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Posts from the ‘Market Update’ Category

Sotheby’s International Realty Significant Sales, Volume 8

ssales_vol8Click on image to view Significant Sales, Volume 8

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5 Reasons Why Real Estate Investment Has Never Been Hotter

Courcheval unit E, Mountain Village, Telluride, Colorado.

Courcheval, Unit E, Telluride, Colorado – Listed by Bill Fandel, Telluride Sotheby’s International Realty

Takeaways:

  • Investors have turned more than 3 million former foreclosures into rentals, which made single-family rentals the fastest-growing rental category.
  • According to NAR, 86 percent of today’s investment buyers report that now is a good time to purchase real estate.
  • Plus the five reasons now is the time for investors.

Whom would you rather represent: the average American homeowner who moves once every eight years or the average American homeowner/investor who moves every eight years, buys an investment property every two years and sells one every five years?

With the decline in foreclosures and the corresponding decline in investor purchases, many people have the impression that residential real estate investing is dying out or returning to pre-boom levels. Nothing could be further from the truth.

Real estate investing is a big business. In the six years that have passed since the foreclosure floods first hit, investors have turned more than 3 million of them into rentals, which made single-family rentals the fastest-growing rental category.

Those who have been bitten by the investment bug are eager for more. According to NAR, the bulk of today’s investment buyers (86 percent) report that now is a good time to purchase real estate.

Newcomers are signing up every day, drawn by single-family rentals’ dual revenue stream that can produce returns exceeding 8 percent. Like all real estate, rentals generate capital gains from appreciation.

Investors who bought foreclosures are doing OK; they fixed them up, rented them out and created capital gains that are hard to beat today, but investors who buy wisely in today’s hot markets are doing just fine.

The second revenue stream is cash flow from rental income, which sets single-family rentals apart from the vast majority of securities investments that most Americans are familiar with.

Rents are soaring and vacancy rates declining, which makes it easy for landlords to keep their properties rented, and their rental income is outpacing inflation. Even in moderate markets, millennials find single-family rentals to be the perfect steppingstone to home ownership, and they are creating extraordinary demand for rentals.

For agents and brokers who understand single-family rentals, these changes and others are creating new opportunities that didn’t exist at the peak of the foreclosure floods.

It’s a different way of looking at real estate, where capacity rates and operating costs are just as important as resale value. Here are five reasons why this is a great time to do business with investors:

1. Millions of small-time investors are looking for good agents

Four years ago, foreclosure auctions and preforeclosure sales — transactions that don’t create a commission — accounted for the lion’s share of deals in the hottest markets.

Those days are over. According to the National Association of Realtors’ Realtors Confidence Index in June 2014, distressed sales were only 8 percent of total sales that month.

Investors are hunting harder for properties, which make them a great market for buyer’s agents who know what constitutes a good investment property and for sell-side agents who know that investors aren’t so limited by geography.

Buyers might live 50 miles away — or across the nation.

2. Commissions are higher today 

With investors buying more REOs and properties listed in MLS, the days of the 30 percent foreclosure discount are gone, and many investors pay close to full price.

The properties they buy cost less to put into rent-ready condition, which saves investors 10 to 20 percent of their purchase price, but higher purchase prices mean larger commissions.

3. Fewer deals fail

Your sellers will love dealing with investors because they pay all cash (though usually not their own cash — most investors have their own investors). Buyers who don’t need financing also don’t risk losing a deal to a low appraisal or a last-minute problem with financing.

4. You can stand out in the crowd 

Investors don’t hire agents because they’re referred by a relative. Relationships are all business, and they are looking for competence, brains and expertise.

Whether you are buying for investors or selling to them, learn your local market from the perspective of an investor. Network with local real estate investment clubs and social media.

5. There’s been a change in perception

Perhaps the most important reason it’s a great time to be working with investors is change in the way many people think about it today — people who just a few years ago would never have considered real estate investing.

“Many of my customers ask me how they can attempt to buy their next home, while holding on to the one they already have — a complete turnaround from the mentality of the seller of yesterday,” said Will Stein, broker and owner of Belair Realty in Bowie, Maryland.

“Many mom-and-pop homeowners might not be savvy investors, but they call me all the time saying they just want one rental property to help with long-term cash flow. It’s becoming the new 401(k) — and it’s smart.”

It’s a completely different world out there. Investors have become anyone who can afford to buy a second home and put it on the rental market. And with soaring rents and a decline in vacancies, now is an excellent time to assist your clients in becoming investors.

Steve Cook is editor and co-publisher of Real Estate Economy Watch and provides communications consulting services to leading real estate organizations. 

To visit the many properties of Telluride Luxury Properties, click here

MARKET NEWS: Madeline Residences boast 8 residences under contract since February 1st

MadelineExteriors-10

Uncompromising, Full-Service, Slopeside Living.  At last!

Madeline Residences, a first-of-its kind ownership opportunity in Telluride, just released their first allotment of fully-furnished and turn-key condominium residences on February 1, 2015, and the initial response has been staggering with 8 residences already under contract.  The Ownership Group has committed $15m in residence and property upgrades which will include two game-changing amenities:  a New Porte-Cochere and Outdoor Pool to be completed by December of 2015 and a new New Club Room to be completed July of 2015.  With the ideal slopeside location just steps from the Gondola to Storybook Telluride and unparalleled four-diamond services and amenities, this is game-changer in Mountain Village real estate.

Madeline Ice RinkTo visit Telluride Luxury Properties, click here

Telluride Taxes by the Numbers

taxessnip

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Sotheby’s International Realty Significant Sales Volumes 5 & 6 2014

Bill Fandel: In The News

marthaturner

The latest news from Sotheby’s International Realty features Bill Fandel among the key market affiliates at the launch of Houston’s Martha Turner Sotheby’s International Realty.

To read the full “Collections” update from Sotheby’s International Realty, click here.

To visit TellurideLuxuryProperties.com, click here.

Trulia / Real Trends: Bill Fandel Ranked #3 in Colorado for Individual Sales by Volume in 2013

Trulia Snip

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Significant Sales represented by Sotheby’s International Realty Network April 2014

Click here to see all Significant Sales April 2014

Update from LA LIVE – Sotheby’s International Realty Global Networking Event 2013

On June 2 – 5, 2013, I was fortunate to be among 1,400 Sotheby’s brokers from 26 countries who attended the Sotheby’s International Realty Global Networking Event and Conference in Los Angeles, CA, which was illuminating and encouraging, to say the least.

Some immediate takeaways provided by Richard Smith, Chairman of Realogy Holdings (the country’s largest real estate firm), along with Henry Howard-Sneyd, Vice Chairman of Sotheby’s Auction House, revealed some reassuring conditions across the world.

More specifically the insights we received at the event included the following:

  • By all conclusions the recovery in real estate is substantive, widespread and sustainable with continued growth and demand across all major metropolitan areas
  • Despite meteoric growth in prices in places like San Francisco and Miami, most growth is far more balanced in its price/ inventory ratio
  • The demand crunch caused by a lack of inventory in many markets can be attributed to an under-supply of new housing stock, combined with a percentage of properties still under water relative to value. With continued demand, increased prices and the return of new housing stock, the markets will provide greater inventory to meet the foreseeable demand
  • Unemployment rates will remain higher in the immediate term, but new household creation will help absorb inventory
  • Tax havens like Florida and Texas are benefitting greatly from the onerous income & state taxes being levied in places like California, New Jersey, Connecticut, New York and Massachusetts
  • Growth will be uneven in the years ahead as Midwestern states such as North Dakota, Indiana and Nebraska will see the greatest broadening of their economies, and have clean balance sheets and low-levels of municipal debt.  Meanwhile, cities in California, along with a city like Detroit, will face municipal bankruptcies if solutions for overarching debt is not approached more deliberately
  • Texas, with its booming economy which can be attributed to the growth in the energy sector, along with other  energy supply-side states, such as  North Dakota, will see continued job growth, as America’s push toward greater energy independence brings continued windfall to these areas and their related economies
  • Second-home markets have seen notable recovery, though it’s been less consistent quarter-to-quarter. Markets like Palm Beach, Montecito, Naples, FL, Nantucket, and The Hamptons have all seen strength across all market segments; while the mountain states saw great pockets of strength in Q3/ Q4 of 2012
  • Telluride and Durango, Colorado both saw consistent strength in the beginning of Q2 and we each anticipate a strong summer with Texans again driving the market’s vitality across all market segments and price points

This information was re-enforced by the following article describing the return of vitality to the second home market on Bloomberg’s Market Watch site: http://www.bloomberg.com/news/2013-06-14/u-s-vacation-home-rebound-lifts-hilton-head-to-hawaii.html

Bill Fandel

Bill Fandel of Telluride Sotheby’s International Realty speaks on specialty markets at the Global Networking Event

See additional photos from the Sotheby’s International Realty Global Networking Event 2013:  https://www.facebook.com/TellurideEstatesBillFandel#!/media/set/?set=a.367884809978584.1073741831.281367361963663&type=3

Sotheby’s International Realty Market Update

Market Update – Telluride

 Telluride, CO (Bill Fandel – Telluride Sotheby’s International Realty)

Telluride market conditions were very strong Q3 and Q4, with an overall record number of sales over $10m marketwide in 2012.  Since the first of the year, tracking closely with the sunset of lower capital gains and tax rates, we saw a substantial decline in sales activity in Q1 closely paralleling with the Aspen market.  Despite a very slow Q1, we are seeing a return of vitality to the market. 

 Buyers continue to be North American in origin, with some Latin American buyers mixed in. Particular concentrations of buyers continue to be from Texas, New York, Florida, and California.  We’ve seen a growing number of inquiries from wealthy Californians interested in exploring relocation of their primary residence to their Colorado second-home to flee the growing tax burdens California has instituted.

 I’ve quizzed a number of clients on their outlook and confidence about the economy, with most showing measured optimism about the property markets but continued caution surrounding the eventual unwinding of the Fed-driven policy that continues manipulating interest rates.

 Property acquired with cash and very cheap debt may prove a strong and stable alternative investment to other investment classes.

 Inquiries for summer rentals, single family homes, condos, and ranches are all on the rise.

 Market Update –North America

 Recently I discussed market highlights around the country with some of my global partners at Sotheby’s International Realty.  Here are some points of interest:

 Seattle, WA ( Stacy Jones – Realogics Sotheby’s International Realty)

  • The Metro Seattle area is witness to a dramatic housing market rebound since completing its post-recession correction during the first quarter of 2012. 
  • Major employment growth from retail titan Amazon.com, which alone has sparked more than 3 million square feet of new office space demand in downtown Seattle, coupled with regional expansion at Fortune 500 companies that includes Boeing, Microsoft, Starbucks and Nordstrom is driving local housing demand. 
  • Collectively corporate growth in the region is drawing thousands of relocating professionals to the Emerald City, including a significant influence from foreign countries, especially Mainland China chasing H1-5 visas for tech workers. 
  • Demand has risen much quicker than supply.  This has caused a seller’s market with less than two months of inventory available in most metro markets. 
  • Only new apartments have been built to address the quickly expanding population base in the City of Seattle (the number of households in downtown Seattle has expanded by 35% since 2000 and is expected to rise another 10% over the next five years).  Rents are expected to rise another 5.5% in 2013 despite thousands of new apartments being delivered (in fact it’s now more expensive to rent than to own in moderately priced segments in the city).

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Aspen, CO (Craig Morris – Aspen Snowmass Sotheby’s International Realty)

  • December was by far the best month we’ve had in over 4 years, followed by 3 straight months of lackluster figures.
  • Our buyers are mainly from the US, but our international crowd has picked up some in the past few years, mostly from the UK and Australia.
  • Majority of our buyers come from Texas, California, New York, and Florida. 
  • Increase in buyers from the Midwest; Chicago, Cincinnati, Michigan and Iowa, and several from Toronto 

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Chicago, IL (Chris Feurer – Jameson Sotheby’s International Realty)

  • Severe lack of inventory virtually over night
  • Trend started in fall of 2012
  • Multiple bid situations are pushing prices higher quickly
  • Prices are climbing so quickly that appraisals are becoming an issue
  • New construction is creeping back into our market
  • We anticipate some brand new rental towers will choose to go condo based upon buyer demand

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Washington DC (Michael Rankin – TTR Sotheby’s International Realty)

  • Luxury buyers are back: 24% increase (Q1 2013 vs Q1 2012) of home sales over $1 million in the Washington Metropolitan Area.
  • A rapid pace: 33% of $1 million plus sales in Washington, DC were on the market for less than one month.
  • Inventory shortage at all price points: Today only 6,000 homes are for sale in the entire DC Metro, down from an April 2008 high of more than 25,000 homes

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New York, NY (Royce Pinkwater – Sotheby’s International Realty New York)

  • New York City is currently the number one market in the world, taking the spot from London, according to the latest Knight Frank Report.
  • The market is booming at the top end, with lack of inventory being the biggest issue.
  • Record prices being paid for co-operative and condominiums.
  • Downtown is very hot – new condo 150 Charles sold very quickly.
  • Most overseas buyers purchase condominiums.

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Toronto, Ontario, Canada (Fran Bennett – Sotheby’s International Realty Canada)

  • Q1, 2013 sales down by 14% (compared to Q1, 2012). This is due to a lack of inventory.
  • Q1, 2013 average sale price up by 3.8% (compared to Q1, 2012)
  • We are continuing to experience a severe shortage of properties to sell and therefore our market is seeing multiple offers on almost anything for sale (excluding condos) up to $1.5 million. We don’t seem to be able to build any inventory which is what we were hoping for this spring to return the market to a more balanced position.
  • Condo sales are down, while the inventory of new condos is high and increasing. We currently have 140 new condo buildings under construction. In particular, the market for new condos in the top-tier (over $2 million) has experienced a significant and sustained softening of demand.

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Hamptons, New York (Dana Trotter – Sotheby’s International Realty The Hamptons)

  • The market here is heating up – the warmer temperatures are bringing both buyers and renters.
  • We are seeing a shift towards seller’s market for the first time since 2006.
  • Bidding wars are happening in all segments especially the properties in the lower ranges (under $2m)
  • Generally the market is extremely active up to $10m with little quality inventory from $5m – $10mm

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Greenwich, CT  (Shelly Tretter Lynch – Greenwich Sotheby’s International Realty)

  • The market has definitely picked up
  • Single family home contracts are up year-to-date by 7.8 %
  • The $5 plus million dollar market (off the water) is actively trading.  Quite a bit of old inventory is under contract
  • Bidding wars, recently forgotten, are now appearing
  • New construction starts are up.  I have listed two new construction homes in the $8 million range
  • Confidence  (in values) for the Greenwich properties is at the highest level in 4 years
  • Back country is starting to see more activity
  • I believe that both buyers and sellers are becoming more realistic
  • We are seeing our “long term” tenants now buying
  • Very attractive to foreign buyers
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