Quantcast
Channel: Real Estate
Viewing all 4385 articles
Browse latest View live

Miami's condo bubble is up against a monster

0
0

brickell tower condo

The 374-unit 46-story Brickell House opened in 2014, during the steamiest days of Miami’s condo bubble. Now the dynamics have changed: 77 condos have been listed for resale over the past 6 months. And three have sold at a loss from their preconstruction prices.

A unit sold in February for $525,000, or $4,000 below preconstruction price. After the 6% sales commission, the net sales price was $493,500 or a loss of 7%, according to StatFunding’s new Miami Preconstruction Condo Market Update. A unit sold in March for $350,000 lost 16% after sales commission. And one sold in May for $233,400 lost 38%.

These sales impact the prices of future sales; comparable-sales data rule the industry, on the way up and on the way down.

Brickell House is somewhat unique. It’s equipped with a fully automatic robotic garage that never worked properly and has been shut down. Residents get to park on the street. Boomerang Systems, which supplied the contraption, filed for Chapter 11 bankruptcy a year ago. In January, it applied for Chapter 7 liquidation. The condominium association is suing its developer….

Miami’s condo bubble didn’t need this sort of debacle. Condos are already getting crushed. And the preconstruction condo resale market has “rolled over,” according to StatFunding.

Supply, supply, supply – the perfect glut.

Due to the condo construction boom, the oncoming supply is huge: since 2012, 17 large projects (defined as over 85 units each) with 3,749 units in total were completed. But over the next 24 months, another 40 large projects will be completed, throwing an additional 11,000 units on the market.

Buyers of preconstruction units who want to sell are getting desperate. Seven of them have taken a loss, including the three at Brickell House. And the number of preconstruction condo buyers willing to take a loss, as indicated by underwater listing prices, has soared from 14 at the beginning of May, to 45 as of August 8. And this, according to StatFunding, shows “we may be past the inflection point in the cycle,” according to StatFunding.

But these sellers are up against a monster.

miami condos

Of the 3,749 units completed in large projects since 2012, 18% or 679 units have been listed for resale. But only 34 have sold over the past six months, and 11 resales are pending. At this sales rate, supply amounts to 119 months.

But 40 large buildings, totaling over 11,000 condos, will be completed over the next 24 months. If a projected 35%, or 3,850 units, are listed for resale – a “conservative estimate,” given current trends – it would mark a 567% jump from 679 units already listed for resale. Combined, given current sales activity, there would be 674 months of supply – or 56 years!

StatFunding:

If the current market trends continue and as additional resale inventory is added to the market, the market could get scary.

Something will probably have to give.

Sellers might throw in the towel on dumping their condos and might instead “flood the rental market” that is already facing its own glut due to a historic apartment construction boom. “Or something unexpected may occur due to the imbalances in the market.”

And Shadow Inventory is ballooning.

Owners, unable to unload their units, have withdrawn, canceled, or terminated large numbers of for-sale listings, and have not listed them for rent either. This overhang can reappear overnight on the condo or rental market.

And in a first in this condo cycle, developers are now “sitting on unsold units.” For example, the developer of 190-unit Echo Aventura lists 31 units for sale (16% of the project) and is also sitting on 21 unsold units (11% of the project) that it has ceased marketing and is not trying to rent either. They have just disappeared from the scene. But they can reappear overnight. Hence the “shadow inventory.” Potential resellers have to compete with them.

To stay afloat, the developer took out a $24.3 million mortgage on 20 of the 21 units, which made StatFunding wonder: “If this is a trend, how long will developers hold unsold units? Will developers dump unsold units on a discounted individual or discounted bulk basis?”

Or will banks force them to sell?

Banks are already getting leery. Underwater mortgages, a concept that sends chills down a banker’s spine, have reappeared.

For example, at the Bay House – where 22% of the units are listed for sale but zero sold since September 18, 2015 – sellers are getting desperate. Three of them have lowered asking prices below the purchase price. If these units sell at or below the asking price, two mortgages on other units would be under water on a comparable-sales basis.

Banks, with fond memories of 2008, get nervous when the value of their collateral heads south. But any newly found prudence on their part can trigger a credit crunch at the worst possible time, setting off a chain reaction.

Many of the preconstruction buyers put 50% down. To avoid losing that deposit, they will try to close the purchase, figuring they can sell the unit at a loss that is smaller than the loss of the deposit would be. And they will put additional pressure on the market. But banks, having caught on to the now “obvious systemic market risk,” can throw a monkey wrench into the calculus. StatFunding:

  • As a result, a subset of 50% deposit-holder-buyers will not be able to close their preconstruction purchases due to unavailability of financing for their remaining 50% balance to close.
  • A subset of preconstruction buyers, unknown in scope, will close on their units and will be forced sellers for economic reasons and will likely be forced to sell at significant losses.

And as prices  under this pressure continue to head south….

  • Financing for actual end users and resale buyers will also likely become unavailable, which will further shrink the pool of potential buyers and further depress prices.
  • Condo lenders who failed to exit the market early will likely see defaults, and lenders will likely realize losses where loans are at the higher end of the LTV spectrum (following short sales and foreclosures).

And that’s how a formerly pooh-poohed doom-and-gloom scenario of an imploding condo bubble – a bubble that has been obvious for years but whose existence has been strenuously denied by the industry and its promoters – is turning artfully into reality. And once again, into a big headache for the banks.

And rents in Miami and other prime markets, under similar pressures, are already hitting the wall of reality. Read…  Big Unwind Begins in San Francisco, Miami, New York, Houston: Rents in “Primary Markets” Sunk by Apartment & Condo Glut

SEE ALSO: Homeowners aren't moving — they're remodeling

Join the conversation about this story »

NOW WATCH: A nutrition expert reveals how often you should eat to look better


19 cities where first-time homebuyers can live large

0
0

touring first home

Buying your first home can be hard.

You have to take out a loan, find a quiet neighborhood, and get a home near good schools and shopping. The list goes on for what seems like forever.

But no matter how long your list is, living space is probably close to the top.

After all, 43% of Americans told Trulia.com they would like a larger home. So if that's true for you, where should you move to in order to get the best value for your money?

Things apparently are bigger in Texas, so start there. But if the Lone Star state isn't for you, then try one of the other 18 metro areas with the biggest starter homes in America.

Read on to find out which areas made the list.

No. 19 Riverside, CA

Median Starter Home: 1237 sq ft

Median Premium Home: 2372 sq ft

Average home: 1744 sq ft

Data provided by Trulia



No. 18 San Jose, CA

Median Starter Home: 1238 sq ft

Median Premium Home: 2088 sq ft

Average home: 1638 sq ft

Data provided by Trulia



No. 17 Oxnard, CA

Median Starter Home: 1238 sq ft

Median Premium Home: 2535 sq ft

Average home: 1827 sq ft

Data provided by Trulia



See the rest of the story at Business Insider

An HGTV star who's invested in over 100 properties says you should do one thing before buying any property

0
0

Scott McGillivray

Scott McGillivray has invested in over 100 properties and even bought over 30 homes in one day, he told Farnoosh Torabi on an episode of her podcast "So Money."

The host of the HGTV show "Income Property" does one thing before considering any real-estate venture: a cash-flow analysis.

"I will never consider an investment property without first doing a cash-flow analysis," he tells Torabi.

It ensures long-term profitability, he says: "I never want to get caught in the scenario where I may have to sell it at a loss. If values aren't what's going up, I need to make sure there's cash flow there so that I can profit continuously."

This strategy fits into McGillivray's broader business philosophy of looking to the future first and working backward from there. As he tells Torabi:

Most people worry about the present and hope it works out for the future.

I look at the future first ... I look at a property and say, "OK. Here's a property that will bring in $20,000 a year in rent." And I'll work back from there and say, "What are all my costs going to be? What is my margin going to be?"

I'll make my decision based on the potential of future profit.

McGillivray isn't the only one who invests for cash flow. Kelly and Chris Edwards, twin brothers who turned a single house into nearly $8 million of property, told Business Insider, "Buy where the numbers work. You buy property for cash flow, not speculating 'This will appreciate 6% over the next 10 years.'"

After doing a cash-flow analysis, it's simply a matter of staying within budget, McGillivray says: "If I stay on budget, I'm guaranteed a profit."

SEE ALSO: An HGTV star who's invested in over 100 properties says one day of the week is best to buy a home

Join the conversation about this story »

NOW WATCH: The 'Property Brothers' raced to see who could build IKEA furniture fastest — it wasn't pretty

5 up-and-coming Chicago neighborhoods for buying a home

0
0

chicagoChicago and its suburbs comprise dozens of unique neighborhoods, each of them offering their own array of dining, entertainment and housing options. Some are well-known, while others fly under the radar.

If you hope to move into the city without spending a fortune, you may not be able to afford to buy a home some of the most popular neighborhoods like the Gold Coast or Wicker Park. And if you’re hoping for a good return on your investment down the road, it may be best to make a purchase in a less well-known area with potential.

We’ve connected with some of Chicago's best real estate agents, as identified by OpenHouse Realty, an agent referral company (and a U.S. News partner), to help us locate five of Chicago’s top up-and-coming neighborhoods.

Near West Side

You won’t find West Loop on this list (it’s just too popular), but the Near West Side has become an affordable option for those who love all that the West Loop has to offer without the high prices.

This neighborhood has plenty of three- and four-bedroom single-family homes, and it's starting to bulk up with new construction, nice grocery stores and retail shopping. “It may not be a walker’s paradise yet, like a Lincoln Park or a Bucktown, but all in due time,” says George Furla, managing broker with North Clybourn Group.

The neighborhood is located just north of Interstate 290 and west of Interstate 90. It’s not far from the United Center, where the Chicago Bulls and Blackhawks play. The two teams have also pledged to build practice facilities nearby as part of their plans to make the neighborhood a more family-friendly area.

Furla doesn’t expect the Near West Side to belong to remain up-and-coming list for much longer. “It’s only a matter of time before it connects to the West Loop,” he says.



West Town

Located to the south of Wicker Park and east of Humboldt Park, West Town – which includes areas such as Ukranian Village and Noble Square – is starting to draw a lot of attention.

Matt Laricy, of Americorp Real Estate, says he’s noticed a recent spike in interest toward areas like West Town that offer a neighborhood feel with tree-lined streets andpopular boutiques. “That’s becoming a huge market,” he says. “You can sense the market is shifting.”

West Town is filled with vintage shops and unique dining options, and offers easy access to I-90 and the Western Train Station. The neighborhood also has a lot of newer, luxury condos with more square footage and lower assessments than the skyscrapers closer to the lake.



West Lakeview/Roscoe Village

While Lakeview and Roscoe Village have already graduated from up-and-coming status, they have a few specific areas that have recently started to heat up. In Chicago, successful public schools have a way of driving home sales. That certainly has been the case in these areas, specifically for houses within the boundaries of Jahn Elementary School and Hamilton Elementary.

“Over the last two or three years the amount of parent involvement has just catapulted these schools and made them so much better,” says Leigh Marcus, a Realtor with @properties.

The up-and-coming Lakeview area is located just west of Ashland Avenue and north of Belmont Avenue, while the hot spot in Roscoe Village is located just south of Belmont Avenue near Hamlin Park. Both of these areas feature single-family homes for between $850,000 and $1 million, which is nearly 10 percent lower than surrounding areas in the same neighborhoods, according to real estate information site Trulia.



See the rest of the story at Business Insider

San Francisco's housing bubble is collapsing under its own weight

0
0

house, San Francisco, California

Here’s the other side of central-bank engineered asset price inflation, or “healing the housing market,” as it’s called in a more politically correct manner:

San Francisco Unified school district, which employs about 3,300 teachers, has been hobbled by a teacher shortage. Despite intense efforts this year – including a signing bonus – to bring in 619 new teachers to fill the gaps left behind by those who’d retired or resigned, the district is short 38 teachers as of Monday, when the school year started. Others school districts in the Bay Area have similar problems.

For teachers, the math doesn’t work out. Average teacher pay for the 2014-15 school year was $65,000. And less after taxes. But the median annual rent was $42,000 for something close to a one-bedroom apartment. After taxes and utilities, there’s hardly any money left for anything else.

A teacher who has lived in the same rent-controlled apartment for umpteen years may still be OK. But teachers who need to find a place, such as new teachers or those who’ve been subject of a no-fault eviction, are having trouble finding anything they can afford in the city. So they pack up and leave in the middle of the school year, leaving classes without teachers. It has gotten so bad that the Board of Supervisors decided in April to ban no-fault evictions of teachers during the school year.

Yet renting, as expensive as it is in San Francisco, is the cheaper option. Teachers trying to buy a home in San Francisco are in even more trouble at current prices. And it’s not just teachers!

This aspect of Ben Bernanke’s and now Janet Yellen’s asset price inflation – and consumer price inflation for those who have to pay for housing – is what everyone here calls “The Housing Crisis.”

As if to drive home the point, so to speak, the California Association of Realtors just released its Housing Affordability Index (HAI) for the second quarter. It is based on the median house price (only houses, not condos), prevailing mortgage interest rate, household income, and a 20% down payment.

urban houses san francisco

In San Francisco, the median house price – half sell for more, half sell for less – is $1.37 million. According to Paragon Real Estate, if condos were included, the median price would drop to $1.2 million.

The median household income in San Francisco is $84,160, including households with more than one earner. So a household of two teachers with $130,000 in household income is doing pretty well, comparatively speaking.

The monthly mortgage payment for the median house in San Francisco, after a 20% down payment and at the prevailing rock-bottom mortgage rates, is $6,740 per month, or $80,900 per year!

So what kind of minimum qualifying household income would be required for the mortgage of a median house, plus taxes and insurance? For the US on average, $47,200 per year. In San Francisco, $269,600 per year. It would require a household of four teacher salaries!

Only the top-earning 13% of households in San Francisco can afford to buy that median house!

Other Bay Area counties have similar out-of-whack affordability rates: In San Mateo County (part of Silicon Valley), only 14% can buy that median home; in Marin County (north of the Golden Gate) 18%; Santa Clara Country (where San Jose is) 19%; Alameda County (where Oakland is) 20%. And so on.

And this despite the historically low mortgage rates. If prevailing mortgage rates rose to 6%, practically no one could afford to buy.

Then there’s the issue of down payment that the CAR so elegantly glosses over: the 20% down payment of for that median house in San Francisco is $275,000!

House in San Francisco

How are people going to save $275,000 after taxes while living and renting in a city that is as pocket-cleaning expensive as San Francisco? Saving $275,000 on a median household income of $84,160 while paying $42,000 a year in rent, plus taxes, utilities, food, transportation, clothes, parking tickets…..

Saving anything is going to be tough. But even if that household, using herculean discipline, can save 5% of its income a year (so $4,200 a year), it would take 65 years to save that down payment. Oh well. There goes the dream.

These are a scary numbers for the housing market! If only 13% can buy that median home – when in a healthier housing market, over 50% should be able to buy a median home – who the heck is going to buy the rest of the homes?

This puts a stranglehold on demand. To sustain these crazy home prices, San Francisco needs to bring in an endless flow of highly paid people, including absentee foreign investors, to replace the teachers and other middle-class households, the artists and shop keepers and office workers, and to push out city employees, nurses, and the like. That’s how the process has worked.

But that endless influx of highly paid people and investors is grinding to a halt. Some companies are still hiring, but others are laying off, and highly paid workers are just switching jobs rather than pouring into the city in large numbers. That’s a sea change for this housing market.

It comes at a time when a historic building boom is throwing thousands of high-end condos and apartments on the market every year, for years to come.

A housing market where only 13% can afford the median home, and only a minuscule number of people can afford the thousands of high-end homes coming on the market every year, will sooner or later buckle under its own lopsidedness. We’re already seeing the signs of that, as even San Francisco’s infamously soaring rents have hit the wall of reality. Read…  Big Unwind Begins in San Francisco, Miami, New York, Houston: Rents in “Primary Markets” Sunk by Apartment & Condo Glut

SEE ALSO: Miami's condo bubble is up against a monster

Join the conversation about this story »

NOW WATCH: What abandoned Olympic venues from around the world look like today

Macy’s decision to close a bunch of stores could spell trouble for billions of dollars of loans

0
0

macys demolition

Sluggish sales at Macy's are hurting more than just the mega-retailer itself.

The department store chain recently announced that it would be closing 100 stores in a bid to shore up business. That could impact about $3.64 billion in commercial mortgage-backed securities debt, according to a report by Morningstar Credit Ratings' Steve Jellinek and his team.

More of Macy's locations are expected to shutter, Morningstar said, citing below-average sales per square foot.

Here is MorningStar: 

"CMBS exposure to Macy’s as a collateral tenant totals about $7.13 billion. We also found an additional $21.36 billion in loans exposed to the store as a shadow anchor. We analyzed the most recent available store-level sales in postcrisis deals and identified 28 locations backing $3.64 billion in loans that have an elevated risk of being closed because the property’s sales fell below Macy’s average sales of $169 per square foot in 2014, the most recent available."

Retail giants like Macy's are usually one of the anchor tenants for regional malls, and their departure can cause problems for those malls. MorningStar gave the example of Hudson Valley Mall, a 618,780-square-foot shopping center in upstate New York that's now in foreclosure. Macy's shuttered its location in the mall in the first quarter, and J.C. Penney's exited last year.

These anchor tenants make up a sizeable chunk of mortgage-backed deals, and regional malls typically suffer large losses when vacancy rates surge and loans go into default.

Morningstar expects to see a $32.4 million loss on the $49.2 million loan at Hudson Valley Mall.

Notably, Macy's doesn't own all of its locations. Some of them are run by real-estate investment trusts, which allows investors to bet on retail without being too concentrated in a single retailer. 

"Macy’s has 690 full-line department stores (including Bloomingdale's) as of second quarter 2016, and REITs own about 400 stores. This means nearly 300 are in the hands of smaller operators who will find it more difficult to backfill any vacancy," Jellinek wrote.

SEE ALSO: BILLIONAIRE INVESTOR: I’m excited about investing in the US

Join the conversation about this story »

NOW WATCH: No one wants to buy this bizarre house in a wealthy San Francisco suburb

Inside the incredible cliffside Hawaii mansion Justin Bieber vacationed in for $10,000 a night

0
0

justin beiber hawaii thumb

Justin Bieber recently rented a Hawaiian property called Water Falling Estate for two weeks at a rate of $10,000 a night, TMZ reports.

The estate, which sold for $5.7 million at an auction in 2014, boasts "a 450-seat tennis/basketball stadium, a 250 million-gallon Olympic infinity pool with a high dive and two-story water slide," and a helicopter landing pad, according to The Hawaii Tribune Herald.

The mansion stands on a cliff overlooking several waterfalls and the Pacific Ocean, and its listing on Concierge Auctions reveals some spectacular photos of the property. It can also be rented on Home Away.

Check out the opulent vacation home Bieber stayed in:

SEE ALSO: No one wants to buy 50 Cent's incredible $6 million mansion that he's been forced to sell due to bankruptcy

The 9.44-acre property stands atop a cliff on Hawaii's Hamakua Coast.

Source: Concierge Auctions



The estate was once a macadamia nut plantation, but now it boasts an Olympic-size pool, a multipurpose athletic court ...

Source: Concierge Auctions



... a helicopter pad on the mansion's roof ...



See the rest of the story at Business Insider

An HGTV star who's invested in over 100 properties says one day of the week is best to buy a home

0
0

Scott McGillivray

According to Scott McGillivray, host of the HGTV show "Income Property," the best day of the week to buy is Monday.

He would know. McGillivray has invested in over 100 properties and even bought over 30 homes in one day, he told Farnoosh Torabi on an episode of her podcast "So Money."

As a rule of thumb, "Go shopping on a Monday, Tuesday or Wednesday," he explains. "If you're shopping for real estate on a Saturday and Sunday, you're not getting deals.

When's the last time you saw a real estate agent promote an open house on a Monday night? It's on a Saturday. It's on a Sunday."

In fact, between a Saturday and a Monday — just two days— the market drops by nearly 1% every week, the HGTV star tells Torabi: "If you think about the average home price in America being around $350,000, you're going to save $3,500 on average by putting offers in on a Monday versus a Saturday."

Why is early week the ideal time frame?

Homeowners are "distracted with work and the kids' routines," McGillivray explains. "They're probably not getting a lot of other offers on a Monday, Tuesday, or Wednesday, so chances are, they'll very quickly and efficiently entertain your offer. A seller is much more difficult to negotiate with on a weekend than they are on a weekday."

No promises you'll save $3,500 by buying on a Monday, but it's worth a try.

SEE ALSO: 2 inexpensive tricks that could help your home sell for more money, from HGTV stars the 'Property Brothers'

Join the conversation about this story »

NOW WATCH: EX-UNDERCOVER DEA AGENT: What I did when drug dealers asked me to try the product


A New York Times investigation found that Donald Trump's US business empire holds at least $650 million in debt

0
0

Donald Trump

A New York Times investigation into Republican presidential nominee Donald Trump's US real-estate holdings revealed that companies he owns have at least $650 million in debt — twice the amount that Trump's public filings, made as part of his campaign, show.

Trump's dealings also depend on a variety of sources, one of which he has repeatedly attacked during his campaign: China, The Times found.

Aside from revealing more information about Trump's complex business web, the investigation also shed light on how much remains "shrouded in mystery," according to The Times, as well as the potential shortcomings of the Federal Election Commission's (FEC) financial-disclosure form for candidates.

Among the specifics, The Times reports that:

  • An office building in Manhattan, which Trump partly owns, carries a $950 million loan, partially overseen by the Bank of China, one of the largest in the country.
  • A "substantial portion" of Trump's wealth stems from three partnerships that owe another $2 billion. While Trump may not be held personally liable if the loans went into default, the value of his investments would drop.
  • In 2015, Trump borrowed $160 million from Ladder Capital, a small New York firm, which his financial-disclosure form simply lists as valued at more than $50 million.
  • The publication found three instances where Trump had ownership interest in a building but did not disclose the related debt. Of these investments, one again involves a partial loan from the Bank of China.

Read The Times' full report here »

While the full terms of Trump's partnerships remain unknown, loans connected with them reach $1.95 billion, according to various public documents cited by The Times. The Trump Organization's chief financial officer Allen Weisselberg, however, told The Times that neither Trump nor the company was responsible for these debts.

The Times notes that the fact that the publication found a substantial increase in debt relates more to what the FEC form asks of candidates rather than any fault of Trump. The form requires candidates disclose their assets and debts in ranges up to $50 million, instead of precise numbers.

In late July, the FEC released a92-page personal-financial-disclosure report for the real-estate mogul turned politician. While the report still didn't completely detail Trump's supposed wealth, a statement released by the campaign claimed it would reveal a "massive" net worth "in excess of" $10 billion.

Weisselberg also told The Times that debts for properties where a Trump company owned less than a 100% stake were not disclosed on the form.

For the investigation, The Times partnered with national property-information firm RedVision Systems to search publicly available data on more than 30 US properties, identified through Federal Election Commission (FEC) filings and information provided by Trump, like filings with the Securities and Exchange Commission (SEC).

Although the investigation covered a variety of documents and records, The Times concentrated on commercial holdings, such as office towers, golf courses, residential properties, and other endeavors, but exempted Trump's businesses outside the US.

Aside from skepticism and controversy over Trump's net worth and debts, the nominee has recently come under fire for refusing to release his tax returns. Most Republican nominees over the past several decades have released the same information, according to the Tax History Project.

Join the conversation about this story »

NOW WATCH: What would happen if Trump decided to quit the presidential race

The popularity of tiny houses is beginning to have a big impact on the real estate market

0
0

tiny house field ominous

It’s no secret that the counter-movement to big, sprawling homes has reached the mainstream – and it's known as the tiny home.

Tiny houses are exactly as they’re described: small homes that are often built on a trailer to be portable. The maximum square footage for tiny living varies by the company or individual, but these small dwellings are typically under 500 to 700 square feet. Tiny homes are often designed to meet function first – whether it's a loft bed or composting toilet – and can cost less than $10,000 and up to $100,000, depending on the size, style and functionality of the space.

Interest in tiny homes gained momentum during the recession that began in 2007, as people sought a simpler, less expensive way to live. And as the U.S. pulled itself out of economic crisis, the desire for simple living didn’t wane.

What started as a very small community that prefers to live in stylized small square footage has grown to be widely recognized as a movement to combat the growing size of traditional homes.

“I still consider it, frankly, a fringe movement, in the best possible way … but I think we just really hit a tipping point where it went into general public awareness,” says Ryan Mitchell, creator of the tiny houses and simple-living blog The Tiny Life.

[See: 9 Alternative Building Materials to Consider for Your Home .]

Today, even if people aren’t necessarily planning to live tiny, many are interested in the option, watching others make the move to small spaces on shows like “Tiny House Hunters,” “Tiny House Nation” and “Tiny House, Big Living” on HGTV.

Dan Louche, founder of Tiny Home Builders, a DeLand, Florida-based company started in 2009 to design and build portable tiny homes, says the network attention that largely began in 2014 brought the previously small community to the forefront, expanding the niche industry with a larger customer base and making it more recognized by other parts of the real estate industry, from appliances that fit the tiny lifestyle to insurance on smaller dwellings.

“Things have gotten easier because everybody knows about tiny houses, so now there’s a lot more companies trying to jump on that bandwagon – and not just tiny-house companies, but traditional financing like SunTrust and insurance companies,” Louche says.

While the added attention and greater industry involvement has made many aspects of tiny homebuilding and tiny living easier, it’s still an alternative way of living compared with traditional homes or renting an apartment.

Near Seattle, real estate broker Matt Parker, with Keller Williams Realty Puget Sound, says many of his homebuyer clients are now hoping to find a space that is smaller and more designed to maximize functionality than the large floor plans common among homes built in the last 30 years. But zoning requirements and lending for new construction are structured to favor bigger construction since it brings better returns.

“The demand is there [for tiny homes] … but the product is not there,” Parker says.

To meet homebuyers' changing desires, Parker says it will likely take a significant shift in the real estate industry and some careful planning. He sees tiny homes as a much more affordable option for living (he is even hoping to build one for him and his wife), but zoning and lot sizes better suited to tiny homes would need construction and zoning requirements to ensure the structure built on the property is an improvement on the land, which requires the homeowner to make a more significant investment in the building materials and design.

“It’s almost like you have to adopt Santa Barbara [California] aesthetic restrictions and city lot sizes, and some mix of those would lead to a beautiful future, in my opinion. You want people spending money on these still – you don’t want people just cheaping out,” Parker says, pointing to Santa Barbara's ordinances and guidelines that encourage neighborhood compatibility, consistent design and quality craftsmanship for single-family homes.

[See: 10 Ways to Save Energy and Reduce Utility Bills at Home .]

Even with tiny living's growing popularity, Parker, Mitchell and Louche all stress that the lifestyle isn’t right for everyone. Before you sell all your belongings that don’t fit in 100 square feet, ask yourself these questions:

SEE ALSO: I stayed in a tiny house, and it made me want to throw out everything I own

Are you ready for less? If you feel like you’ve got more square footage than you can handle, it may be time to look tinier. “Most people don’t think about approaching housing differently. … There are other options,” Mitchell says.

But before you start building that tiny house that will restore simplicity, consider the things you can’t physically downsize. If you have a large family that isn’t excited about living that close, pets that need more space than a tiny home allows or a job that requires you to be in a city where a place to keep your small house is hard to find, maybe the lifestyle isn’t right for you just yet.



Do you have the financial means? A tiny home certainly costs less than a traditional home, but it’s still more than many people have on hand. While some lenders have started issuing tiny house loans, including online lenders Backed and SunTrust, it’s not a part of the standard mortgage industry yet.

“We’re outsiders. They’ll give us a loan to build this McMansion, but we don’t want to do that,” Parker says. “That pathway is not grooved in the mortgage industry right now,” he adds.



Can you commit? It’s not just a matter of being able to downsize to a trailer’s worth of belongings. Living in such a small space requires a commitment to simplifying your entire lifestyle. Otherwise, Mitchell says you can find yourself going back to a traditional home all too quickly.

“It’s really doing the deeper work with yourself, that kind of introspectiveness that is setting the stage to live in a tiny house. Because if you don’t do that work, you’re going to be miserable,” Mitchell says.

[See: 10 Ways Millennials Are Changing Homebuying .]



See the rest of the story at Business Insider

Here's the salary you have to earn to buy a home in 19 major US cities

0
0

san diego california luxury

How much does it take to buy a home?

Mortgage site HSH.com has updated its estimate of how much annual income a household would need to buy a home in major metropolitan areas in the US, according to second-quarter 2016 data.

In Q2, mortgage rates fell across the board, while list prices in major metros such as Chicago and San Francisco increased dramatically — 18% and 15%, respectively.

HSH.com looked at median home prices from the National Association of Realtors. It took into account interest rates for common 30-year fixed-rate mortgages and property taxes and insurance costs to figure out how much money it would take to pay a median-priced home's mortgage, taxes, and insurance in each city, and how much you'd have to earn to afford it.

HSH.com emphasizes that this is only the base cost of owning a home, without taking into account maintenance and other incidentals.

The site also calculated how it would change the salary needed to buy a home if a buyer were to put 10% down instead of the recommended 20%. No matter where you are, putting down less makes things more expensive — you can visit HSH.com to see both numbers.

Salaries are listed from lowest to highest needed and are rounded to the nearest $500.

SEE ALSO: Here's how much you need to earn to live comfortably in 15 major US cities while still saving money

19. San Antonio

Population: 1,409,000

Median home price: $210,500

Monthly mortgage payment: $1,137

Salary needed to buy: $47,000



18. Orlando

Population: 255,483

Median home price: $223,000

Monthly mortgage payment: $1,152

Salary needed to buy: $49,500



17. Minneapolis

Population: 407,207

Median home price: $242,400

Monthly mortgage payment: $1,208

Salary needed to buy: $52,000



See the rest of the story at Business Insider

A Jaguar cofounder's former home has barely been touched for 30 years, and now it's on the market for $9.8 million

0
0

Wappenbury_Hall_051

The former Wappenbury, England, estate of Sir William Lyons — who cofounded Jaguar Cars with William Walmsley in 1922 — is up for sale for $9.8 million.

Lyons died in 1985, and although its current owners, Godfrey and Marie Hall, didn't buy the property until 2007, they recently told the Wall Street Journal, "The layout of the house is exactly the same as when Sir William had it, as it was in very good condition when we bought it. All we've done is upgrade some of the fittings and put in new bathroom suites." 

Let's take a look inside the 329-acre estate, which has luxurious carpeting, decadent drapes, and dark wood paneling. 

SEE ALSO: 23 photos inside dreary Moscow dorms show what college life is like in Russia

The property, measuring at 329.47 acres, is made up of five different lots only half an hour from the Jaguar factory. Lyons would have every prototype delivered to the house so that he could get his wife Greta's final opinion before production.



A swimming pool, two tennis courts, formal gardens, and green houses surround the home.



The 12,195-square-foot country house dates back to late Victorian era.



See the rest of the story at Business Insider

A simple equation could help you decide whether to buy or rent a home

0
0

small house colonial

Buy or rent?

Real estate investor Grant Cardone, who has been in the field for 25 years, writes on Entrepreneur that buying a home "is for suckers" because monthly payments make it a liability, not an investment.

On Quora, MIT Economist Erik Brynjolfsson explains that buying is better than renting, because you get dividends in the form of rent you pay to yourself.

On the Altucher Confidential, James Altucher writes that between the taxes, closing costs, constant maintenance, and demand on your cash, he'll never own a home again.

So really, it depends who you ask.

The answer won't be the same for everyone. Perhaps the intangible feeling of ownership is priceless to you; perhaps you like the freedom of knowing you can up and leave your rented home whenever you want.

If you are making the decision for yourself, Tara Siegel Bernard of the New York Times highlights an equation from financial adviser William Bernstein, author of "If You Can: How Millennials Can Get Rich Slowly" to use as a tool in your arsenal.

She writes:

Never pay more than 15 years' fair rental value for any home, or 180 months of rent. Why 15 years? By his calculations, someone paying more than 180 months of rent might potentially do better by investing in the market, after considering the costs of owning.

So if an apartment would rent for $4,000 a month, that means you shouldn't pay more than $720,000 ($4,000 x 180) for an equivalent property.

That's simply [cost of market value rent] x 180 = [maximum purchase price].

If you're not sure about the rental price of your would-be home, real estate listings site Zillow usually provides a sales and rental estimate ("Zestimate") for listed properties. To verify accuracy, look up the estimates for surrounding properties as well.

Punching a few numbers into your phone's calculator may not make up your mind for you, but at least it's somewhere to start.

SEE ALSO: Buying a home was the greatest investment I ever made — but it was also the toughest

Join the conversation about this story »

NOW WATCH: This lunch box for adults could change the way you eat

Vancouver's commercial real estate market is seeing vacancies at a 12-year high

0
0

vancouver canada

For investors, Vancouver real estate has been a heavenly gift. But now, suddenly, some of the biggest institutional investors, including Canada’s third largest pension fund, are getting cold feet and want out.

Just over the past 12 months, the “benchmark price” soared 27% for apartments and 38% for detached houses! The term “housing bubble” doesn’t even do it justice.

But in July, British Columbia implemented a 15% transfer tax on home purchases involving foreign investors, an effort to put a lid on the price spiral that’s threatening to price an entire generation out of the housing market. By the end of July, the first squiggles appeared, as prices still soared but year over year sales volume plunged nearly 20%.

Preliminary reports for August are now trickling in as anecdotal and incomplete data in a slow summer month, and therefore not necessarily indicative. For example, the Canadian publication, Global News, summarized the August move with plenty of caveats: “Vancouver real estate market is in the midst of a major slowdown, with prices dropping and sales plummeting.”

We will know more when the monthly data emerges.

Similarly powerful dynamics, including the influx of foreign money and a strong local economy, have driven the commercial real estate market. According to the second-quarter report by commercial real estate firm Colliers International, “Vancouver’s FIRE sector” – Finance, Insurance, Real Estate – is hot. Housing construction is hot. Office construction is even hotter, “set to be the fastest-growing sector” in the city, expected to expand by 5% in 2016, with 1.5 million square feet currently under construction. Alas:

The delivery of 2.1 million square feet of new office supply in 2015 has contributed to the office vacancy increasing slightly from 9.8% in Q1 to 10% this quarter.

Citing commercial real estate firm Avison Young, Bloomberg pegs the vacancy rate at 10.4%, “a 12-year high”:

Additional space is set to flood the market, with six office towers under construction for delivery as soon as this year totaling about 802,700 square feet, and 10 buildings proposed for the city….

Despite the vacancy, rental rates for the best quality assets in Vancouver are the highest in Canada and some U.S. cities such as Chicago and L.A. at about $30 a square foot, Avison Young said.

A perfect time to unload: with office rental rates at record levels and optimism still riding high, while a tsunami of new supply is piling on the market and vacancy rates are rising, this would be the definition of a peak.

The Ontario Teachers’ Pension Plan, Canada’s third-biggest pension fund, has $4 billion invested in Vancouver’s white-hot commercial real estate. But it is now trying to unload $2 billion worth of these holdings, “people familiar with the matter” told Bloomberg.

These properties are held by the fund’s real estate unit, Cadillac Fairview:

The Cadillac Fairview portfolio, which hasn’t yet started marketing, includes 14 properties in downtown Vancouver and Richmond, with some of Canada’s largest shopping centers, office towers, and historic buildings up for grabs.

The assets include a portfolio of waterfront properties including Waterfront Centre, a 21-story tower on the harbor built in 1990; the 238,000-square-foot PricewaterhouseCoopers Place; and The Station, a historic property built in 1912 that serves as North America’s largest transport hub, currently pending approval for an added office tower.

Some of the country’s biggest retail assets are also in the mix, such as the Pacific Centre, a downtown retailer with 1.6 million square feet for which Cadillac Fairview submitted a proposal this year to expand. It’s the third-most profitable shopping mall in Canada, according to brokerage Avison Young, with $1,599 in sales per square foot. The center also contains eight office towers of two million square feet, including 701 West Georgia and the HSBC building.

A Royal Bank of Canada (RBC) logo is seen on Bay Street in the heart of the financial district in Toronto, January 22, 2015.  REUTERS/Mark BlinchAccording to “the people familiar with the matter,” the fund has hired CBRE Group and Royal Bank of Canada to work the sale.

Other pension funds have already decided to unload some of their properties in Metro Vancouver, according to Bloomberg, including the Healthcare of Ontario Pension Plan and Ivanhoe Cambridge, which are trying to get about $800 million for their office towers in Burnaby.

What do they see that the market doesn’t see, or doesn’t want to see?

For pension funds, which have to achieve predictable and fat returns, this is a bleak environment, with the Canadian 10-year yield at 1.02%, and the US 10-year yield at 1.56%. Stocks are at dizzying levels, even as corporate profits and sales have declined for nearly two years. If these pension funds want to expand into government bonds and high-grade corporate bonds in Europe and Japan, they’ll make the acquaintance with negative yields.

So why are they selling hot assets with a predictable yield when the investment options for the proceeds are so dismal? Preservation of capital?

A commercial real estate bust can take 40% or more off the top. The last one in the US did. They take years to unfold. When prices go down, real estate markets become illiquid. Trying to sell a property at a survivable price might be impossible. And cutting the price far enough to where liquidity reappears might be devastating to the seller.

The key is to get out while optimism makes these transactions possible and before the market becomes illiquid. Perhaps find a Chinese company, such as Anbang Insurance Group, which already scooped up the Bentall Centre in Vancouver, a 1.5-million-square-foot office complex and shopping mall.

Even as Canada’s debt-fueled economy is bogged down, consumer debt rose to a new record and delinquences are are soaring among Millennials. 

SEE ALSO: Toll Brothers sold more luxury homes at higher prices

Join the conversation about this story »

NOW WATCH: Watch the Air Force drop 8 armored Humvees out of a plane from 5,000 feet

There's a simple reason the percentage of people owning a home is at a historic low

0
0

home house construction

One of the most trumpeted economic statistics over the past few months has been the 51-year low in the homeownership rate. Even Republican presidential nominee Donald Trump has started to use the chart at his rallies to go after President Obama.

The problem with citing the statistic as emblematic of weakness in the economy (much less using it as an indictment of an entire presidency) is that it ignores a simple fact: Millennials want to get educated.

Or at least that's the essence of an argument from Mark Fleming, the chief economist at First American Financial Corporation, who tells Business Insider that the housing stock that was built up over the previous 30 years is more than enough for the demand that young people are putting on the market as a whole.

According to Fleming, millennials are the "most educated generation." It is true that 36% of people in the US ages 25 to 34 have a bachelor's degree, while only 26.7% of those 65 or over have a similar degree. In Fleming's opinion, this is lowering the level of demand for housing across the country.

"If you're going to school for longer, you're more likely to put off things like marriage or buying a home or having a kid," Fleming tells Business Insider. "So this has shifted young people's demand out further compared to their parents' generation that was entering the housing market at a younger age."

At the same time, Fleming said, the stock of homes that has been built up over time has more than kept up with new household formation.

Looking at Census data on the number of total households (defined by the Census Bureau as a person living alone or a group of people living together, related or not) and houses built, it appears that the housing stock available to households has remained roughly the same.

In 1973 (the earliest year the data was available), there were 51,287,000 single-family houses for 68,250,000 households, or one home for every 1.33 households. In 2013 (the most recent data), there were 91,173,000 homes for 122,460,000 households, or one home for every 1.34 households. So, housing supply has kept up with household growth over the past 40 years.

Even with the underwhelming supply of new homes coming onto the market right now, Fleming says, the boom in single-family building from 1970 onward has left the US with enough long-term oversupply to have the ownership rate drop over time, especially coupled with young Americans now being inclined to wait longer before buying. (He acknowledges, however, that there might be some supply constraints in certain areas.)

So, at the very least, the supply of single-family homes that the US is building is staying consistent with household growth, while, according to Fleming, those households being formed may be delaying the decision to purchase a home.

Thus, you have more total homes available, and the same number of homes per households, but fewer people looking to move in. And since the homeownership rate is the number of households who live in houses they own, keeping the housing supply constant while seeing a smaller proportion of new households looking to own could be driving the rate down.

SEE ALSO: Existing home sales tumble

Join the conversation about this story »

NOW WATCH: Scientists just collected a mysterious 'purple orb' at the bottom of the ocean, but no one could anticipate what happened next


The American McMansion is dying for good

0
0

large house mcmansion salinas california

In the late 1990s to mid-2000s, there was perhaps no better indicator of affluence than the McMansion, a cookie-cutter suburban home that typically measures between 3,000 and 5,000 square feet.

In this era of speculative homebuilding before the 2008 financial crisis, bigger was considered better, and buyers sought homes with the same general list of features: five or more bedrooms, a three-car garage, and cathedral ceilings in the master bedroom or living room, for example.

It used to be the case that although McMansions would cost more to construct, they would also sell for more than a typical starter home.

But according to a new report from Bloomberg, that just isn't the case anymore. Bloomberg cites data from Trulia that shows that the premiums paid for McMansions have declined significantly in 85 of the country's 100 biggest cities.

To cite one example, in Fort Lauderdale, Florida, the extra money that buyers were expected to be willing to pay to own a McMansion fell by 84% from 2012 to 2016.

In that same city in 2012, a typical McMansion would be valued at $477,000, about 274% more than the area's other homes. Today, a McMansion would be valued at $611,000, or 190% above the rest of the market.

McMansions are often despised for their mishmash of architectural styles and general ostentatiousness.

"People used to buy a home under the assumption that they would be living there until the end of a long, nebulous concept of time. A house was for life, a marriage of sorts," the anonymous writer of McMansionHell, a tongue-in-cheek blog that criticizes the design flaws inherent in the American McMansion, told Business Insider.

"The McMansion was never designed to last forever ... [it] was built cheaply in order to get maximum items checked off the check-off list for the lowest cost. The designing of houses from the inside out caused the rooflines to be massive and complex."

mcmansion missouri

The author of McMansionHell — whose ire for the home style began when they saw their rural North Carolina neighborhood be transformed into what they called "Anywhere USA"— said that they hope their criticisms of the McMansion will help bring an end to this architectural era.

"Among the general population, a positive trend is emerging: People are starting to see that bigger isn't always better — this is evidenced by the tiny-house phenomenon that's been sweeping the nation the last couple of years," they said, adding that McMansions could be declining in value in part because millennials are waiting longer to buy homes.

"However, I started McMansionHell with the goal of educating people about architecture and making them aware of the flaws of these houses (both architectural and sociological) through a combination of humor and easily digestible information in a way people who wouldn't otherwise care about architecture can get engaged with. If my work can stop just one person from bulldozing a forest to build an oversized house that's a blight on the environment, then I would call McMansionHell a very successful project."

SEE ALSO: 8 of the craziest perks we've seen in luxury real estate listings

Join the conversation about this story »

NOW WATCH: The secret to selling your house for more money

Netscape's billionaire cofounder Jim Clark is selling his Florida mansion for a whopping $137 million

0
0

CBD10A5A 5C83 90A1 67BF 12185EFBD038

Silicon Valley legend Jim Clark made it big when Netscape, the web browser company he founded with Marc Andreessen, went public in 1995. The IPO made Clark a very rich man, with a net worth that is now estimated to be as much as $1.9 billion.

Clark also became quite the property mogul, acquiring homes in New York City, upstate New York, and the Hamptons. He also owns a home in Palm Beach, Florida, which he just listed for sale for $137 million, the Wall Street Journal reported.

The palatial estate has 10 bedrooms, 13 full bathrooms, and more than 68,000 square feet of space. Let's take a look inside.

SEE ALSO: Look inside Tom Ford's estate that includes an entire movie set and is rumored to be worth $75 million

Clark's sprawling family estate is called Il Palmetto, and it's located in Palm Beach, Florida.



The estate was built in the 1930s in the Italian Renaissance style.



Clark bought the property for $11 million in 1999 and spent four years renovating it.



See the rest of the story at Business Insider

13 housing markets where it's getting a whole lot harder to afford a house

0
0

house for sale

If you just look at basic selling prices, it looks like home prices are on the rise. 

The Federal Housing Financial Agency's house price index has been on the rise since its trough in 2012, and concerns over home price affordability in some markets keep popping up.

According to First American Financial Corporation, which provides financial services for mortgage lenders, the home price market actually isn't overheating like you may think. First American's Real House Price Index not only adjusts for inflation, but also median income in the area and interest rates on mortgages to gauge how affordable a home is.

According to Mark Fleming, chief economist at First American, affordability over the country is improving as wage growth picks up and interest rates remain near all-time lows. 

"The gains in affordability, caused by a combination of low mortgage rates and recent improvements in wage growth are helping the market reach its potential for home sales," said Fleming in a note.

"Many markets that are often listed as the most expensive for housing are not as expensive as many believe when one accounts for the strong growth in household income within these markets.”

There are some markets, however, that aren't as lucky. Whether caused by an influx of new movers or increasing prices, some markets in the US have seen real home prices increase over the past year.

We've compiled a list of the 13 housing markets have seen their RHPI increase by 1% or more over the past year. Most of the cities where house prices are becoming less affordable are in the South and West.

We've included the change in the RHPI from a year ago and the median household income for the city based on the US Census Bureau's most recent data.

Check out the full list below.

SEE ALSO: What 25 major world leaders and dictators looked like when they were young

13. Atlanta, GA

RHPI increase from a year ago: 1.19%

Median Income: $46,438



12. Los Angeles, CA

RHPI increase from a year ago: 1.23%

Median Income: $49,682



11. San Diego, CA

RHPI increase from a year ago: 1.34%

Median Income: $65,753



See the rest of the story at Business Insider

Here are the most popular New York City neighborhoods for new graduates

0
0

New York City is the greatest city in the world, and it draws people looking to find their fortune from just about everywhere.

Next Step Realty, a New York City real estate brokerage that matches recent graduates and young professionals with luxury apartments, shared data with Business Insider on over 1,000 2016 graduates and the neighborhoods they moved to from May through July of this year.

Next Step CEO and co-founder Blair Brandt told Business Insider that "the Upper East Side is officially no longer the highest volume weapon of choice in the NYC neighborhoods for the freshman class of NYC, that baton was passed back to Murray Hill and Kips Bay in 2016 vs 2015, although the two have gone back and forth over the years due to competitive prices on Upper East Side and Murray Hill's concentration of young professionals, as well as proximity to increasingly Midtown located employers."

The ten most popular areas for Next Step's customers include several locales that have long been home to New York's elite:

popular nyc neighborhoods

Seeing as we are looking at apartments in Manhattan and Brooklyn, rent is not cheap. Among those ten most popular neighborhoods, the average rent for a one-bedroom apartment for Next Step's clients ranges from $2,400 per month in Alphabet City and the Upper West Side to $4,128 in the West Village:

cost of nyc neighborhoods

SEE ALSO: This is how much you can hope to earn on Wall Street based on your degree

Join the conversation about this story »

NOW WATCH: Saudi Arabia is building the world’s tallest building – nearly twice the height of One World Trade Center

Take a tour of this Chinese 'nail' neighborhood that's been in a stalemate with developers for the past 16 years

0
0

Nail neighborhood windows

Shanghai's Guangfuli neighborhood has been in a stalemate for the past 16 years.

The area is centrally located in one of the world’s most expensive real-estate markets. Luxury condo towers have popped up all around the neighborhood. But hundreds of people living in Guangfuli refuse to move out of their homes and allow the area to be developed.

Their defiance has created what in China is referred to as a ‘nail’ neighborhood, a term that references the last stubborn nail that can’t be pried from a piece of wood. The phenomenon is more common with single homes with residents who can’t come to an agreement with the government or a developer, so the houses remain standing as construction proceeds around them.

According to Reuters, some residents of Guangfuli now live in squalid conditions, growing vegetables in Styrofoam boxes and braving the elements, since many windows lack glass and the buildings are poorly insulated.

But many say the developer won’t pay them a fair price and are waiting it out until a better deal is reached. Take a look inside the neighborhood:

SEE ALSO: The owners of these defiant 'nail houses' in China refuse to yield to developers

Disagreements between developers and residents in China are particularly difficult because the country hasn’t always had a real-estate market. "It used to be that you either got your housing from the government or your employer," Greg Stein, a professor at the University of Tennessee College of Law specializing in Chinese real-estate law, tells Business Insider. "Housing was not a commodity."



Under Chinese law, residents can now own buildings or apartments, but the government still owns all the land. So it has the right to compensate residents for their homes and force them to move — or work with a developer to do so. (Similar eminent-domain policies exist in the US as well).



Many homeowners have found the compensation they've been offered too low, and have refused to accept a deal. Bian Jianhua, 48, is one of those. He lives with his mother in a 20-square-meter house. In this photo, his brother, Bian Guohua, stands outside.



See the rest of the story at Business Insider
Viewing all 4385 articles
Browse latest View live




Latest Images