Posts Tagged house
For Landlords, the Numbers Are Starting to Look Better
Posted by Tetyana Matychak in Investing on March 5th, 2010
Home prices are falling, rents are tumbling, and apartment vacancies are rising. So why are thousands of small investors becoming landlords?
Because real-estate prices have fallen much faster than rents, the math of buying a rental has actually improved substantially in most parts of the country. Money invested in an apartment complex today typically generates annual returns of 7% to 8% right off the bat, up from less than 6% at the peak of the housing bubble in 2006.
If your property appreciates in value or rents rise, you could end up with double-digit annualized returns when you sell it. But higher returns usually come with higher risks. If you overpay for a rental property or you buy in the wrong market at the wrong time, you can lose a lot of money.
In general, landlords should pick communities where real-estate prices and rents appear to have nearly bottomed out, and jobs are stabilizing. Some of the best deals are in places like Fort Worth, Texas, or Columbus, Ohio, where prices never went wild. Markets like Las Vegas and Phoenix, both plagued by overbuilding, and Detroit, hurt by auto-industry woes, still look dicey.
But other markets like San Francisco or Chicago can still be attractive for landlords who find the right neighborhoods. Fred Bertucci, 50 years old, has been investing in small apartment properties in the Chicago suburbs since 1990. In August, he and his business partner, Kevin Moriarty, 54, bought a six-unit apartment house out of foreclosure for $280,000. It brings in about $25,000 per year in net operating income, he says, or about a 9% yield on the dollars invested. That’s up from roughly a 5% yield several years ago when prices were higher, he says. Read the rest of this entry »
Housing Prices Fall at Slower Pace
Posted by Tetyana Matychak in Budget on February 25th, 2010
Home prices kept falling, but at a slower rate, at the end of last year as the housing market continued to stabilize.
The national S&P/Case-Shiller home-price index declined 2.5% in the fourth quarter, compared with the same period a year earlier, according to a report released Tuesday. The slight drop is a clear improvement from earlier in the recession. In the fourth quarter of 2008, for example, home prices fell 18.2% from the same period in 2007.
“Overall, this report suggests that the recent positive momentum in the U.S. housing market is gaining further traction and underscores that home prices are continuing to stabilize,” Millan Mulraine, a TD Securities analyst, wrote in a note to clients. “As such, we may only be a few months away before we see a monthly gain in national home prices.”
The month-to-month change in home prices for a composite index of 20 housing markets that S&P/Case-Shiller tracks showed that home prices rose 0.3% in December from the prior month, adjusted for normal seasonal variation. That measure of home prices also rose 0.3% in November.Prices fell in just five of the 20 markets included in the survey, remained flat in one and rose in the other 14. Read the rest of this entry »
Weak US Housing Market Drags on Lowe’s Profit
Posted by Tetyana Matychak in Budget on November 19th, 2009
Lowe’s, the second-largest U.S. home improvement chain, posted a 30 percent drop in quarterly profit as consumers put off big renovations as the U.S. housing market remains sluggish, sending shares down 2.1 percent in premarket trading.
But the North Carolina-based chain gave a fourth-quarter profit forecast that could beat Wall Street expectations, noting that it was starting to see signs of improvement in some of the hardest-hit housing markets, including California and Florida.
“The broad-based pressures of the macro environment are clearly evident in our sales as consumers continue to delay large purchases until they feel better about the economic outlook,” Lowe’s Chief Executive Robert Niblock said in a statement.
Lowe’s profits fell to $344 million, or 23 cents per share, in the third quarter that ended on Oct. 30, from $488 million, or 33 cents per share, a year earlier.
Those results fell just short of analyst expectations of 24 cents per share, according to Thomson Reuters I/B/E/S. Read the rest of this entry »
Surprise drop in new home sales
Posted by Tetyana Matychak in Budget on October 29th, 2009
Sales of newly built homes fell unexpectedly in September after rising for five straight months, according to government figures released Wednesday.
The Commerce Department said new home sales fell 3.6% to a seasonally-adjusted annual rate of 402,000 last month, from a downwardly revised rate of 417,000 in August. It was the first time new home sales declined since March.
Economists surveyed by Briefing.com had expected September new home sales to rise to a rate of 440,000 units.
“We’re attributing most of the decline to the potential expiration of the new home-buyer tax credit,” said Adam York, an economist at Wells Fargo.
In addition to relatively low prices and attractive mortgage rates, the housing market has been supported in recent months by a temporary government tax credit for first-time homebuyers.
The credit, which can be worth up to $8,000 for eligible buyers, is set to expire at the end of November. Congress is expected to extend the credit, but the terms are still being debated. Read the rest of this entry »
U.S. Home Prices to Fall 14% More Before Bottoming
Posted by Tetyana Matychak in Budget, Favourites on June 22nd, 2009
U.S. home prices may fall another 14 percent, led by the New York and Orange County, California, metropolitan areas, before reaching a bottom as an increase in unemployment offsets lower prices, Deutsche Bank AG said.
“Affordability is no longer the driving issue in the housing market, and we believe prices still have a ways to fall in many areas before home prices reach their trough,” Deutsche Bank analysts led by Karen Weaver, wrote in a report yesterday. “The bottom is getting closer, but we are not there yet.”
Home prices are forecast to fall 41.7 percent from their peak, Weaver said. That’s higher than a forecast she released in March and reflects “the actual declines to date and the expected future impact on home prices from rising foreclosure inventory and unemployment.”
In March, Deutsche Bank had forecast a 16.5 percent decline in “current-to-trough” prices. While today’s projection is less than that, many metropolitan areas will still see steep declines, the report said.
In the New York metropolitan area they may drop 40.6 percent from the first quarter to the bottom, the report said, less than Deutsche Bank’s March estimate of 47.4 percent. Read the rest of this entry »
Low prices bring investors back into housing markets
Posted by Tetyana Matychak in Budget on June 8th, 2009
Home price declines have sent affordability soaring. Prices have fallen so far that the average U.S. home is now undervalued by 12.2%, according to a new report from IHS Global Insight.
“The good news is that the declines are happening as consumer confidence is rising and housing sales and [building] starts seem to be bottoming out,” said Jeannine Cataldi, senior economist for IHS in a statement accompanying the study.
“The bad news is that job losses continue at high rates, housing inventories are still elevated and consumers, while becoming somewhat more confident, are still wary in the face of economic uncertainty.”
Prices still falling
The IHS study, House Prices in America, reported that, of the 330 markets it tracked, homes are under-priced in 248. That contrasts sharply with four years ago when only 108 markets were undervalued. Read the rest of this entry »
Current Financial Crisis Will Lead To An Overhaul Of The Banking System
Posted by Tetyana Matychak in Banks on April 28th, 2009
Starting in the 1970’s, the banking system has undergone a long cycle of deregulation. The culmination of all this was the repeal of the Glass-Steagall Act in 1999 which has since muddied the distinctions between banks, securities firms and the insurance industry when they began a period of consolidation.
The arguments for deregulation was to foster a climate of competition, innovation and lower prices by lessening government oversight and allowing market forces to dictate the flow of credit. Since then financial sector has experienced a rapid expansion by offering many new products and services.
After this current financial crisis is over, I think we can expect things turn back the other way. While the collapse of the housing bubble was the main cause of our current economic troubles, no one can deny that the financial sector has it’s fair share of the blame for all this. Lax lending standards and excessive risk taking through the explosive growth of securitization and derivatives has created a highly leveraged financial machine that is at it’s breaking point. Read the rest of this entry »
Are You Saving Too Much for Retirement?
Posted by Tetyana Matychak in Investing on April 24th, 2009
A new free online tool performs some extremely complex calculations to make financial planning simpler for small investors.
ESPlannerBasic, set to be officially launched later this week, takes a different approach than many competing online tools. Rather than calculating your odds of meeting your spending goals in retirement, the tool is intended to help you maintain a stable standard of living throughout your life. It’s available at www.esplanner.com/basic.
Many retirement-planning calculators ask people to estimate their own spending needs in retirement, a feat that Laurence Kotlikoff, the Boston University economics professor who developed the tool, says is nearly impossible. “It’s like asking them to make their own penicillin,” he says, “when we have the antibiotics that work.”
Instead of pulling spending goals out of thin air, ESPlannerBasic asks users to enter information about their age, earnings, assets, housing costs, special expenses and other factors. The program then offers advice on how much to spend and save each year, and even how much life insurance to buy, so that the user and his or her spouse can maintain a steady living standard through their retirement years. Read the rest of this entry »
What to Buy While the Economy Is in the Tank
Posted by Tetyana Matychak in Investing on April 8th, 2009
We’ve long pointed to the silver lining of a down economy here at the Wallet. Sometimes, we’re downright optimistic.
Yes, nationwide unemployment is at 8.5% and jobs keep being shed. Yes, excessive consumer spending is part of what got us into this mess. But the majority of people are still working. We, like the rest of the world, have no clue how much longer the Great Recession will last, but if you’re a prudent saver and spender, there’s no sense in wasting some historic buying opportunities.
Forbes has a slide show of 10 things to buy when the economy is down. Their list includes:
1. A house
2. A car
3. A vacation
4. Toys
5. High-dividend stocks Read the rest of this entry »
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