are fee-simple ownership—rare if at all, in China; the rule of law—recourse if something goes wrong; and a stable government, despite what we might think during presidential election season.”

Many buyers are relocating on investor visas, some are purchasing rental properties or second homes, while others are motivated by worry over the devaluing of the Chinese yuan, pushing many to translate their assets to the U.S. dollar.

“New real estate owners do not stop spending once the real estate purchase is completed,” says Wong. “Whether buying new appliances, new cars, or eating at restaurants, these new owners infuse money into local economies. The Chinese buyers can lay the foundation for vibrant community growth.”

New Year’s Pledge: Automatic Wealth Through Rental Real Estate

By Mark Ford, founder,
The Palm Beach Research Group

Do you invest in real estate?

I’m not talking about your home. Owning a home has more to do with security (emotional and personal) than it has to do with
building wealth.

I’m talking about rental real estate.

I love real estate. It’s not without its problems, but it’s the best way I’ve found to accumulate a good deal of wealth on a part-
time basis.

In the many years I’ve been actively investing in real estate, it has given me returns much better than the stock market. In fact,
my average return has been between 5% and 8%, without leverage. When I use bank financing, those numbers are in the 12%-15% range.

I’ve tried all sorts of real estate investing. But I’ve gotten the best results by sticking to this plan: direct investments in
income-producing properties… either residential or commercial.

You receive something with rental properties you don’t get with many other real estate deals: guaranteed income. Sure, you get
appreciation, too. But I’ve come to see that as secondary to having dozens of extra, ongoing income streams. (And did I mention
it’s money cost of borrowing, the maintenance, and the theoretical loss of income by charging a modest rent.

I netted something like $10,000 per year on a condo I bought for $65,000. That was a return of roughly 15%, cash on cash. (Cash-on-
cash return = annual dollar income / total dollar investment.)

Had I used bank financing, I would’ve made more – without any significant increase in risk.

I own dozens of individual properties like this. They send me checks – usually thousands of dollars – on the first of every month.
That’s a nice way to begin your month.

Mark on his favorite day of the month: the first.

On the credenza are 24 small red binders. Each represents a separate real estate investment I’m involved in.

Some are individual properties I own myself. Some are properties I own with friends. Some are direct investments. Some are in
partnerships or corporations. Some are rental plays. Some are build-and-sells.

If you decide this is the year to begin a real estate portfolio, start slowly.

My first real estate investment was a bad one. I’ve written about it before. It was a rental unit in Washington, D.C. (It was
overpriced and occupied by a prostitute who would neither pay me rent nor do her business elsewhere.)

It took me years to dig myself out of that mistake. I emerged a smarter (but not-yet-smart-enough) real estate investor.

Take your time. Be selective. Educate yourself. Some of what’s on the bookshelves is full of misguided advice.

My best advice is to subscribe to our rental real estate program. It’s part of the Palm Beach Research Group’s Wealth Builders
Club. That, you can trust.

You can also take adult education classes… if you can find them. Be leery of free seminars –they’re likely to be selling
traps.

Here’s a promise: If you start investing in rental real estate this year, you’ll be glad you did. If you keep investing – buying at
least one new property per year (which will be easy once you get going) – you will be a real estate multimillionaire in no
time (not counting your other assets).

And you’ll be well on your way to retiring as a multimillionaire.

When you look back on all the wealth you acquired, you may feel the way I do now: that real estate was the easiest and – next to
your personal business – most lucrative wealth-building activity you ever got involved in.

Regards,

Mark Ford

Solid Real Estate Growth Predicted Through 2017

Source: RISMedia

The real estate industry is expected to remain on a sustainable course of solid growth for 2015 through 2017, according to a new three-year forecast from the Urban Land Institute (ULI) Center for Capital Markets and Real Estate. The outlook – the latest installment of the semi-annual ULI Real Estate Consensus Forecast – is based on a survey of 43 of the industry’s top economists and analysts representing 32 of the country’s leading real estate investment, advisory, and research firms and organizations.

For an analysis of the survey findings, as well as highlights of the industry and overall economic projections through 2017, click here .

The Aging of The Homeowner

Source: RIS Media

 

According to a new report from the EBRI (Employment Benefit Research Institute),
senior citizens are still the age group with the greatest homeownership rate.

Americans 50 years old and over are predominently homeowners, and
not likely to rent until reaching their 70’s.

Seventy three percent of households of those over 50 reported
owning the homes that they lived in. This rate increases to over
eighty one percent by the age of 65. The rate then declines a bit
to 77 percent at age 75, and from there the rate declines more sharply.

As one might expect, trends in rental property show the opposite
pattern. Those renting their homes peaks at age 50, at about twenty
three percent. This rate drops to fifteen percent by 65.
However, after age 75 the rental rate increases steadily.