Brian Davison's Alternative Investment Times

The Influence of Buyers & Sellers on Supply & Demand
No matter what industry you look at, supply and demand always plays a large role. This is especially true of real estate and home prices. When there is a large inventory of homes for sale, pricing declines, while a lack of inventory will drive up pricing. This is usually how supply and demand works. However, there are times when a large supply of highly desirable inventory is paired with a large demand. When this happens, pricing may also rise. There are many factors that can play into this, such as the location of the homes. The more desirable an area, the more people will want to buy a home there, and even if there is a large amount of inventory, there will still be competition to buy the best of that inventory. Another influence on supply and demand in the housing market is the type of people...
Housing Market Hopes on the Rise
Last summer existing home sales reached a peak of 5.38 million, but according to the seasonally adjusted rate basis (SAAR) reported in January, they have since declined to 4.62 million.  This 14% decline has left the market feeling a bit weak, but there is some good news on the horizon, as many experts predict this weakness to be only temporary. What is causing the Weakness? There are several factors causing the ups and downs of the housing market. From increased mortgage rates and prices, to a decrease in available distressed sales and investor buying. Another theory being discussed among those is real estate, is the influence of the Polar Vortex, which has gripped most of the country this winter. With so many people not really being able to go outside because of bitter cold temperatures, it makes searching for a new home less of a priority. There may not...
Foreclosure Rates Still High in Some Florida Cities
The real estate market might be on the rebound for most of the United States, but in some cities foreclosure rates are still on the rise. According to the January 2014 U.S. Foreclosure Market Report™ recently released by RealtyTrac®, default notices, scheduled auctions and bank repossessions were up by 8 percent. While this is an increase from December 2013, it is still lower than it was in January 2013. It is no surprise that foreclosure activity would rebound in January, since things tend to become quiet over the holidays. However, RealtyTrac reported that the 8 percent increase seen in January is the largest since May 2012. Even with this increase, the foreclosure rates for the entire country is still on the decline and has been for the past 40 months. Florida One of Top States for Foreclosures While the population in Florida may be growing, so are its...
What Do the Next Five Years Hold for Home Pricing?
The days of home prices reaching levels seen during the real estate bubble seems to be over. Though pricing in 2013 was down 20% compared to its 2006 summer highs, the S&P Index Committee did report that prices were up 23% from their March 2012 lows in both the 10 and 20 city indexes. While 2013 proved to be a banner year for the housing market, with an appreciation rate of 6.4 percent, experts do predict that prices will cool somewhat due to rising mortgage rates, less inventory and a lack of good bargains. In fact, most economist, real estate experts and real estate investment strategist predict a moderate annual rise in prices of 3.7% over the next five years. This translates to a cumulative change in home value of 19.7% by the end of 2018. This housing market pricing picture is based on a recent study...
Foreclosures are Still Selling in Tampa
Conventional housing prices might be on the rise, but according to RealtyTrac’s Year-End 2013 U.S. Residential & Foreclosure Sales Report, foreclosed or distressed homes still account for more than one in four of all home sales. One of the states where this definitely holds true is in Florida and more specifically in the Tampa/St. Petersburg/Clearwater area. In fact, Florida still leads the nation in foreclosures. In the Tampa area this means that about 30% of all homes for sale are priced 40% less than traditional properties. Since the process to sell a foreclosed home in Florida also involves the court system, the selling process is delayed, which has become a growing concern among the lenders and banks who possess these homes, especially as the housing market recovers and the number of foreclosures in other parts of the country decreases. The good new is that like most other cities...
Retail Rent Sees Global Growth
There is finally some good news in the land of retail rent. According to research conducted by CBRE, a real estate services and investment firm, global retail rent grew by 4% in 2013, and is expected to continue to rise in 2014, especially in popular markets. The growth seems to be a result of the lack of prime retail space available in some of the most expensive markets in the world, such as Hong Kong, Paris and New York. In 2013, a square foot of space cost US$4,333 per year in Hong Kong, US$3,150 in New York and US$1,426 in Paris. Additionally, there also appears to be a shortage of new retail development, which makes the fight for limited existing space even more competitive and costly. This is especially true in Hong Kong, where space in limited and demand is extremely high, especially among luxury retailers who...
The Myth of the Shadow Inventory
One of the biggest myths floating around the real estate sphere is that of the “shadow inventory.” Proponents of this myth believe there is a large inventory of homes, either empty or repossessed, waiting to enter the market. This idea is especially false in markets that are functioning as they should be, i.e. markets where homes that are for sale are for sale. What is perpetuating the idea of the shadow inventory? Some experts in the real estate industry believe that banks and mortgage companies are holding up the foreclosure of a large number of homes. As a result of this so-called hold-up, there are hundreds or maybe thousands of distressed homes waiting to flood the market. However, banks, such as Wells Fargo, and investment firms, such as Barclays Capital, have denied and debunked the existence of the shadow inventory. In fact, in the third quarter of...
If You Want to Predict The Housing Market, Go West
Back in 2007, it seemed as if the housing market crash would never end, and that foreclosures and decreased home values were to become the new norm. No place was this more apparent than in California, where home prices plummeted by about 42%. Slowly, though, the market began to recover, and California, as well as the rest of the country, began to see an upturn in the housing market. Today, however, affordable housing in California is harder and harder to find. It is estimated that only about a third of the population in California is now able to afford the costs of buying a new home. Why is this concerning for the rest of the country? Because California is actually one of the biggest indicators and predictors of what will happen in the housing market across the country. In other words, if housing prices are too high...
There Goes the Neighborhood?
“We’ve seen the shift from the time we first moved in here from 2009 to now. The neighborhood is already declining.” 30-something mom and homeowner’s board member, Brooklyn, New York They block school buses and garbage trucks by parking on the narrow streets. Neighbors complain of hearing teenagers outside at all hours of the night. Fast food restaurant trash is seen strewn on the ground. What force could be causing this neighborhood devastation? Renters. “Homeowners are more likely than renters to do neighborhood maintenance, get involved with community groups and vote with greater frequency.” (Research paper, Edward Coulson, economics professor, Pennsylvania State University) Behemoth alternative real estate investment firms own thousands of rental properties in family neighborhoods. They believe that funneling money into properties that would otherwise be left vacant improves communities, boosts the quality of rental homes and affords moderate-to-higher-income families access to better quality schools. But these large landlord...
At the Doorstep of Immense Investment Opportunity
For the most part, Republicans blame Fannie Mae/Freddie Mac and government policies for inflating the housing bubble, while Democrats blame Wall Street for creating exotic investments that funneled subprime mortgages. Regardless, Wall Street’s success in the alternative real estate market depends largely on unparalleled demand for rentals from American families who homes were lost to foreclosure and from renters who want to buy but cannot get mortgages due to restricted credit banking practices following the 2008 real-estate bust. Investors Seek Higher Returns The U.S. homeownership rate today stands at 65.3 percent, the same as 20 years ago. However, because single-family rentals represent 10 percent or more of the housing market, lending and investment opportunities, still in their infancy, are immense. These properties offer 10 percent or higher yearly yields in rental income, and tidy profits when the homes are eventually sold. Funds set up by Blackstone, the...