July 21st, 2010 by Ryan Hinricher | Mortgage Purchase Applications
Is real demand back in the market? The most recent survey by the Mortgage Bankers Association shows this may be the case. Mortgage purchase applications rose for the first time in 5 weeks, up 3.4% from levels not seen since 1996. This is likely a combination of record low interest rates and new demand, which up until now had been removed from the market (due to the tax credit).
Investors might start again seeing competition from primary occupants seeking homes with interest rates too good to pass up. More than likely we’ll see continued volatility in the Index over the upcoming months and the market seeks footing.
- Ryan Hinricher, Founder, Senior Housing Analyst
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July 16th, 2010 by Ryan Hinricher | Home Data Index
With bank foreclosure prices increasing in Memphis, the city’s real estate was ranked No. 1 in the nation in the most recent Home Data Index by Clear Capital.
The report shows Memphis leading mostly Midwestern and Southern cities with a 16.2% gain (year-over-year) in prices. The quarter showed a 20.6% increase in price in Memphis real estate, fueled by tax credit buyers.
Rounding out the top 5 were; Cleveland, Milwaukee, Birmingham, Chicago, and Minneapolis.
- Ryan Hinricher, Founder, Senior Housing Analyst
Tags: Clear Capital, Home Data Index
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July 14th, 2010 by Ryan Hinricher | Housing Market
When I saw today’s Mortgage Bankers Association survey of purchase applications fall again, I realized we’re in a period where investors can rule the home buying market.
If you’ve considered the purchase of a quality investment property in the first half of the year, you probably noticed that you literally couldn’t find quality housing. Primary occupants armed with tax credits snatched up everything in site near median home prices. We saw nearly our entire inventory purchased by these individuals. Unfortunately distressed inventory saw little competition during this same period as there is certain difficulty in using improvement financing for average home buyers.
The bottom end of the market (much of the inferior housing stock) saw little to no competition from the average home buyer because, frankly they don’t want it.
Mortgage purchase applications fell 3.1% last week (week-over-week basis) showing us a low not seen before since 1996.
What this means is that it’s now possible, to acquire these properties with limited competition from primary occupants. I said, “limited” because we are still getting heavy interest from owner occupants on Investor Nation housing stock, looking for non-distressed homes in pristine condition.
I know at least one investor who experienced frustration on finding his ideal investment property (near median-price value) because he was competing with tax credit buyers. He recently was able to find what he was looking for almost immediately after the April 30th contract deadline.
If it’s been easy to find the properties you are buying all along, you need to ask if there really is value in the asset. Aren’t things worth having, difficult to get?
- Ryan Hinricher, Founder & Senior Housing Analyst
Tags: Mortgage Purchase Applications, Quality Housing Stock
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June 24th, 2010 by Ryan Hinricher | Events, New Home Sales
This week there’s been much seemingly bad news about the real estate economy. New home sales hit a record low, existing home sales have dropped, and are poised to drop further.
For an investor it can be challenging to figure out how you should be involved in real estate today. Over the last 12 months, Investor Nation has put an unparalleled focus on locating properties that outperform the market. We use the term, “blue-chip” because they are the bellwethers or dividend stocks of the market.
This type of home offers investors safety and performance in uncertain times. In fact, this type of home is what existing home buyers are purchasing as opposed to new homes (where the builders can’t compete with distressed asset prices). Because of this, there is simply more demand from buyers and renters for this product, while the product on the low end continues to decline being purchased by investors only.
This weekend, I’ll be discussing key fundamentals of this asset class at the Summer Wealth Summit in the San Francisco Bay area. Despite the real estate market struggling, opportunities do exist in the post-crisis economy.
- Ryan Hinricher, Housing Analyst
Tags: asset class, New Home Sales, summer wealth summit
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June 22nd, 2010 by Ryan Hinricher | Housing Starts
Last week, the Commerce Department reported that housing starts hit a 5-month low, dropping 10% to a seasonally-adjusted annual rate (SAAR) of 593,000. Analysts were expecting a number of around 650,000 housing starts.
Along with this, new builder permits dropped 5.9% to a 574,000 pace in May, the lowest in a year signaling builders aren’t able to get financing or aren’t prepared to take the risk of having vacant inventory.
Even worse, ground-breaking on single family homes dropped more than 17% to 468,000 units. Meanwhile multi-family starts zoomed 33% to a 125,000-unit annual pace.
For investors, the news isn’t all that bad. Fewer housing starts means the market is absorbing existing inventory. Inventory that badly needs to be absorbed. It’s estimated that nearly 1.6million homes need to be built each year to keep up with demand, far above the pace that’s occurring today.
I anticipate we won’t see much in the way of recovery for builders this year and well into next year. Look instead to see continued demand for existing housing stock and strengthening demand for rental housing. This is in part due to delays in household formation and inability for people to get financing.
- Ryan Hinricher, Housing Analyst
Tags: household formation, Housing Starts
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