Existing Home Sales Rise at Fastest Pace in 10 Months

US - Market Analysis:


WASHINGTON -- U.S. home resales rose to a 10-month high in July and the number of Americans filing new claims for unemployment benefits fell last week, signaling strength in the economy early in the third quarter. ow.ly/2Mbm7z

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Canadians the biggest foreign buyers of US property

Canadians are the biggest foreign buyers of US property. Figures for April-May released by the National Association of Realtors in Washington show that Canadians accounted for 19 per cent of foreign homebuyers; down from 23 per cent last year; while the Chinese spent the most money.

While investment from China is focused on expensive real estate in California and New York, Canadians put their money into the popular winter escapes of Florida and Arizona.

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Foreign Buyers Boosting U.S. Housing Market Recovery

The U.S. housing recovery continues and international buyers are a big reason, with the Chinese leading the charge. Chinese buying is up more than 70% to $22 billion -- nearly 1 in 4 dollars of all foreign purchases, according to the National Association of Realtors.

Canadians are No. 1 in total homes bought, but the Chinese buy more expensive homes: An average price of $591,000.

The Chinese also bring a lot of cash to the table: More than three-quarters of their purchases were all-cash buys.

California is the biggest market for the Chinese, accounting for a third of their purchases.

Washington State, however, is coming up quickly, accounting for 9% of buys. It's followed by New York, Pennsylvania and Texas.
Why are they buying? Only 39% of Chinese buyers said they intended to use their purchases as their main home.

Some may buy condos for their children attending U.S. colleges. They hope that, in addition to saving on dormitory fees, they can make benefit from home price appreciation by the time the students graduate.

Others are becoming landlords, buying cheap homes in distressed economic pockets, like Detroit, and renting them out.
Still others use the homes as vacation properties a couple of weeks a year and rent them out the rest of the time.

In addition to the Chinese buyers and the Canadians, Mexico, India and the United Kingdom filled out the top five list. India also had a notable jump in money spent -- 48% growth.

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The Best U.S. Markets for Rental Properties

The rental market has been booming over the past several years, with many landlords earning returns of 10% or better.

While rising home prices have limited returns for landlords in some markets, other markets offer plenty of profits, according to RealtyTrac which analyzed rental market conditions in 370 major U.S. counties, including median home prices, average rents and unemployment rates.

For example, landlords in Anderson County, S.C., can rent a three-bedroom home with a median price of $70,000 for $900 a month. With average returns of 15.3% -- that's well above the national average of 10%.

Home to a university and several auto parts makers for BMW, Anderson is part of the Greeneville metro area and has a low 4.3% unemployment rate, meaning demand should continue to strengthen and help add to future profits.

Other areas that offer landlords more bang for their buck include Woodbury County, Iowa. Median home prices in the area, which includes the Sioux City metro area, were a low $84,250 while rents averaged $914 a month. That translates into a rental return of about 13% for landlords.

While low unemployment is one factor landlords should look for while assessing a market, RealtyTrac also suggested that investors take the demographics of an area into account as well, particularly when it comes to baby boomers and millennials.

Markets where these populations are growing rapidly should produce strong returns for investors going forward. For boomers, who were born between 1945 and 1964, retirement-friendly markets in Florida are predictably hot. Some local markets have seen their boomer populations grow by 20% or more since 2007.

The Tampa-St. Petersburg-Clearwater, Fla. metro area topped the list among markets for boomers.

Millennial markets, on the other hand, were scattered throughout the nation. RealtyTrac cited the Baltimore, Philadelphia, Jacksonville, Fla. and Atlanta metro areas as leading rental markets for this age group.
Several smaller markets are also good Millennial bets such as Fayetteville, N.C. and Virginia Beach/Newport News City, Va.

U.S. Apartment Rents Continue Rise

Apartment landlords in the U.S. continued to push through hefty rent hikes in the second quarter, squeezing households that already are struggling financially after four years of steady increases.

The average monthly rent for an apartment rose to $1,099 in the second quarter, up 0.8% from the first quarter, according to data to be released Wednesday by real-estate research firm Reis Inc. That was the 18th consecutive quarter of rent increases. For the 12-month period ended in June, rents rose 3.4%.

Effective rents—which tend to be lower than asking rents—were up in all 79 U.S. metro areas tracked in the Reis report. West Coast cities that have been the model of recovery continued to top the list of highest rent growth for the quarter and over the past 12 months.

Rent growth exceeded 6% over the past year in San Francisco, San Jose and Seattle.

Even cities that aren't normally associated with fast rent growth, such as Charleston, S.C., and Nashville, Tenn., posted strong growth over the year, up about 5% or more for the year.

U.S. Construction Spending Rises but Less Than Projected

WASHINGTON -- U.S. construction spending rose less than expected in May, which could prompt a further downgrading of second-quarter economic growth estimates.

Construction spending edged up 0.1 percent to an annual rate of $956.1 billion, the Commerce Department said Tuesday. However, April's construction spending was revised up to show a 0.8 percent rise, taking some of the sting out of the report.

Economists polled by Reuters had expected construction spending to advance 0.5 percent after a previously reported 0.2 percent gain.

The data was the latest to suggest the economy's rebound from a brutally cold winter could fall short of expectations.

U.S. Home Prices Rise in May but Gains Have Slowed

WASHINGTON -- U.S. home prices rose in May compared with a year earlier, but the gains have slowed.

Data provider CoreLogic (CLGX) said Tuesday that prices increased 8.8 percent in May compared with 12 months earlier. The pace of gains has slowed as more homes have come onto the market, according to CoreLogic.

On a month-to-month basis, prices rose 1.2 percent from April to May.

Prices increased the most in Western states, including Hawaii, California and Nevada.

Millennials Could Drive Next U.S. Housing Boom

The Millennials who for years have lived with their parents while the economy imploded, now seem poised to move out on their own.

According to a report released Thursday by Harvard's Joint Center for Housing Studies, by 2025 Millennials could form 24 million new households and drive the U.S. real estate market.

The report also found that, the number of young people who buy homes increases as their incomes grow. The hiring of Millennials has recently improved as the economy heals. If the trend continues, these same Milennials could soon become homeowners.

U.S. Home Construction Slips in May

HOUSTON -- The pace of U.S home construction slipped in May as buyers face higher mortgage rates.

Construction firms began work on fewer single-family houses, condominiums and apartments last month.

Home construction has struggled to gain much traction this year, limiting its contribution to broader economic growth. Many potential buyers face higher mortgage rates than at this time last year, while builders are selling fewer new homes but charging more for them.

This has reduced the number of possible buyers and the number of construction jobs by 1.49 million fewer than at the start of the Recession in December 2007, a loss of about 20 percent.

In May, construction declined in the Northeast, Midwest and West. Only the South experienced greater building activity in May.

Housing starts have increased 9.4 percent during the past 12 months but apartments account for most of the gains, suggesting that more Americans will be renting instead of owning homes.

U.S. Home Sales Post Biggest Monthly Gain in 3 Years

HOUSTON -- Sales of previously owned U.S. homes posted the best monthly gain in nearly three years in May.

The National Association of Realtors reported Monday that sales of existing homes increased 4.9 percent last month to a seasonally adjusted annual rate of 4.89 million homes. The monthly gain was the fastest since August 2011.

The 14 Best Places in the U.S. to Flip Properties

The 14 Best Places in the U.S. to Flip Properties
The best places for flipping properties are currently concentrated along the East Coast, but it's a popular practice across the country.

If you're interested in buying low and selling for significantly more than you paid, RealtyTrac came up with a list of locations with the best opportunities:

14. Middlesex County, N.J.

Average purchase price of flips: $200,015

Average sale price of flips: $264,742

Average ROI: 32.36%

13. Nassau County, N.Y.

Average purchase price of flips: $316,060

Average sale price of flips: $422,858

Average ROI: 33.79%

12. Monroe County, Fla.

Average purchase price of flips: $311,701

Average sale price of flips: $429,564

Average ROI: 37.81%

11. Berks County, Pa.

Average purchase price of flips: $117,846

Average sale price of flips: $162,774

Average ROI: 38.12%

10. Montgomery County, Md.

Average purchase price of flips: $347,682

Average sale price of flips: $482,969

Average ROI: 38.91%

9. Bergen County, N.J.

Average purchase price of flips: $320,010

Average sale price of flips: $450,492

Average ROI: 40.77%

8. Wright County, Minn.

Average purchase price of flips: $105,058

Average sale price of flips: $152,563

Average ROI: 45.22%

7. Anne Arundel County, Md.

Average purchase price of flips: $197,355

Average sale price of flips: $291,243

Average ROI: 47.57%

6. Saint Marys County, Md.

Average purchase price of flips: $180,411

Average sale price of flips: $268,254

Average ROI: 48.69%

5. New Castle County, Del.

Average purchase price of flips: $127,795

Average sale price of flips: $195,246

Average ROI: 52.78%

4. Campbell County, Ky.

Average purchase price of flips: $75,253

Average sale price of flips: $127,848

Average ROI: 69.89%

3. Baltimore County, Md.

Average purchase price of flips: $131,186

Average sale price of flips: $224,089

Average ROI: 70.82%

2. York County, Pa.

Average purchase price of flips: $88,063

Average sale price of flips: $151,871

Average ROI: 72.46%

1. Prince George's County, Md.

Average purchase price of flips: $125,011

Average sale price of flips: $229,275

Average ROI: 83.4%

U.S. Home Prices Highest in 7 Years

U.S. home prices jumped 12.2 percent in May from a year ago, the most in seven years.

Real estate data provider CoreLogic said Tuesday that home prices rose from a year ago in 48 states. They fell only in Delaware and Alabama. And all but three of the 100 largest cities reported price gains.

Prices rose 26 percent in Nevada to lead all states. It was followed by California (20.2 percent), Arizona (16.9 percent), Hawaii (16.1 percent) and Oregon (15.5 percent).

CoreLogic also says prices rose 2.6 percent in May from April, the fifteenth straight month-over-month increase.

Steady hiring and low mortgage rates have encouraged more Americans to buy homes. Greater demand, a limited number of homes for sale and fewer foreclosures have pushed prices higher. Prices are still 20 percent below the peak reached in April 2006, according to CoreLogic.

Sales of previously occupied homes topped the 5 million mark in May for the first time in 3 ½ years. And the proportion of those sales that were "distressed" was at the lowest level in more than four years for the second straight month. Distressed home sales include foreclosures and short sales. A short sale is when a home sells for less than what is owed on the mortgage.

Home sales are expected to increase in the coming months. That's because the number of people who signed contracts to buy homes rose in June to the highest level since December 2006. There's generally a one- to two-month lag between a signed contract and a completed sale.

One worry is that higher mortgage rates could slow the housing recovery. Still, rates remain low by historical standards. And increases in rates could boost home sales. That's' because many Americans may act to lock in the lower rates before they rise further.

A survey by the University of Michigan released last week found more Americans believe it is a good time to buy a home because both rates and prices are just starting to rise.

Rates have been trending higher for two months. And the average rate on a 30-year fixed mortgage leapt to 4.46 percent last week, according to mortgage buyer Freddie Mac. That's the highest in two years and a point more than a month ago.

Mortgage rates surged after Federal Reserve chairman Ben Bernanke said last month that the Fed could scale back its bond buying later this year and end it next year if the economy continued to strengthen. The bond purchases have kept long-term rates down.

Economists say that higher mortgage rates are unlikely to stifle the housing recovery. A more critical issue is whether potential buyers can get loans. There are signs that banks have become more willing to extend mortgages.

Florida Leads U.S. in Foreclosures

Florida is the nation's foreclosure state, and Miami is the foreclosure capital.

The greater Miami area posted the highest foreclosure activity of any large city in the nation in the first quarter, with one in every 79 residences receiving some type of foreclosure filing, RealtyTrac said.

Miami's foreclosure activity was more than three times the national average.

Florida continued to rank No. 1 among the 50 states in the first quarter, with more of its homes getting foreclosure filings than in any other state, according to the Irvine, Calif.-based real-estate data firm.

Six other Florida metro areas also ranked in the top 10 in the nation in foreclosure activity in the first quarter. They are: Orlando (No. 2, with one in 86 housing units receiving a foreclosure filing); Ocala (No. 3, with one in 92); Tampa (No. 5 with one in 100); Jacksonville (No. 7, one in 105); Palm Bay-Melbourne-Titusville (No. 8 with one in 109); and Lakeland (No. 10, one in 128).

During the first quarter, 85,671 Florida residences got some sort of foreclosure filing. That was one in every 104 residences -- a rate nearly three times as high as the national average of one in every 296 residences, RealtyTrac said.

Foreclosure activity in Florida increased 7 percent in the first quarter from the prior period and jumped 17 percent from the year-earlier quarter, the firm said.

The increase reflects a step-up in activity by lenders who had held off on pressing foreclosures during the "robo-signing'' scandal that spotlighted an array of improprieties in the way lenders handled cases. Since last year's major legal settlement between 49 state attorneys general and five big banks, lenders have clearer parameters on how to handle foreclosures and have been working through their backlogs.

Worries that a mountain of foreclosures in Miami would flood the market and derail the housing recovery have proven unfounded so far. Amid a shortage of homes and condominiums for sale and a growing crowd of eager buyers, distressed properties are getting snapped up quickly. Housing prices in the area are posting steady gains.