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Real Estate Experts Provide Advice for Investors

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Real Estate is a popular investment vehicle for American investors.  In fact, 89% of investors put their money into real estate, according to a report by Better Homes and Garden Real Estate.  In a recent article published by Forbes, real estate experts provide reminders and warnings regarding real estate investments in order to help insure a profitable investment.

One real estate professional, Lee Kiser, reminds investors to study the real estate taxes of a property before making the purchase.  Its important to understand what the upcoming tax liability may be down the road, and a real estate tax professional may be able to help an investor prepare accordingly.

Shelling out the money for a professional inspection and appraisal might not be top of the list for investors, but according to Angela Yaun of the Day Realty Group, it may help save more money for the investor later.  The investor may be able to get items covered under a home warranty if they are proven to be functioning at the time of the inspection.  It can also make the buyer aware of repair expenses they should plan for later.  A professional appraisal will provide the most accurate square footage and appraised value, important facts to have on hand when the investor is looking to sell their property.

The article goes on to detail the importance of understanding Home Owners Association restrictions, obtaining a Master Land Use plan for the area surrounding the property, and getting accurate and professional estimates for repairs, holding costs and closing costs.

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Photo Credit: Antonio Carlos Cascatrina

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Low Inventory is Concerning Real Estate Professionals

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The low inventory of homes for sale is causing some real estate companies to panic a bit.  The number of homes for sale March 2017 compared to March 2016 fell seven percent according to the National Association of Realtors.  In an article published by CNBC by Dian Olick, she quotes Glenn Kelman, CEO of Seattle-based Redfin, a real estate firm, “”The inventory is reaching historic lows. It’s never declined faster than it did last month. It’s freaking us out — it’s affecting our business; it’s limiting our sales.”  

The cause of this low inventory issue can be attributed to a few factors.  To begin, many homeowners are deciding to become landlords.  Instead of selling a home when moving on, homeowners are holding on to their home and renting it out.  Another reason is new home construction is declining.  On average, home builders are building about 18 percent fewer homes than the historic average.

The good news for home owners looking to sell, homes are selling quickly and some are even selling above list price.  Homes in April 2016 went under contract in 50 days, as of April 2017, that number decreased to 40 days.

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There are Twice as Many Vacant Foreclosures in the Chicago Area This Year, Find Out Why

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“A strong seller’s market along with political pressure has likely motivated lenders to complete the foreclosure process over the past year on many vacant properties that were lingering in foreclosure limbo for years,” Attom Senior Vice President Daren Blomquist said in a statement.3993310255_273389be94_o

As a result, the number of vacant bank-owned properties in the Chicago-land area has almost doubled since the third quarter of 2015; the number has increased from 1,245 in the third quarter of 2015 to 2,379 by the end of the second quarter of 2016.  The good news is, with an average market time of 92 days in the Chicago-land area, these foreclosures may not remain vacant for long.

According to an article written by Dennis Rodkin, published by Crain’s Chicago Business, another effect of the strong sellers’ market is a significant decrease in the number of “zombie foreclosures”.  Instead of delaying the foreclosure process longer, the banks are moving forward with seizing the property, and moving it through the pipeline.  Ultimately, a vacant foreclosure is more desirable than a zombie foreclosure.  “Assuming that the foreclosing lenders are maintaining these properties and paying the property taxes, they pose less of a threat to neighborhood quality than zombie foreclosures,” he said.

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Photo Credit: BasicGov

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What’s in Store for Real Estate in the Second Half of 2016?

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house-question-1-1583653Thus far in 2016, the real estate market has seen mortgage rates hovering near record lows, increased home values and significant demand.  Also true of the market in the first half of 2016, a low inventory of homes for sale.

It is predicted that this low inventory will continue to be an issue for the rest of 2016.  Ralph McLaughlin, chief economist at real estate data firm Trulia indicated, “That has been the biggest story in the last six months and it will continue to be a story for the rest of the year.”   The number of both existing homes for sale and new construction homes being built is, and will likely continue to remain, lower than the demand for these homes.

The good news is, mortgage rates are around 3.6 percent and there is no indication that they will be increasing significantly the second half of 2016.  In fact, some experts expect mortgage rates could reach all-time lows as a result of global economic factors.

Because of the enticing mortgage rates being offered, coupled with the supply and demand factors, home buyers can expect to pay close to asking price for a home they wish to purchase and should be prepared to act fast.  According to an article written by Samantha Sharf and by published by Forbes, “The typical home is selling in just 42 days…” and buyers are paying an average of 95.3% of asking price.

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Positive News about “Distressed” Home Sales

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FotoFlexer_PhotoForeclosures on homes in many U.S. cities lead to investors purchasing these “distressed” homes at deeply discounted prices.  Consequently, the value of the other homes in these cities declined as well.

However, some good news has been released about this sector of the real estate market.   According to an article published in DSNews.com by Brian Honea, there has recently been a decline in the number of distressed homes for sale.  More specifically, as of May 2016, the number of distressed homes for sale decreased by 4 percent over the year.  The lower inventory of foreclosed, REO and short sale homes has helped increase the demand for homes and, subsequently, increased the home values in those areas.

Honea quotes CoreLogic Chief Economist Frank Nothaft,  “Overall, the homes-for-sale inventory remains relatively lean, while demand to buy homes has increased because of an improving labor market, more optimistic levels of consumer confidence, and continuing low mortgage rates.”

To learn more, read the entire article.

 

Photo Credit:  Taber Andrew Bain

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Existing-Home Sales Continue to Rise

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According to an article published by the National Association of Realtors (NAR), the sale of existing homes nationwide has increased 6 percent since April 2015.  Additionally, the median home price for existing homes is up 6.3 percent since last April.   Although the total housing inventory is showing some upward movement, it is still lower than it was a year ago.FotoFlexer_Photo

Lawrence Yun, NAR chief economist, indicated “The temporary relief from mortgage rates currently near three-year lows has helped preserve housing affordability this spring, but there’s growing concern a number of buyers will be unable to find homes at affordable prices if wages don’t rise and price growth doesn’t slow.”

The supply of entry and mid-priced homes is still low and the market for these homes will likely be the most competitive in the coming summer months.  However, proposed changes to FHA condo rules could eliminate some of the obstacles that stifle condo sales.  These changes would allow more first time home buyers an opportunity to purchase a condo and enter the real estate market.

For more information, read the entire article.

 

Photo Credit: Marcel Suliman

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The Impact of Millennials on the Real Estate Market

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for-rent-sign-2-1147396It had been predicted that the Millennial Generation (18-34 year olds), would be key to a healthy rebound in the real estate market.  However, based on new survey data released by Redfin, they might actually be responsible for the low inventory of homes for sale.

Millennials are, for the most part, more optimistic about the housing market.   They have not seen home mortgage rates over 5 percent and have been able to build more equity than home owners of older generations.  Additionally, they are confident they will see an increase in home values over the next year.

Therefore, according to the survey, millennials are more apt to rent out their home instead of selling their starter home.  As a result, the supply of homes for sale will continue to remain low.  A recent article on DSNews.com by Brian Honea indicates “…28 percent of millennials plan to rent out their house instead of selling it, compared to only 4 percent of homeowners ages 55 and older.”

For more information, read the entire article 

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