A recent article in The Detroit News indicates that in January there were further signs of growing stability in the Metro Detroit housing market. The standing inventory of homes is down 21% from last January with non-foreclosure sales growth of 7%. Sales jumped 7% last month in the four-county region with all-cash purchases accounting for half of all sales.
Contributor: Cindy Coin
In a recent article from DSNews.com by Krista Franks she quotes economists from Capital Economics and the National Association of Realtors stating that the real estate market has started its recovery. They point towards “record low mortgage interest rates, job growth and bargain home prices” as drivers towards improving consumer confidence.
While 2011 did show a slight increase (1.7%) in existing-home sales over the previous year, the article did provide evidence that the recovery won’t be quick or dramatic. Distressed sales still represented more than 30 percent of sales and foreclosed home sales sold at a 22 percent discount from market rate in December. Capital Economics chief economist Paul Dales summarized this mixed bag of information when we said, “Housing still won’t contribute much to GDP growth over the next few years, but at least it will no longer subtract from it.”
As spring break approaches, it is the ideal time for high school students – no matter what grade they are in – to visit college campuses. Spring break college visits are helpful and well-timed because:
Most college websites have tour times and information sessions listed. If not, a quick call or email to the Admissions Office can provide this information. It is also beneficial to attend the sessions and speak with an Admissions Counselor about specific topics of interest, such as financial aid or sports.
In his article in the Fort Lauderdale Sun Sentinel, Paul Owers writes about a subject quite familiar to those working in Destination Services: the reluctant landlord. Due to the real estate crisis, many would-be home sellers across the United States owe much more than their property is currently worth and thus are unable to list their homes for sale. For many, this is a first-time experience – and not one that they find particularly enjoyable. Although the same real estate crisis has created a “red hot rental market”, finding a reliable, long-term tenant is still a challenge. Maintenance costs, tenants with pets and rent payments that do not cover the mortgage are additional headaches reported by these novice landlords.
For the international employee moving to the U.S., the inexperienced landlord creates a whole host of challenges. For example, first-time landlords are often reluctant to work with expats that have no US credit or rental history. Also, most have never heard of a diplomatic clause. And finally, inexperienced landlords do not understand why a Relocation Management Company is asking for their social security number on a W9 form and their bank account information in order to pay rent on behalf of the transferee. In many markets, the international transferee is competing with a long line of local rental applicants with acceptable US credit history and a ready check book. In such a fragile real estate market, it is important these international transferring employees use the best available resources to assist in finding a new home.
On January 12th, Bloomberg Businessweek reported that 2012 foreclosure activity across the nation could swell 25% as compared to 2011 with an estimated one million homes potentially being seized by lenders. According to RealtyTrac, the nation’s top resource and foremost authority on the foreclosure housing market, “the 2nd half of 2011 showed signs that lenders were beginning to push through some delayed foreclosures in select local markets”. This is likely to continue throughout 2012 “as lenders resume foreclosure actions”, according to Darren Blomquist with RealtyTrac.
Source: Bloomberg Businessweek, “Home Seizures May Jump 25% This Year as U.S. Foreclosures Resume” by Dan Levy
A recent Forbes.com article highlighted 13 cities that were exceptionally hard hit in 2011 as they saw dramatic home price drops throughout the year. The list contains those markets that were severely impacted early on in the subprime mortgage crisis like Las Vegas and Phoenix, but also includes other cities like Boise where rising unemployment has triggered an increase in foreclosure activity. Clearly the common thread in all of these markets is the ongoing high level of foreclosures and distressed property sales. The article indicated that over 50% of sales in these cities were distressed. With that level of distressed properties on the market, non-distressed home sale prices were forced downward to compete for the limited number of buyers.
Unfortunately for these cities, the experts are looking at 2012 as a continuation of the downward price trend they experienced in 2011.
Renting a home in the US is a process fraught with anxiety these days. With markets across the country reporting vacancy rates at record lows, cities have been in a race for who’s rental market can tighten the most over the last year. The results are in—the San Jose metropolitan area has clinched the title for 2011. According to a study done by Marcus & Millichap Research Services, San Jose reported a vacancy rate of 3.1% in the third quarter of 2011 which is significantly lower than the national average of 5.6% vacancy over the same timeframe. The good news is that the increase in the demand for rental housing seems to be tied to large economic growth for the region as tech workers flock to communities throughout the metro area. Please View the full article posted by The Silicon Valley/San Jose Business Journal.
Relocating employees to different regions of the country or the world has been ongoing for hundreds of years. The Dutch East India Company “began relocating” their employees to carry out colonial activities in Asia in 1602. Three centuries later in the 1950′s, corporate relocation as we know it began in the United States and it looked very different from the days of the Dutch East India Company. Modern companies relocate employees to locations where they are unable to hire specialized workers or in situations where widespread domestic or international experience is an important part of talent management.
The face of the United States housing market is changing due to high unemployment, rising home foreclosures, and falling home prices for six consecutive quarters. Will 2012 be the Year of the Landlord? Yes, according to a recent report by Oliver Chang, an analyst at Morgan Stanley. Chang writes that ”rents are rising, vacancies are falling, household formations are growing and rental supply is limited. We believe the demand for rental properties will continue to grow.” With nationwide rent prices rising by 2.4% over the past year, landlords will continue to be in the driver’s seat in 2012 with less room for renters to negotiate the terms and price of a lease. For more information, read the Financial Post article “Renters Transform US Housing Market.”
A recent CNN Money report indicates that home prices declined in October for the sixth straight month in 2011. Prices fell 1.2% compared with September and 3.4% a year ago according to the latest S&P/Case-Shiller 20–city index. Though recent reports on new home sales, existing home sales, and home building have been positive, this report puts a damper on the overall mood of the market. Homes have lost nearly 33% of their value since the beginning of the bust in 2006. Peter Morici, a professor of economics at the University of Maryland said home prices remain weak because demand for existing homes is soft. Many potential buyers are migrating to rental markets or buying new homes that had been sitting unsold for months. Read the CNN Money article here.
What are your thoughts?