Home buyers and sellers can take heart: Companies of all stripes are investing in real estate again. While the actions of big Wall Street funds and global corporations might seem to matter little to families choosing cities and towns in which to live, consumers can learn a lot by following which investing markets heavy hitters are focusing on--and which ones they're avoiding.
The housing health of a city is affected by a lot of factors including the jobs picture and the rate of vacancies and foreclosures. But some cities where home prices have been battered look like great buys for investors, a good sign that in spite of deep declines, they might turn around dramatically.
Two years ago the idea of putting money behind real estate ventures seemed too risky for even the most reckless of capitalists. But investor skittishness about the real estate market is slipping away, and speculators are seeing value in distressed markets.
But in a housing market this volatile, it can be hard to tell when low sales prices on property indicate a market that has bottomed or one with little hope of a turnaround any time soon. We asked Cary, N.C.-based Local Market Monitor (LMM), a real estate research firm, to identify the markets that were the best bet for residential real estate investing.
Raleigh, N.C.; McAllen, Texas; and Austin led the list. These cities didn't see the same dramatic run-ups in prices as many Sand State cities did between 2001 and 2006. As a result, they were spared a corresponding bust. They are also buoyed by a mix of jobs that's weighted toward growth industries like government and education.
"Markets with a high percentage of jobs in those categories tend to be more or less stable markets," says LMM president Ingo Wizner. "Then there are the categories you want to stay away from, like construction and finance."
LMM wasn't looking for markets that had come back--this list identified where they think the housing market will come back, with the greatest chance for price appreciation.
"We're not trying to predict which markets will all of a sudden have double-digit growth in home prices again," says Wizner. "We won't know that until the economy starts recovering again."
But investors aren't just looking at the jobs picture, and neither should families seeking promising cities in which to live. One of the characteristics of a city poised for a comeback is a population that was booming before tough economic times made relocating difficult for most Americans. Raleigh saw its population expand by 18% in the first half of the last decade, and McAllen and Austin each had 16% population growth during those five years.
That's the story for other cities on the list, like Nashville, Tenn. It had a 10% population surge. San Antonio, Texas; Colorado Springs, Co.; and Albuquerque, N.M., all on the list, grew by 9% each before the downturn hit.
"These are markets that in the past year have had sharp turndowns but we think they have longer-term potential," says Wizner. "Markets with longer-term prospects in general have had above-average population growth between 2000 and 2005."
At the other end of the spectrum, Lakeland, Fla.; Reno, Nev.; and Orlando are the absolute worst real estate markets into which you could put your money, with LMM calling them "frankly dangerous." Home prices in these metros have dropped to dramatic lows--in Lakeland, they fell 18% between the second quarters of 2009 and 2010. Worse yet, they are forecast to continue declining.
To select the best markets for investing, LMM analyzed the 145 Metropolitan Statistical Areas with populations over 400,000 on a variety of factors, including historic population growth, job growth, housing price changes and the mix of jobs in an area, using data through Sept. 1. The investing sweet spot is a market where strong job growth is predicted over the next three years, the population was expanding rapidly before the recession began and home prices are at or near their bottom.
Although much of the housing crisis fallout has already occurred, investing in residential real estate is still dicey, and valuations are trickier than ever. Wizner says that's exactly why real estate is becoming exciting again.
"You tend to get the best bargains in the market when nobody knows where price ought to be," he says. "The question is no longer which are the risky markets. Now that that adjustment has taken place, it's what's going to happen from here on in."
Source: Forbes
Wednesday, September 15, 2010
Friday, September 3, 2010
Pending home sales rise 5.2%!
The uptick is better than expected, with gains in all four US regions!
The National Association of Realtors said Thursday that its index of contracts to buy previously owned homes in the U.S. rose 5.2% in July.
The increase was better than expected, with gains in all four regions. Economists had expected the index to fall by 1.1% to a reading of 74.9, from a downwardly revised 2.6% decline in June.
The pending home sales index plunged 29.9% in May and 2.8% in June after the April 30 expiration of federal tax credits for homebuyers.
While the July index came in better than expected, sales in the month remained 19.1% lower than in July 2009.
Pending home sales are considered a good barometer of future existing-home sales. There is typically a one- to two-month delay from when contracts are signed till when home sales are closed.
Reports last week showed existing-home sales plummeted 27.2% in July, far worse than the expected rate of 4.72 million units after a downwardly revised rate of 5.26 million in June.
Adding to the already dismal outlook for the U.S. housing market, new-home sales fell 12.4% in July to a new record-low rate of 276,000, the Commerce Department reported last week. The figure also came in well below expectations, representing a 32.4% decline from year-earlier results and the weakest month on record. Sales were strongest in the South and weakest in the Northeast.
The S&P/Case-Shiller 20-city index of national home prices rose higher than expected in the second quarter, according to data released early Tuesday.
Nationwide home prices rose 4.4% in the second quarter after a 2.8% drop in the first quarter. A federal tax credit for homebuyers of up to $8,000 is largely credited with strengthening home sales last spring as buyers rushed to push up their purchases before the credits expired April 30.
Record-low and near-record-low mortgage rates have failed to spark demand for housing in recent months, but they clearly have had an effect on homeowners looking to lower their monthly payments.
Mortgage applications rose 2.7% last week, the Mortgage Bankers Association said Wednesday, led by a 2.8% rise in refinance applications. Loan applications for home purchases rose 1.8% in the week.
Refinancing applications were at their highest rate since May 2009, making up 82.9% of all mortgage applications last week, up from 82.4% in the week prior.
The average rate for a 30-year fixed loan fell to a new record-low rate of 4.43%, from 4.55% a week earlier.
In an effort to keep people in their homes, the Obama administration plans to offer $1 billion in zero-interest loans to homeowners who have lost income and are facing foreclosure. The measure is part of $3 billion in additional aid targeted at areas deemed economically stressed.
The housing market saw sales ramp up in March and April as consumers rushed to take advantage of tax credits that offered as much as $8,000 for first-time homebuyers and $6,500 for repeat buyers.
After the expiration of those credits on April 30, the market saw a dramatic decline in demand for the month of May that spilled over into June. Data for July showed a further drop in demand. Lawmakers later extended the deadline to close on a home purchase and still qualify for the tax credit to Sept. 30.
Stocks in the homebuilder sector reacted quickly, and most moved higher. The SPDR S&P Homebuilders (XHB), an exchange-traded fund that tracks the homebuilder sector, rose 1.8%. The iShares Dow Jones US Home Construction (ITB) gained 1.6%. NVR (NVR) rose 1.1%, PulteGroup (PHM) 1% and M.D.C. Holdings (MDC) 0.7%.
Ryland (RYL) bucked the trend, falling 0.8%. Hovnanian Enterprises (HOV) jumped 2.5%. The builder said early Wednesday it narrowed its quarterly losses even as signed sales contracts for newly built homes tumbled 37%.
Source: http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1800106
The National Association of Realtors said Thursday that its index of contracts to buy previously owned homes in the U.S. rose 5.2% in July.
The increase was better than expected, with gains in all four regions. Economists had expected the index to fall by 1.1% to a reading of 74.9, from a downwardly revised 2.6% decline in June.
The pending home sales index plunged 29.9% in May and 2.8% in June after the April 30 expiration of federal tax credits for homebuyers.
While the July index came in better than expected, sales in the month remained 19.1% lower than in July 2009.
Pending home sales are considered a good barometer of future existing-home sales. There is typically a one- to two-month delay from when contracts are signed till when home sales are closed.
Reports last week showed existing-home sales plummeted 27.2% in July, far worse than the expected rate of 4.72 million units after a downwardly revised rate of 5.26 million in June.
Adding to the already dismal outlook for the U.S. housing market, new-home sales fell 12.4% in July to a new record-low rate of 276,000, the Commerce Department reported last week. The figure also came in well below expectations, representing a 32.4% decline from year-earlier results and the weakest month on record. Sales were strongest in the South and weakest in the Northeast.
The S&P/Case-Shiller 20-city index of national home prices rose higher than expected in the second quarter, according to data released early Tuesday.
Nationwide home prices rose 4.4% in the second quarter after a 2.8% drop in the first quarter. A federal tax credit for homebuyers of up to $8,000 is largely credited with strengthening home sales last spring as buyers rushed to push up their purchases before the credits expired April 30.
Record-low and near-record-low mortgage rates have failed to spark demand for housing in recent months, but they clearly have had an effect on homeowners looking to lower their monthly payments.
Mortgage applications rose 2.7% last week, the Mortgage Bankers Association said Wednesday, led by a 2.8% rise in refinance applications. Loan applications for home purchases rose 1.8% in the week.
Refinancing applications were at their highest rate since May 2009, making up 82.9% of all mortgage applications last week, up from 82.4% in the week prior.
The average rate for a 30-year fixed loan fell to a new record-low rate of 4.43%, from 4.55% a week earlier.
In an effort to keep people in their homes, the Obama administration plans to offer $1 billion in zero-interest loans to homeowners who have lost income and are facing foreclosure. The measure is part of $3 billion in additional aid targeted at areas deemed economically stressed.
The housing market saw sales ramp up in March and April as consumers rushed to take advantage of tax credits that offered as much as $8,000 for first-time homebuyers and $6,500 for repeat buyers.
After the expiration of those credits on April 30, the market saw a dramatic decline in demand for the month of May that spilled over into June. Data for July showed a further drop in demand. Lawmakers later extended the deadline to close on a home purchase and still qualify for the tax credit to Sept. 30.
Stocks in the homebuilder sector reacted quickly, and most moved higher. The SPDR S&P Homebuilders (XHB), an exchange-traded fund that tracks the homebuilder sector, rose 1.8%. The iShares Dow Jones US Home Construction (ITB) gained 1.6%. NVR (NVR) rose 1.1%, PulteGroup (PHM) 1% and M.D.C. Holdings (MDC) 0.7%.
Ryland (RYL) bucked the trend, falling 0.8%. Hovnanian Enterprises (HOV) jumped 2.5%. The builder said early Wednesday it narrowed its quarterly losses even as signed sales contracts for newly built homes tumbled 37%.
Source: http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1800106
Thursday, September 2, 2010
Jobless Claims Drop, Retail Sales Rise!
A weak economy got a little lift Thursday with new data suggesting companies aren't pursuing mass layoffs and stores are a little busier.
New applications for unemployment benefits declined for a second straight week after rising in the previous three. Retailers reported surprisingly strong sales in August. And more people signed contracts to buy homes.
Economists were mildly encouraged by the news, which followed several downbeat reports on housing and weaker economic growth last week. But few saw signs that the economy is gaining momentum.
"It's encouraging that we're not seeing further deterioration as we have in recent months," said Julia Coronado, U.S. economist at BNP Paribas. "But we're not turning around and moving in the direction of stronger growth."
New claims for unemployment aid fell last week by 6,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. The four-week average of claims, a less-volatile measure, fell by 2,500 to 485,500, its first decrease after four straight increases.
Even with the declines, claims are still at much higher levels than they would be in a healthy economy. When economic output is growing rapidly and employers are hiring, claims generally drop below 400,000.
It appears "that a wave of panicked layoffs has passed, as companies have become a bit calmer in the face of the financial and economic disruptions of late spring and early summer," Pierre Ellis, an economist at Decision Economics, wrote in a note to clients.
In a separate report, the Labor Department said productivity fell in the spring by the largest amount in nearly four years while labor costs rose. That indicates companies may have reached the limits of their ability to squeeze more work out of their reduced work forces.
The nation's retailers reported surprisingly solid gains for August. Aggressive discounting helped during an unusually hot summer when consumers worried about jobs and a weakening economy.
And the number of buyers who signed contracts to purchase previously occupied homes increased in July, according to the National Association of Realtors. But it remained well below last year's levels, a sign that demand for housing remains weak.
The modest increase in home sales comes as mortgage rates keep falling. The average 30-year mortgage dropped to 4.32 percent this week, down from 4.36 percent last week, according to mortgage buyer Freddie Mac. That's the tenth time in the past 11 weeks that rates have hit their have lowest level since Freddie Mac began tracking them in 1971.
In another report, factory orders rose slightly in July after two months of declines. But most of the gains were a result of higher airplane orders. Excluding transportation, orders fell 1.5 percent, the biggest drop in 16 months.
Still, concerns that manufacturing could be faltering were eased on Wednesday with a private trade group's report showed the industrial sector grew for the 13th straight month in August.
Requests for jobless benefits haven't improved much this year. New claims stood at 470,000 during the week of Jan. 9, almost the same as last week's figure. The four-week average was about 20,000 lower in January.
Economists closely watch initial claims for real-time information on the job market. They are considered a gauge of the pace of layoffs and a measure of companies' willingness to hire.
Hiring has slowed to a crawl in recent months. The claims report comes one day before the Labor Department is scheduled to issue the August employment report. That is expected to show that private businesses added a net total of only 41,000 jobs last month, the fourth straight month of anemic hiring.
When government jobs are included, total payrolls are forecast to drop by 100,000 -- based on about 115,000 temporary census jobs ending. The jobless rate is projected to rise to 9.6 percent from 9.5 percent, according to Thomson Reuters.
The number of people continuing to claim benefits fell by 23,000 to 4.46 million, the lowest since late June.
But that doesn't include millions of people who are receiving extended benefits under emergency programs enacted by Congress during the recession. More than 5.4 million people were on the extended benefit rolls during the week of Aug. 14, the latest data available. That's a drop of about 320,000 from the previous week.
Without more jobs, consumers will likely spend cautiously, making it harder for the economy to gain steam. Consumer spending accounts for about 70 percent of economic activity.
The pace of economic growth has slowed considerably from earlier this year, as the impact of the government's stimulus package fades. Many economists are increasingly pessimistic that private companies will do enough hiring and spending to replace the impact of the stimulus.
The nation's gross domestic product, the broadest measure of economic output, grew at a 3.7 percent annual pace in the first quarter, but that slowed dramatically to 1.6 percent in the April-to-June period. That's not fast enough growth to bring down unemployment.
Economists at Bank of America-Merrill Lynch on Wednesday marked down their estimates of future economic growth. They now expect the economy to grow at only a 1.8 percent pace next year, down sharply from an earlier estimate of 2.3 percent.
That's equivalent to a "growth recession," says Bank of America's top North American economist, Ethan Harris. A growth recession occurs when the economy grows slightly but not enough to reduce the unemployment rate.
Harris now expects the jobless rate to tick back up above 10 percent by early next year.
Comair, a regional airline owned by Delta Air Lines Inc., said Wednesday that it will reduce its fleet by half and cut jobs over the next two years to lower costs. The company, which employs about 2,600 people, didn't say how many jobs would be affected.
Heavy equipment maker Caterpillar Inc., meanwhile, is headed in the other direction. It opened a new road grader factory Wednesday in North Little Rock, Ark. That will create 600 jobs.
Source: http://finance.yahoo.com/news/Unemployment-claims-drop-for-apf-4050914282.html?x=0
New applications for unemployment benefits declined for a second straight week after rising in the previous three. Retailers reported surprisingly strong sales in August. And more people signed contracts to buy homes.
Economists were mildly encouraged by the news, which followed several downbeat reports on housing and weaker economic growth last week. But few saw signs that the economy is gaining momentum.
"It's encouraging that we're not seeing further deterioration as we have in recent months," said Julia Coronado, U.S. economist at BNP Paribas. "But we're not turning around and moving in the direction of stronger growth."
New claims for unemployment aid fell last week by 6,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. The four-week average of claims, a less-volatile measure, fell by 2,500 to 485,500, its first decrease after four straight increases.
Even with the declines, claims are still at much higher levels than they would be in a healthy economy. When economic output is growing rapidly and employers are hiring, claims generally drop below 400,000.
It appears "that a wave of panicked layoffs has passed, as companies have become a bit calmer in the face of the financial and economic disruptions of late spring and early summer," Pierre Ellis, an economist at Decision Economics, wrote in a note to clients.
In a separate report, the Labor Department said productivity fell in the spring by the largest amount in nearly four years while labor costs rose. That indicates companies may have reached the limits of their ability to squeeze more work out of their reduced work forces.
The nation's retailers reported surprisingly solid gains for August. Aggressive discounting helped during an unusually hot summer when consumers worried about jobs and a weakening economy.
And the number of buyers who signed contracts to purchase previously occupied homes increased in July, according to the National Association of Realtors. But it remained well below last year's levels, a sign that demand for housing remains weak.
The modest increase in home sales comes as mortgage rates keep falling. The average 30-year mortgage dropped to 4.32 percent this week, down from 4.36 percent last week, according to mortgage buyer Freddie Mac. That's the tenth time in the past 11 weeks that rates have hit their have lowest level since Freddie Mac began tracking them in 1971.
In another report, factory orders rose slightly in July after two months of declines. But most of the gains were a result of higher airplane orders. Excluding transportation, orders fell 1.5 percent, the biggest drop in 16 months.
Still, concerns that manufacturing could be faltering were eased on Wednesday with a private trade group's report showed the industrial sector grew for the 13th straight month in August.
Requests for jobless benefits haven't improved much this year. New claims stood at 470,000 during the week of Jan. 9, almost the same as last week's figure. The four-week average was about 20,000 lower in January.
Economists closely watch initial claims for real-time information on the job market. They are considered a gauge of the pace of layoffs and a measure of companies' willingness to hire.
Hiring has slowed to a crawl in recent months. The claims report comes one day before the Labor Department is scheduled to issue the August employment report. That is expected to show that private businesses added a net total of only 41,000 jobs last month, the fourth straight month of anemic hiring.
When government jobs are included, total payrolls are forecast to drop by 100,000 -- based on about 115,000 temporary census jobs ending. The jobless rate is projected to rise to 9.6 percent from 9.5 percent, according to Thomson Reuters.
The number of people continuing to claim benefits fell by 23,000 to 4.46 million, the lowest since late June.
But that doesn't include millions of people who are receiving extended benefits under emergency programs enacted by Congress during the recession. More than 5.4 million people were on the extended benefit rolls during the week of Aug. 14, the latest data available. That's a drop of about 320,000 from the previous week.
Without more jobs, consumers will likely spend cautiously, making it harder for the economy to gain steam. Consumer spending accounts for about 70 percent of economic activity.
The pace of economic growth has slowed considerably from earlier this year, as the impact of the government's stimulus package fades. Many economists are increasingly pessimistic that private companies will do enough hiring and spending to replace the impact of the stimulus.
The nation's gross domestic product, the broadest measure of economic output, grew at a 3.7 percent annual pace in the first quarter, but that slowed dramatically to 1.6 percent in the April-to-June period. That's not fast enough growth to bring down unemployment.
Economists at Bank of America-Merrill Lynch on Wednesday marked down their estimates of future economic growth. They now expect the economy to grow at only a 1.8 percent pace next year, down sharply from an earlier estimate of 2.3 percent.
That's equivalent to a "growth recession," says Bank of America's top North American economist, Ethan Harris. A growth recession occurs when the economy grows slightly but not enough to reduce the unemployment rate.
Harris now expects the jobless rate to tick back up above 10 percent by early next year.
Comair, a regional airline owned by Delta Air Lines Inc., said Wednesday that it will reduce its fleet by half and cut jobs over the next two years to lower costs. The company, which employs about 2,600 people, didn't say how many jobs would be affected.
Heavy equipment maker Caterpillar Inc., meanwhile, is headed in the other direction. It opened a new road grader factory Wednesday in North Little Rock, Ark. That will create 600 jobs.
Source: http://finance.yahoo.com/news/Unemployment-claims-drop-for-apf-4050914282.html?x=0
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