July / August 2016 Newsletter

In this issue…

• BUYING HERE AND ABROAD: INTERNATIONAL ACTIVITY IN REAL ESTATE……
• VACATION/SECOND HOME/INVESTMENT/RETIREMENT ………
• A FEW FINANCING TIPS….
• RECENT MARKET STATISTICS…..
• WHY YOU SHOULD NEVER BUY OR SELL WITHOUT AN AGENT…

The PROFILE OF INTERNATIONAL ACTIVITY IN U.S. RESIDENTIAL REAL ESTATE is out, published by the National Association of Realtors on 7/6/2016. The report finds the increase in price of U.S. real estate together with the depreciation of foreign currencies against the U.S. dollar has made foreign investment in U.S real estate quite a bit more expensive than during the previous survey period. The median sale price of an existing home became 45% pricier for Venezuelans, 24% pricier for Brazilians, and at least eight other countries including China and Canada saw a double- digit increase measured in their country’s currency.

Yet foreign buyers purchased 214,885 residential properties, approximately 3 % more than in the previous 12 month period.

Foreign buyers typically purchase more expensive properties. The median purchase price this period slipped to $277,380, from a year ago, $284,900, due to a lower number of non-resident foreign buyers. But overall foreign buyers most commonly purchased a home priced between $250,000 and $500,000 while 10 percent paid over $1 Million or more.

Exactly half of all international transactions were all cash purchases, slightly down from the 55% a year ago, but still roughly double the overall share of existing sales. Predominantly all cash purchases were made by non-resident foreign buyers, 73%, and by those from Canada, China and the United Kingdom. Five states accounted for over half, 51 percent, of the total residential property purchases made by foreign nationals: Florida, 22%, California, 15%, Texas, 10%, Arizona, 4%, New York, 4%.

According to this survey, the National Association of Realtors also notes a 50% increase in the number of Realtors who report working with U.S citizens to purchase property outside of our country….. topped by Mexico, then Costa Rica, Philippines, Colombia and Canada. The majority, 87% of these, planned to use the property as a vacation home or residential rental unit.

The 2016 NAR INVESTMENT AND VACATION HOME BUYERS SURVEY is highly significant for local markets. The report states U.S. vacation home sales are at a high level propelled by baby boomers’ demand for vacation homes. Down slightly from the 2014 peak, 2015 was still the second highest level since 2006. Furthermore, according to NAR chief economist Lawrence Yun, “the expanding pool of buyers amidst a dwindling number of bargain-priced properties led to tighter supply and fewer sales, causing the price of the vacation home to rise.” The median vacation home price nationwide was $192,000, an increase of 28% in 2015 over 2014.

RSPS, Resort and Second Home Property Specialist, is a designation of expertise in the vacation and second home marketplace, especially effective training where vacation and second home purchases represent a high percentage of market activity. We stay abreast of issues that can specifically affect the buying decisions of these buyers, while helping them attain and balance vacation, short term and long term investment goals.

For over 100 years Florida has been a top vacation market in our nation. Today visitors come from around the nation and around the world, to enjoy the natural beauty, recreation, many amenities and lifestyle our State offers. And every year a significant number of those visitors decide to buy a vacation home, to invest in property in our communities.

Are you looking for your own vacation home?… there’s no better place than the Tampa Bay area.
How about a second home or vacation retreat along our Gulf Beaches or beautiful downtown St. Petersburg? The market is tight, search here in real time:
CLICK THE LINKS BELOW FOR A LIST OF
ALL CONDOS, GULF BEACHES, PRICED UNDER US$300K
SF HOMES ON BEACHES PRICED UNDER US$500K
ALL BEACH WATERFRONT HOMES UNDER US$800K
ALL LUXURY NEW CONSTRUCTION CONDOS, (Beaches, Tierra Verde, St. Petersburg)
BEACH-FRONT SF HOMES ON THE GULF
IN REAL TIME!

Today U.S citizens and foreign nationals alike search the globe for retirement destinations, vacation/second homes, and investment properties.
Here is a fun article describing 25 different retirement destinations across the globe……. including Ottawa, CA; Aurora, Colorado; Portland, Oregon; Panama City, Panama; Cascais, Portugal; Kilarny, Ireland; Valencia, Spain; Managua, Nicaragua; Bordeaux, France….. Charlene Oldham, March 25, 2016, writes, “retirement means more than golf and gardening for an increasing number of Americans looking for fun outdoor activities, international adventures and cutting-edge cuisine later in life. And while there are countries, cities and states that offer more affordability for retirees, the best place to retire really depends on what you’re seeking.”

….Check it out! “25 Coolest Places To Retire In The World,” by Charlene Oldham.
(https://www.gobankingrates.com/author/charleneo/)

Real Estate Professionals who have attained the Certified International Property Specialist (CIPS) Certification and are Trans National Certified (TRC) are adept at guiding global real estate investors, either foreign nationals entering our country to purchase a property, or U.S. citizens wishing to buy property abroad. We are part of a unique global network of real estate professionals who share resources and business ethics, who achieve specialized training on critical aspects of the international transaction, including regional market and cultural differences, differences in business practice and types of ownership, closing procedures, exchange rates, tax issues, title issues…

A FEW FINANCING TIPS I’VE FOUND USEFUL IN MY BUSINESS….
3% Down Loans!… Lenders are now offering 3% down conventional fixed rate loans up to $417,000… Minimum credit scores range 620 or better, down payment assistance may be available through gifts or community assistance programs and may require borrowers to complete homebuyer education courses. Banks are offering these loans as they cut back on their origination of Federal Housing Administration loans (FHA) , federally insured loans which they consider more costly and riskier, and penalty- laden if mistakes are made in the origination.

A note on the FHA front… NAR’s recent Call To Action campaign and Realtors who responded helped push HR 3700, the “Housing Opportunity Through Modernization Act,” through the U. S. Senate unanimously, already passed by the House. This bill when signed by the President, will roll back FHA restrictions on condominium financing, among other provisions, specifically lowering the owner-occupancy requirement. This move will help first-time home buyers and lot-to-moderate buyers enter the condo market, surely, but it will also boost the ability of retirees to attain FHA insured Reverse Mortgages and stay in their homes with more comfort.

Jumbo loans, which were once considered riskier loans and carried higher interest rates, now carry lower interest rates than conventional, conforming, loans. Over the past couple years the spread in annual interest rate between the jumbo loan and the conventional home loan has narrowed. Formerly around 1.5 %, this spread narrowed to around 1% difference a year ago, and recently has flipped. Smaller loans, conventional loans, are backed by Fannie Mae and Freddie Mac, Jumbos are not, which made them inherently riskier. But conventional loans are now more
expensive for lenders to offer, and so the thinking goes, the well heeled borrower presents less risk of default, thus a better bet overall.

With the uncertainty that followed the Brexit vote and the strong dollar, U.S. interest rates receded, and it is generally expected the Federal Reserve won’t raise our interest rates anytime soon, at least not until next year. This will likely entice new buyers and investors to enter our real estate markets. Not being a financial analyst or economist or any sort, I advise everyone to consult your financial advisor. But several rules of falling mortgage rates seem especially prudent to me now, as described by Lou Barnes, Inman.com, June 21, 2016. Written before the Brexit vote, he states odds may favor slightly lower rates. But it’s likely most prudent to think the downtrend is past, don’t expect or even hope it will continue. The time is Now. Don’t consider an ARM unless the spread between fixed and adjustable is wide, i.e. Not Now. Why buy with a 15 year loan when you can take advantage of these low rates for 30 years? Why be in a hurry to pay back a loan at these historically low rates? Build equity, enjoy your retirement, diversify investments….

RECENT MARKET STATISTICS BEGINNING WITH NATIONAL REAL ESTATE TRENDS: Florida Realtors News and Events, 6/29, article picked up a CNBC 6/23/16 source, “New Warning Lights for Rising Home Prices.” This article reflected a report by the National Association of Realtors (NAR) that the national median price of an existing home reached a new record in May, $239,700, a price primarily driven upward by repeat buyers trading up or downsizing from current homes. Opportunities for first-time home buyers continue to dwindle, however, due to affordability issues. According to NAR’s chief economist Lawrence Yun “We’re seeing flashing yellow lights on affordability,” where home prices are rising way too fast compared to people’s income and wage growth. Even with historically low mortgage rates we are facing housing affordability challenges. Rental demand has been fueling construction activity, but multi-family housing starts are beginning to slow as most of this activity was centered in higher-priced urban rentals where supply is now high, points out Diana Olick, CNBC Research analyst. While low mortgage rates and job growth create healthy demand, the tight supply of homes on the market continues to constrain sales….’a pressure cooker effect,’ says Andrew LePage of CoreLogic…where the
traditional pressure release valve, new home construction, isn’t helping much, given new home sales are running over 40 percent below historically normal levels.

A global client asked me last week about buying existing multi-family housing. Current trends indicate this could be a valid investment opportunity, there is housing demand especially in areas of economic growth and availability of entry/mid level jobs, or where single family home inventory is limited, or where millennials and young families are often priced out of owning their own home. ( On real estate as an investment vehicle, a good read, Real Estate Investing by Amelia Josephson, March 29, 2016, https://SmartAsset.com/investing/real-estateinvesting.)

…Continuing to the PRO (Pinellas Realtor Organization) Statistics Report for June, 2016 for our County:

As reported by PRO, compliments of David Bennett President and CEO: Pinellas County Real Estate Statistics for June 2016 show an Absorption Rate for Single Family homes has risen steadily this year to an all-time high which dates back as far as January 2012. The Absorption Rate is the rate at which homes are selling in a given timeframe.

• The number of Closed Sales for Single Family homes for June 2016 was up 0.3% over June 2015, while Closed Sales for Townhome/condos was up 3.6% over June 2015.
• Median Sale Price for Single Family was $220,000 this June, versus $185,000 last June, a huge increase of 18.9%. Median Sale Price for the Townhome/Condo segment was also way up from last June at 16.7%, or $140,000 for June 2016 versus $120,000 for June 2015.
• New Listings for Single Family for June 2016 were 1,493, up 5.2% from last June, when they were 1,419. New Listings for Townhome/Condo for June 2016 were 761, up 1.3% from 751 in June 2015.
• While New Listings for single family and Townhome/Condo were up slightly from last June, Total Active Listings for June 2016 Single Family and Townhome/Condo combined were down 6.9% from June 2015.

Thus Months Supply of Inventory continues to reflect a seller’s market when priced astutely. Single Family inventory is down 13.2% year-over-year, with a 3.3 month supply this June, as compared to a 3.8 month supply in June 2015. Months Supply of Inventory for Townhome/Condo was down 9.1% year-over-year, with 4.0 months in June 2016 compared to 4.4 months in June 2015. Active listings for June 2016 Single Family and Townhome/Condo combined were 6,707, down 6.9% from 7,207 in June 2015.

(Representing nearly 7,000 members, the Pinellas Realtor® Organization is one of Tampa Bay area’s largest professional trade associations. The organization advances and promotes the real estate profession through professional development programs, government affairs, and political advocacy and maintains a high standard of conduct by real estate professionals through professional standards training and administration.)

THE HOME SEARCH AND HOMEBUYING TRENDS ARE SHIFTING with the rise of digital technology, and it appears today’s consumer may be searching for the next best thing sooner rather than later. More frequent moves might be the norm rather than the traditional 5 to 7 years, given how everything has sped up in recent years.

But industry specialists find roughly three quarters of Americans who are looking to buy a home want to work with… have in their pocket… at their back side…both a mortgage professional and a real estate professional. If they’re serious. Especially seasoned buyers. And most sellers don’t try to sell without a Realtor, whether first time sellers or seasoned sellers.They want expertise in Pricing, Positioning, Predicting, Presentation/Staging, Marketing, Negotiating, Problem Solving, Market Knowledge, Exposure, Community Involvement, Professional Networks, Inspections, Repairs, Service Contractors, Connections, The Closing Process….

And if you’re also going for Experience, Trusted Advisor, Available Point Person… Call me.
Surprise is never a good thing when it comes to buying or selling a property.