The Urban Land Institute and PwC have just released the real estate industry’s widely anticipated industry forecast, Emerging Trends in Real Estate 2020. The report indicates that while real estate economists are tempering their views on economic growth in the United States, they continue to forecast steady real estate markets and returns through 2021.

The outlook remains generally upbeat amid an escalation of the U.S.-China trade war, volatility in global financial markets and the inverted yield curve for U.S. Treasury bonds, which is among the most consistent recession indicators.

In spite of these headwinds, the forecast cites adaptability to change along with discipline as key factors in the industry’s ability to withstand an economic downturn and the possibility of softer real estate demand in the years ahead.

The report states, “Reinforcing the optimism about real estate’s ability to withstand a recession is satisfaction that the property sector’s discipline in this recovery means that ‘this time it won’t be our fault’ if the economy falters. Any warning signs are arising from causes that real estate has little control over.”

The findings suggest that a willingness to embrace change and rethink growth strategies is beneficial for cities as well as the industry. Austin, the capital of Texas, is ranked first out of 80 cities in the U.S. for overall real estate prospects for 2020, followed by Raleigh/Durham, North Carolina; Nashville; Charlotte, North Carolina; and Boston. Other favorites for 2020 include Dallas/Fort Worth, Orlando, Atlanta, Los Angeles, Seattle and Tampa/St. Petersburg.

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The majority of foreclosure sales to third-party buyers are owner-occupied within a year, according to a new study from Auction.com. Auction.com’s Seller Strategy Report notes that 56% sold of properties sold to third parties at foreclosure sale in Q2 2018 were Owner-Occupied a year later, compared to 43% that reverted to the lender.

Additionally, third-party foreclosure sales executed higher relative to credit bid at the foreclosure sale than did properties sold as REO, and properties sold via “Day 1” REO online auction sold on average 95 days faster than REOs sold via the MLS..

“By synthesizing the rich transactional data from our market-leading platform with public record and MLS data, we’re able to provide a holistic view of the disposition metrics that matter to distressed property sellers,” said Jason Allnutt, CEO at Auction.com. “At the top of that list are execution of the sale price relative to credit bid, time to sell a property, and impact on the surrounding neighborhood.”

Opportunity Zones execute higher to reserve than non-opportunity zones, with properties in Opportunity Zones that sold to third-party buyers at foreclosure auction executed 5 percentage points higher relative to reserve than properties located outside of Opportunity Zones. Homes in Opportunity Zones are cheaper, in general, as well. ATTOM Data Solutions reports that 80% of these zones had median home prices in the Q2 2019 that were below the national figure of $266,000, and that half had median prices of less than $150,000.

Additionally, compared to the surrounding regions, median Q2 2019 prices in about one in four zones were less than 50% of the typical value in the Metropolitan Statistical Areas where they exist. Within Opportunity Zones, 86% had median Q2 2019 sales prices that were less than the median sales price for the surrounding Metropolitan Statistical Area (MSA). Roughly 26% had median sales prices less than half the figure for the MSA. Only 14% had median sales prices that were equal to or above the median sales price in the MSA.

See original article [Source: www.dsnews.com]

The average sales price for properties sold at foreclosure auction in Q1 2019 increased by 8% from the previous quarter to $147,115, or 7% higher than a year ago, according to a report from Auction.com. This is the highest level since Auction.com began recording this data in Q1 2016.

“Auction.com has digitized much of the foreclosure auction process over the past several years, giving us access to real-time transactional data from our leading marketplace that provides forward-looking insight for the distressed market as well as a good barometer for the larger retail housing market,“ said Auction.com CEO Jason Allnut

The Q1 2019 Auction.com Distressed Market Outlook notes that scheduled foreclosure auctions decreased 1% from a year ago nationwide but were up in 30 states, including California, Texas, Colorado and Nevada. According to the report, the declining rate of completed foreclosure auctions as a percentage of scheduled foreclosure auctions in the first quarter shows more distressed homeowners who fall into foreclosure are able to avoid a completed foreclosure.

Foreclosure auction properties sold for 20.8% below estimated market value on average in the first quarter, down from a 23.5% average discount in the previous quarter but up from a 19.7% average discount in Q1 2018.

By state, 25 states posted a year-over-year increase in the third-party buyer sales rate at foreclosure auction, including New Jersey (up 22%), Florida (up 2%), North Carolina (up 7%), Missouri (up 3%), and Virginia (up 6%). Additionally, average foreclosure auction sales prices increased from a year ago in 36 states, including New Jersey (up 22%), Florida (up 2%), Texas (up 4%), Georgia (up 3%), and Illinois (up 12%).

Twenty-five states posted an annual increase in third-party foreclosure auction sales, including Texas (up 11%), Ohio (up 34%), Virginia (up 32%), Wisconsin (up 47%), and Oklahoma (up 130%).

“Solid real estate investor demand and a limited supply of distressed properties continues to push average prices up in most parts of the country,” said Ali Haralson, Chief Business Development Officer at Auction.com. “Even in areas with decreasing prices, the decrease can often be explained with a shift in the type of inventory being sold at auction.

Source: www.dsnews.com

Renovations can make us happier in the places we call home, but some of the most dramatic updates can add real value when it’s time to sell.

6 home renovations that return the most at resaleSince kitchen, deck and other upgrades can represent a significant cost, it’s helpful to know what kind of return you might expect before you decide to write a check.

“Budget is the number one pain point for most remodeling professionals when they meet with potential clients,” says Clayton DeKorne, chief editor of the JLC Group, a collection of magazines serving building professionals. Since 2002, the organization’s Remodeling, a magazine for the construction industry, has produced the annual Cost vs. Value report, which examines the cost of popular home renovations versus the return on investment (ROI) at resale.

The 2019 Cost vs. Value report compares the average cost of 22 remodeling projects with the value those projects retain at resale in 136 U.S. markets, based on a survey of 3,000 real estate agents and firms. It’s important to note, however, that costs can vary greatly by region based on the cost of labor and materials, as well as the level of service offered by individual remodelers.

In any project, there are the so-called hard costs of labor and materials, but the real value is a combination of personal enjoyment and additional value at the time of a home sale.

“There’s no project on the list that returns lower than 50 percent,” DeKorne explains. “On the lower end of the ROI spectrum are the bigger-ticket projects that have a whole lot of personal selection involved, such as choosing finishes in a bathroom remodeling project. They may or may not translate from one buyer to the next, but there is value in those personal finishes. A homeowner is going to get enjoyment in those things while they’re living there.”

Whether you plan to stay in your house for a long time or just a few years, it’s smart to know which home renovations add the most value. Here are the six home remodeling projects that deliver the highest returns.

Read Full Article [Source: www.bankrate.com]

As a new or even seasoned investor, finding the best markets to invest in is crucial to long-term success. But what are the characteristics that define a market as among the best? Here are seven tips for all investors wanting to find the best real estate markets to invest in when it comes to rental properties or a buy-and-hold strategy.

1. Look for a rent-to-value ratio of 1%.

One of the quickest, easiest ways to determine if a rental property is a smart investment is the rent-to-value (RTV) ratio. For example, if a $100,000 property will rent for $1,000 per month, the RTV is 1%. Generally, if a property meets the 1% RTV, it is a viable investment to consider. A and B Class neighborhoods and properties may fall below the 1%. That doesn’t necessarily mean they are bad choices. However, if the RTV falls below 0.9%, you may not be getting the best return for your investment. If your aim is to maximize cash flow, the 1% RTV is important.

2. Rental demand is important.

Many major cities will have large percentages of renters, but many smaller markets may also be good places to find high percentages of renters. For example, the Midwest markets of Dayton, Ohio, and Middletown, Ohio — where I work and invest — have renter percentages between 40% and 50%. This is a strong correlation for a successful buy-and-hold strategy. If the population of renters falls below 30%, you’re likely looking at a market that may have trouble attracting renters because of location, price point or some other reason. Ideally, strive for markets with a 35%-60% renter population. A number higher than 60% can also indicate a market that doesn’t attract owner-occupied buyers, which isn’t positive either.

3. Diverse economy is key.

Beyond assessing whether the property is a good investment, you must evaluate the market you’re investing in. What are the large industry players? Is the city attracting new business? If so, what kind? You want to ensure that there is long-term support in the market for employment and future growth. If a market is heavily manufacturing, will those jobs be replaced with robotic technology? If a market is heavily based on tourism, could a natural disaster or a recession deplete the attraction for tenants? A diverse economy is key. This supports long-term stability, attraction for young professionals and a way to recession-proof the market (if a market relies on one industry, it could easily be wiped out during a recession, depending on what businesses fail during that time).

4. Don’t limit your location.

The mistake that many investors make is limiting their investments to a radius around their home. The old adage was to invest within an hour drive from home. However, the great expanse of the internet and technology has made this just that — an old adage. The emergence of firms like ours, known as turnkey investment companies, has made investing in markets away from your personal home possible. Turnkey companies specialize in finding promising rental properties, rehabbing them to certain standards, finding tenants and setting up property management for investors who live anywhere. I always say, “Live where you want. Invest where it’s smart.” If you confine your search to your local market, you will likely be missing out on some of the best investment markets. 

If you choose to invest in the best markets, they’re likely not within a close range to home (see No. 4). Therefore, it is important to find a great team with boots on the ground in the market you want to invest in. Find a turnkey company or team that lives and works in the area they’re investing in. There are many companies that invest and operate remotely. This means their home office is located in one city, while they’re selling properties in a market many states away. This is not ideal. You want a team that can easily access your investment on any given day if an issue occurs. Be sure to thoroughly vet any company before signing on to work together.

6. Think like an investor, not a homeowner.

Too often, investors base their purchase decision on where they would live. Cities in the Midwest may not be an East Coaster’s cup of tea, but that doesn’t many that millions of other people aren’t choosing to live, work and raise families there. If there is evidence to support a large renter population and the numbers for the investment make sense after your due diligence, don’t cancel the deal based on personal feelings on the market. Even more granular, don’t discount a property with a paint color or layout that you don’t personally enjoy. If the numbers make sense, and a renter is paying the rent amount, don’t let the purple shutters bother you that much. After all, you could always spend $100 to get the shutters painted.

7. Finally, look for boring markets.

Boring markets are best for buy-and-hold investors. Here’s why: Markets that have large ups and downs in terms of their real estate market can be turbulent. Markets like Las Vegas were hit hard in the recession. Many residents moved out, not only hurting the local economy, but also the renter population. Demand went down. Rent prices dropped, and cash flow for investors in that market took a tumble. Markets that are stable over the long term, that don’t have large ups and downs, will generally survive a recession without a huge hit. If you’re building a portfolio for cash flow purposes, or even banking on selling off assets in the future with a bit of appreciation earned, this is a very important point to consider.

View Source Article [www.forbes.com]

CoreLogic’s latest Home Price Index (HPI) revealed national home prices rose 3.6% year-over-year in May 2019.

The report adds that CoreLogic is forecasting prices to increase 5.6% from May 2019 to May 2020. The May 2019 gains was lower than the 6.4% increase of May 2018, but a slight increase from March 2019’s 3.3%.

Homes in the lower-price tier saw the largest annual increases at 5.4%. The middle low-to-middle tier rose 4.5%, middle-to-moderate price tier increased 4%, and the high-price tier jumped 3%.

CoreLogic stated the overall HPI has increased annually every month since March 2012, and grown 61.1% since bottoming out in March 2011. The overall HPI in May 2019 was 8.3% higher than its pre-crisis peak in April 2006. Home prices increased 2.6% year-over-year in May 2019, and were 11.6% below their peak.

For the eighth-consecutive month Idaho led the nation in annual appreciation, coming in at 10.7% in May 2019. North Dakota had its 11th month of annual HPI decreases, and saw home prices depreciate at 1.7%.

Home prices in 39 states, including the District of Columbia, have risen above their pre-crisis peaks. California, Idaho, and Michigan have surpassed their pre-crisis peaks as of May 2019.

Connecticut’s home prices in May 2019 were 17.6% below the July 2006 peak, which is the largest gap in the nation. Home price cooling was most evident, according to CoreLogic, in Washington, California, and Nevada.

Rising home prices are an issue for prospective buyers, as a study by realtor.com found that half of today’s home buyers are looking for a property under $288,000, which is more than 9% below the median price for homes currently on the market.

The results of the study found that home’s priced below $288,000 is 9.1%, or $27,000 under the national average.

“The price differences between what buyers are searching for, closing on, and what’s available on the market demonstrates just how big the gap is for entry-level home buyers,” said Danielle Hale, Chief Economist for realtor.com.

Realtor.com states that closing that gap won’t come easy, and estimates that approximately that 94,000 homes priced between $100,000 and $340,000 would need to be put up for sale achieve that balance.

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