Investor Intelligence

Orlando MSA Logs 12% Rise in Median Price in December

Ryan Hinricher — Wed, 01 Feb 2012 11:42:53 +0000

According to the Orlando Realtors Association, the median price of homes rose 12% in December 2012 over December 2011. Excluding distressed sales, the median price in was $159,000. The cumulative median price for all of 2011 was $109,900 which is higher than 2010′s $108,500.

Other numbers to note from the Realtors year-end report:

Foreclosure sales were down over 56% in 2011 as the foreclosure pipeline starts winding down
Total sales were down in 2011 to 34,670 from 2010′s 35,140, a decline of 1.34%. This decline is low considering no home buyer tax credit existed in 2011.
Short sales account for 75% of all pending contracts
Inventory is down 35% from December of last year
Current supply stands at 4.58 months versus about 6 months last year at year end.
Normal sales were up 12% in 2011, Short sales were up 21%, while bank-owned were down 27%

I anticipate in 2012 we’ll total sales eclipse 2011 by 10% or more in the MSA as there will be no tax credit year to compare it to. Also short sale inventory will reduce in 2012 and normal sales will again drive the market. Construction is a wild card in the area. In my community 30 new units have been built in the last 6 months with more being built spec now. If one drives the MSA, there is dirt being turned over nearly everywhere in the shape of new infrastructure such as utilities and roads. 2012 will be a game of inventory in the Orlando MSA as Wall Street bets on housing as an asset class.

Goldman Sachs Calls Bottom in U.S. Housing Market

Ryan Hinricher — Mon, 30 Jan 2012 15:38:55 +0000

Analysts for Goldman Sachs Hui Shan and Sven Jari Stehn predict that the U.S. housing market will reach a bottom in the second half of this year. The analyst built a model that considers equilibrium home prices for each of 147 metropolitan statistical areas. Data points include population, income, lending costs, and construction costs. Also factored are the number of subprime loans in markets as well as excess supply of homes.

Among the best performers include Miami, Detroit, and Cleveland. Among the worst performers are Atlanta and Portland with projected 8% and 6% declines respectively.

Memphis Inventory Down 14% in 2011

Ryan Hinricher — Thu, 19 Jan 2012 12:30:57 +0000

Over the last 12 months, inventory in Memphis has dropped by 14%. Since 2008, inventory levels are down nearly 43% in the Memphis metro area. And while supply stands at roughly 8 months worth, the pace of sales should increase in 2012 due to an improving local economy, continued population growth in the MSA, and higher household formation.

I believe we’ll see price stabilization in Q1 2012 with subsequent appreciation beginning. This will primarily be due to the absent of a large foreclosure wave in the area. Foreclosures seem to continue trickling out and Memphis has seen very limited short sale data (contrast to many major markets).

See the chart I prepared with the inventory drop:

Investor Nation Expands Footprint to Florida

Ryan Hinricher — Fri, 06 Jan 2012 15:35:15 +0000

Over the last 18 months we’ve been investigating the housing market in Florida. It of course is one of the poster children of the housing crisis. Home prices have now dropped as much as 50% in some of the sub-markets of the state. A year ago we started acquiring homes in Miami-Dade county and this year in the Orlando area. In fact, Ryan Hinricher on our team relocated from New York, NY to the Orlando metro area. We’re now fully entrenched in Florida and have built a great extended team in Florida.

We felt the time was right after seeing the yields on real estate turn from negative to positive. The Florida market typically has a boom-bust cycle where the busts are followed by a subsequent boom. Since population growth is one of the top drivers of housing, we felt the Florida market could not be ignored. In the next 18 years Florida is expected to grow by nearly 10 million people. Those people will undoubtedly need housing. Further the Orlando metro area just had a record number of visitors becoming the “most visited city in America.”

But investing in Florida isn’t as simple as most markets. For investors looking for financing, we’ve seen it more difficult to obtain. Appraisals are inconsistent as the market stabilizes. Miami is more challenging than Central Florida and Orlando in this regard. But a home that costs around $110,000 will yield you 1% of the purchase price in rent or around $1,100 per month. Be mindful that many homes in this price range once sold for nearly twice this price or more.

The big number we’ve been watching is the inventory of homes. In 2006 the Orlando MSA had 26,000 homes on the market. Today that number is hovering around 10,000 or a 5-month supply. And according the Orlando Regional Realtor Association the median home price rose 9.5% year-over-year in November. In Miami the market peaked at 43,000 homes. Today Miami has less than 15,000 homes on the market.

The crux of investing in Florida is a highly diversified exit strategy. Vacationers, permanent residents, international buyers, and snowbirds all compete for homes on the market. If you can live with a little less monthly yield in return for solid growth prospects, this might be the perfect time for you to consider buying a home in Florida.

Home Prices 2007-2010 Boom to Bust Interactive

Ryan Hinricher — Sat, 19 Nov 2011 14:33:34 +0000

Coldwell Banker has been putting out some great infographics lately. We wanted to vet them and pass the most relevant ones on to you. This particular one allows you to visualize prices from the peak-to-2010-trough. You can click on the below map and choose the state to review. You can compare apples-to-apples and apples-to-oranges this way.

Just click the image below:

Memphis Tops List of Most Affordable College Towns

Ryan Hinricher — Fri, 18 Nov 2011 12:49:29 +0000

Being the most affordable college town for housing doesn’t necessarily mean you have the best team. Coldwell banker ranks affordability of the 120 Football Bowl Subdivision schools. Not only is it fun to see where your city stacks up, but college towns can be very good places to build an income property portfolio. Parent investors often battle local and out-of-state investors for real estate near the college.

Here’s the top 20 most affordable college towns in 2011:

Institutional Investors Ready to Bet on Single-Family Homes

Ryan Hinricher — Tue, 15 Nov 2011 02:27:57 +0000

While real estate as a viable investment alternative for institutions has primarily been focused on real estate investment trusts (REITs), a report by Morgan Stanley suggests institutions shift attention to single-family homes. Oliver Chang of Morgan Stanley’s Housing and Securitized Products Strategy division co-authored the paper and believes that for the first time ever, single-family homes should be a portion of a larger asset-allocation

Shelby County Schools Receive Highest Rating

Ryan Hinricher — Thu, 10 Nov 2011 20:50:59 +0000

AdvancED, the world’s largest education community and accreditation authority, recently awarded Shelby County Schools their highest rating – “highly functional”. The rigorous process evaluates schools on seven areas: vision and purpose; governance and leadership; documenting and using results; resources and support systems; stakeholder communications and relations; commitment to continuing improvement; and teaching and learning. The Shelby County School System received the highest marks in 6 of the 7 categories. AdvanED interviewed over 484 people during their research process.

Jerry Cooper, head of the nine person team that conducted the research, commented that the highest rating is not commonly given. Cooper went on to say that Superintendent John Aitken is a “driving force” in the district.

This accreditation validates even further the fact that Investor Nation selects assets in Blue Chip areas. The location of the assets may be the most important feature of a particular property, and a driving force on area is the strength of the schools. There is no doubt that families prefer to live in areas that provide top notch education for their children. This translates to stronger home values and rent revenues for investors.

AdvancED serves over 27,000 public and private institutions throughout the United States and is in 69 different countries. AdvanED interviewed over 484 people during their research process.

Orlando expected to attract 53.4 million visitors in 2011

Ryan Hinricher — Wed, 09 Nov 2011 22:12:09 +0000

In 2010, Orlando became the first city to cross the 50 million visitors in a year threshold with 51.5 million, beating New York City. In 2011, that number expected to rise to 53.4 million visitors according to a forecast by Visit Orlando and its research vendor Tourism Economics. Conventions are expected to increase by 8% to 3.5 million visitors in Orlando. Canada and the UK represent the largest share of foreign visitors with 1 million and 830,000 respectively.

SeaWorld and Disney to add new parks

Ryan Hinricher — Wed, 09 Nov 2011 22:00:14 +0000

In September, Disney announced it was building a $400 million dollar Avatar theme park near its Animal Kingdom. The project will start construction in 2013 and open in 2016, five years from now.

and…

SeaWorld announced this week it was building 3 new theme parks including: Antarctica – Empire of the Penguin, Turtle Trek, and Freshwater Oasis. In 2013 Antarctica – Empire of the Penguin will have an entire section of shops, restaurants, and rides, similar to Universal’s Harry Potter attraction. SeaWorld is looking to expand to keep up with growth at Universal, Disney, and the New LEGOLand in nearby Winter Haven.

The theme park industry has settled in the South Orlando area creating opportunities for investors targeting homes for both long term rental and short term vacation rental.