Real Estate Is Fastest-Growing Industry

Twelve of the 20 fastest-growing industries in the U.S. over the past year are related to real estate and construction, according to data from Sageworks, a financial information company. What’s more, all of the industries on the list that are related to construction saw sales growth at 2 percentage points to 15 percentage points above the average sales growth of all other privately held companies in Sageworks’ database.

Topping the list of fastest-growing U.S. industries: Offices of real estate agents and brokers. Also, among the top six on the list were residential builders, foundation contractors, and lumber wholesalers. In the commercial sector, nonresidential builders, engineering firms, and heavy-construction firms ranked within the top 11.

“The economy is just improving in general, and these industries are indicators that things are moving in the right direction,” says Sageworks analyst Chuck Nwokocha.

Source: “The Fastest-Growing Industries Over the Last Year,” Forbes.com (April 28, 2014)

Home Builder Enters 'Bargain' Market

The nation’s largest home builder, D.R. Horton, is changing its focus from higher-end homes to the entry-level market. The company will be launching a new brand, called Express Homes, which will offer properties priced between $120,000 and $150,000 – much lower than the national median new-home price of $290,000. D.R. Horton executives say demand for lower-priced homes is high, but supply remains inadequate.

"We wouldn't be getting into Express Homes if we didn't think it was the next segment of the market to recover," D.R. Horton CEO Donald Tomnitz told CNBC.

Express Homes will be concentrated in Texas, Florida, and Georgia. The homes will be offered in a turnkey manner, with no options or upgrades available.

D.R. Horton’s move comes at a time when other builders, such as Pulte Homes, are focusing on higher-end homes.

"We view it as the right move," says analyst Stephen East, senior managing director of research firm ISI Group. "Horton's cost structure and operational experience at the entry level makes them one of the few builders that can do this profitably. Also, we are firmly convinced the first-time-buyer segment is getting access to more credit, which will lead to more demand for this low-entry level product."

Source: “Largest U.S. Builder Bets on ‘Bargain’ Homes,” CNBC (April 24, 2014)

Pending Home Sales Increase in March

Pending home sales—considered a leading indicator of the housing market—rose in March, marking the first gain in the past nine months, according to the National Association of REALTORS®. NAR's Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 3.4 percent to 97.4 from an upwardly revised 94.2 in February.

“After a dismal winter, more buyers got an opportunity to look at homes last month and are beginning to make contract offers,” says Lawrence Yun, NAR chief economist. “Sales activity is expected to steadily pick up as more inventory reaches the market, and from ongoing job creation in the economy.”

Though it has risen after months of stagnation, the index is still 7.9 percent below year-ago levels. Although home sales are expected to trend up over the course of the year and into 2015, this year began on a weak note and total sales are unlikely to match 2013 levels.

The pending sales numbers varied from region to region:

• In the Northeast, the PHSI increased 1.4 percent to 78.8 in March, but is 5.9 percent below a year ago.

• In the Midwest, the index slipped 0.8 percent to 94.5 in March, and is 10.1 percent below March 2013.

• Pending home sales in the South rose 5.6 percent to an index of 112.7 in March, but are 5.3 percent below a year ago.

• The index in the West increased 5.7 percent in March to 91.0, but is 11.1 percent below March 2013.

Existing-home sales are expected to total just over 4.9 million this year, below the nearly 5.1 million in 2013. However, with ongoing inventory shortages in much of the country, the national median existing-home price is expected to grow between 6 and 7 percent in 2014.

Source: NAR

Florida Sales up 1% in March, Prices up 11%..!

RealtyTrac's March Residential & Foreclosure Sales Report finds that U.S. residential properties – single family homes, condominiums and townhomes – sold at an estimated annual pace of 5,253,464 in March, an increase of 0.4 percent from February and up 8 percent from a year ago. The report has slightly different results than National Association of Realtors® (NAR) numbers issued Tuesday, which include only Realtor-assisted transactions.

RealtyTrac's median sales price in March – including both distressed and non-distressed sales – was $164,500, up 1 percent from February and up 10 percent from March 2013. March was the 24th consecutive month where U.S. median home prices increased on an annual basis, and the 10 percent annual increase was the biggest annual percentage increase in that 24-month span.

"The housing market showed signs of coming out of hibernation in March after a sluggish fall and winter," says Daren Blomquist, vice president at RealtyTrac. "Median home prices increased on a monthly basis following six consecutive months where they were flat or declining. Sales volume also increased slightly from March to February following four consecutive monthly decreases."

Investors and second home buyers accounted for 34 percent of all sales in March based on a look at the number of buyers who listed a home address different than the sale property.

Furthermore, 7 percent of all sales in March were multi-parcel transactions where more than one property was sold on the same date and recorded on the same sales deed document. Multi-parcel transactions are not always reported buy a Multiple Listing Service (MLS).

Despite the annual increase in residential sales volume nationwide, sales volume in March decreased from a year ago in six states and 21 of the nation's 50 largest metro areas.

Florida sales

RealtyTrac found a 1 percent increase in March home sales month-to-month and also a 1 percent increase year-to-year. It found a statewide price decline of 2 percent month-to-month, but an 11 percent price increase year-to-year.

In some cities, prices continue to rise but at a slower pace. RealtyTrac points to Cape Coral-Fort Myers, Fla., as one example, where median home prices are up 86 percent from their bottom in November 2010. But while Cape Coral-Fort Myers recorded a peak year-to-year price increase of 30 percent in January 2013, its year-to-year price increase in March was 14 percent.

According to RealtyTrac analysts, many of the cities that are seeing a slower price increase are the ones that also saw the biggest price bounce earlier in the rebound.

© 2014 Florida Realtors®

New Homes are Cheaper to Maintain

New homes – those that are four years old or less – can be cheaper to maintain than older homes, according to data from the American Housing Survey.

Twenty-six percent of home owners spend $100 or more a month on various routine maintenance expenses for their home. However, the study shows that 73 percent of new home owners spend less than $25 a month on routine maintenance costs.

Home owners of new homes tend to spend less on energy costs too. Home owners on average spend 81 cents per square foot per year on electricity. In comparison, home owners of new homes tend to spend 68 cents per square foot per year.

Utilities tend to be less expensive too. All home owners spend, on average, 28 cents per square foot per year on water bills. But on new homes, home owners tend to average 22 cents.

The studies also suggest that owners of new homes also tend to pay less on insurance too: The median cost of all home owners for property insurance is 39 cents per square foot compared to 31 cents per square foot for new homes.

“These data highlight that a new home offers savings over the life of ownership due to reduced operating costs,” according to the National Association of Home Builders’ Eye on Housing blog. “These reduced expenditures represent one of the many reasons that the current system of appraisals needs updating to reflect the flow of benefits that come from features in a new home.”

Source: “New Homes Are Less Expensive to Maintain,” National Association of Home Builders Eye on Housing blog (April 17, 2014)

Buyers Have Fear of Rejection

Nearly half (46 percent) of today's potential home buyers fear they won't qualify for a home mortgage; as a result, they don't try, according to a national consumer survey conducted by OmniTel on behalf of loanDepot.

The survey results suggest that many Americans may have a pent-up demand for homeownership, but they're not acting on it because they think it's not worth the effort.

Potential buyer attitudes

• One in three Americans (29 percent) would like to buy a home within the next two years (42 percent don't currently own a home)

• One in five (20 percent) who already own a home would like to buy another home in the next two years – either a primary residence, investment home, retirement home or vacation home.

• Just over half (56 percent) of all people who would like to buy a home are not pursuing it because they don't think they'll qualify for a loan

• About one-third (30 percent) of current homeowners who want to buy within the next two years also believe they won't qualify for a loan

• While 71 percent of all Americans who want to buy a home in the next two years will need financing, 89 percent haven't taken steps to see if they'd qualify.

Credit scores

Most potential buyers overestimate the difficulty of qualifying for a mortgage. Only 18 percent of all Americans believe it's easier to get a mortgage today compared to a year ago – 43 percent incorrectly say it's harder. The February 2014 Ellie Mae Origination Insight Report found today's average mortgage application approval rate is 55.3 percent compared to 49 percent in 2012.

Credit scores also remain a mystery to most Americans. Half (50 percent) don't know what minimum FICO score is required to qualify for most loans, while 18 percent think they need a minimum FICO score of 680 to 770+ to qualify. About 33 percent of all closed loans in Feb 2014 had an average FICO score of less than 700.

Debt as a barrier to ownership

Many potential buyers overestimate the impact their debt compared to income (DTI) has on their ability to qualify for a mortgage.

Of those potential buyers who aren't even trying, almost a third (34 percent) say their DTI is too high; meanwhile, another 24 percent say their DTI is too low.

First-time buyers

According to the survey, mortgage-qualifying fear keeps a greater number of younger buyers on the sidelines compared to other age groups. Half (48 percent) of all potential homebuyers who don't own a home today are ages 25 to 34; the median age is 31.

The market share of first-time buyers has declined from 54 percent of all sales in March 2009 to 28 percent in February 2014.

The survey was conducted by OmniTel based on interviews conducted March 21-23, 2014. The OmniTel study consists of 1,005 completed interviews, made up of male and female adults (in approximately equal number), all 18 years of age and over. The margin of error on weighted data is +/- 3 percentage points and higher for subgroups.

© 2014 Florida Realtors®

Florida Housing Market Shows Rising Prices in March

Florida's housing market reported higher median prices, more new listings and a stable level of inventory in March, according to the latest housing data released by Florida Realtors®. Closed sales of single-family homes statewide totaled 20,081 last month, up 2.8 percent over the March 2013 figure.

"March marked the 28th month in a row that statewide median sales prices rose year-over-year for both single-family homes and townhome-condo properties," said 2014 Florida Realtors President Sherri Meadows, CEO and team leader, Keller Williams, with market centers in Gainesville, Ocala and The Villages. "Realtors across Florida are reporting fewer short sales of distressed properties and more interest from potential home sellers as they observe the return of more traditional market conditions. Statewide, new listings for single-family homes in March rose 16.5 percent year-over-year, while new townhouse-condo listings rose 10.3 percent."

The statewide median sales price for single-family existing homes last month was $173,000, up 7.1 percent from the previous year, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. The statewide median price for townhouse-condo properties in March was $140,000, up 16.7 percent over the year-ago figure. The median is the midpoint; half the homes sold for more, half for less.

Read more at Florida Realtors®

Mortgage Availability Hits 3-Year High

Access to mortgage credit is at its highest level in at least three years, and credit standards are expected to loosen even more this year, according to a newly-released index by the Mortgage Bankers Association.

MBA’s index, which tracks mortgage credit availability, shows that in March the gauge rose to 114 – the highest reading in the gauge’s three-year history.

“I don’t think there’s any question that mortgage underwriting has gotten easier or is looser than it was two or three years ago, but it’s nowhere near where it was in 2005, 2006,” Guy Cecala, publisher Inside Mortgage Finance, told The Wall Street Journal. “We are talking about easing from extremely tight underwriting standards.”

Some housing experts have been concerned that new mortgage rules for lenders and borrowers this year would tighten credit access. Indeed, 80 percent of bankers said they expected the new regulations to have a “measurable reduction in credit availability,” according to a survey by the American Bankers Association. However, Bob Davis, ABA’s executive vice president, says standards will likely loosen up as lenders adapt to the new rules.

“There will be a tendency for some liberalization over the course of the year,” Davis told The Wall Street Journal. After all, lending experts note that the number of mortgage refinancing applications has drastically fallen the past year, and more banks likely will be looking to the purchase market to make up for that lost share in income.

Indeed, nearly 17 percent of large banks have recently eased credit standards for prime purchase mortgages, while 5.6 percent have tightened their standards and the remainder have left standards the same, according to the Federal Reserve’s recent senior loan officer survey.

Source: “Mortgage Credit Most Available in at Least Three Years, Gauge Says,” The Wall Street Journal (April 9, 2014)

Housing Continues to Build Strength

The housing market is stronger today than at any point since the Great Recession and has made progress in several key areas after hitting bottom in 2009, Freddie Mac reports in a blog post looking at the state of the housing market heading into spring.

Home sales are up 13 percent since their low point, Freddie Mac reports. Frank Notaft, Freddie Mac’s chief economist, predicts that home sales will rise about 3 percent in 2014.

Also, the agency reports that housing starts are up 50 percent since hitting bottom. Freddie Mac is predicting a nearly 20 percent increase in new-housing starts in 2014, “which will begin to help ease tight inventories in many markets.”

Housing prices have also been on the upswing, about 16 percent higher than their bottom in 2009, Freddie Mac reports. They expect home values to continue to rise this year, but at a more moderate 5 percent pace. Also, researchers say many markets are still posting housing values that are below their 2006 peaks.

Freddie Mac is forecasting mortgage rates to remain near their historic lows this year, but rates are expected to rise about a half-percentage point during the year to around a 5 percent average by the end of the year.

Source: “After Winter Chill, Time to Spring Forward,” Freddie Mac (April 10, 2014)

8 Countries Where There's a Rush for U.S. Real Estate

Foreign buyers are being lured to U.S. real estate due to what they perceive as bargain prices, economic stability, and a “safe haven for investors,” 24/7 Wall St. reports. Interest in U.S. real estate from international buyers in 10 countries has soared since 2009 by 95 percent or more. In nine of those countries, the interest has at least doubled, according to data from RealtyTrac.

“The U.S. real estate market is coming off of a rough patch and entering recovery mode,” says Daren Blomquist, RealtyTrac’s vice president. “International buyers see it as a great time to jump in and catch the U.S. market on the upswing.”

24/7 Wall St. compiled data from RealtyTrac to find that the following countries are showing the highest increases in interest in purchasing American homes.

1. United Arab Emirates
Growth in prospective home buyers: 352.2%
Share of international prospective buyers: 1.1% (12th highest)

2. Switzerland
Growth in prospective home buyers: 269.7%
Share of international prospective buyers: 2.1% (8th highest)

3. Hong Kong and China
Growth in prospective home buyers: 254.2%
Share of international prospective buyers: 4.1% (4th highest)

4. France
Growth in prospective home buyers: 190%
Share of international prospective buyers: 2.8% (6th highest)

5. Italy
Growth in prospective home buyers: 178.4%
Share of international prospective buyers: 1.9% (10th highest)

6. United Kingdom
Growth in prospective home buyers: 153.8%
Share of international prospective buyers: 12.1% (2nd highest)

7. Australia
Growth in prospective home buyers: 121.9%
Share of international prospective buyers: 11% (3rd highest)

8. Canada
Growth in prospective home buyers: 107.7%
Share of international prospective buyers: 45% (the highest)

Source: “10 Countries Racing to Buy American Homes,” 24/7 Wall Street (April 11, 2014)

Housing Has Better Momentum Than Stocks

Economist Robert Shiller, a Yale University professor, told CNBC on Tuesday that even though the housing market is showing some signs of slowing, the recovery still remains strong.

“There is a certain, substantial amount of momentum in the housing market — much more so than the stock market,” he says. “I think this boom we saw in the last year and a half in home prices has something to do with quantitative easing and the record-low mortgage rates.”

But there are signs of easing: Mortgage rates have been rising, while building permits and housing starts are softening. Still, Shiller says he doesn’t see those factors as derailing the housing recovery. In fact, Shiller, who co-founded the Case-Shiller Home Price Index, says the futures market is predicting 25 percent higher home prices in 2018. “That seems like a possibility,” he told CNBC.

Source: “More Momentum in Housing Than Stocks, Shiller Says,” CNBC (April 15, 2014)

A Third of Home Owners in Foreclosure Have Equity

More home owners in the foreclosure process are finding that their home may no longer be underwater, according to a new report by RealtyTrac. “Because of rising home prices, many of the home owners in the foreclosure process — more than a third — actually have positive equity,” says Daren Blomquist, vice president of RealtyTrac. “That will enable some of them to avoid foreclosure,” allowing the home owners to either sell or refinance.

However, “many distressed home owners with equity may not realize they have it and, in some cases, have vacated the property already, assuming that their foreclosure is inevitable,” Blomquist says.

Rising home prices have been helping to lift more home owners above water on their mortgages in the past year. About 9.1 million home owners, or 17 percent, are “seriously” underwater on their mortgage (their debt exceeds the home’s value by 25 percent or more). That's down from 10.9 million, or 26 percent, of all properties a year ago, according to RealtyTrac.

Source: “Nearly 2 Million Home Owners No Longer ‘Seriously’ Underwater,” CNNMoney (April 17, 2014)

FHA Program Allows Ex-Home Owners to Buy Again Sooner

Typically, home owners who lost their homes to a short sale or foreclosure are required to wait about 36 months before being able to purchase a primary residence again with a Federal Housing Administration loan. But the FHA’s Back to Work Program is allowing buyers to purchase a primary home much sooner — possibly as soon as 12 months following a short sale, foreclosure, or deed in lieu of foreclosure.

The program runs through Sept. 30, 2016.

To qualify for the program, potential buyers will need to document the financial problem that prompted their short sale or foreclosure, such as showing a 20 percent loss in income for at least six consecutive months prior to losing the home. Buyers will also have to show that they have taken steps to re-establish their income and credit (having a credit score of at least 640 or having undergone a HUD-approved counseling agency program on home ownership or residential mortgage loans). The program does not consider divorce, previous loan modifications, or adjustable-rate loan recasting as reasons to qualify.

With conventional loans, boomerang buyers are typically eligible to buy again seven years after a short sale or foreclosure, or possibly three years with sufficient documentation of the circumstances and a lender exemption. FHA, VA, and USDA all offer opportunities for boomerang buyers to repurchase 36 months following a short sale or foreclosure.

Source: “FHA Program Gives Distressed Homeowners a Second Chance,” Credit.com (April 9, 2014)

U.S. Foreclosure Inventory Down 35% Year-to-Year

CoreLogic released its February 2014 National Foreclosure Report.

“Although there is good news that completed foreclosures are trending lower, the bigger news is the impressive decline in the foreclosure and shadow inventories,” says Dr. Mark Fleming, chief economist for CoreLogic. “Every state has had double-digit, year-over-year declines in foreclosure inventory, which is reflected in the $70 billion decline in the shadow inventory.”

“The stock of seriously delinquent homes and the foreclosure rate are back to levels last seen in the final quarter of 2008,” adds Anand Nallathambi, president and CEO of CoreLogic. “The shadow inventory has also declined year over year for the past three years as the housing market continues to heal, including double-digit declines for the past 16 consecutive months.”

Read more at Florida Realtors®

Rents Are Going Up Again

As apartment demand continues to rise, landlords are projected to increase their rents for the fifth consecutive year. A rise in apartment construction isn’t likely to offer relief to tenants anytime soon either, USA Today reports.

Between 2000 and 2012, apartment rents have risen 6 percent while incomes among renters have fallen 13 percent in that time period, according to a report from Apartment List, a rental housing website that adjusts for inflation.

"That's what we call the affordability gap," says John Kobs, Apartment List's chief executive. "I don't see that improving in the near future."

The vacancy rate for apartments has dropped from 8 percent to 4.1 percent from 2009 to 2013, according to Reis, a commercial real estate data provider. Meanwhile, the average national effective rent has increased 12 percent to $1,083 from 2009 to 2013, according to Reis, which data reflects apartments in buildings with 40 or more units.

During that same time period, the median price of an existing home has risen about 14 percent, according to the National Association of REALTORS®. Many renters – which surveys show want to buy a home – are unable to purchase a home due to tight credit conditions that are preventing them from obtaining financing.

Rents rose the most in 2013 in Seattle, increasing 7.1 percent in the past year, followed by San Francisco, which has risen 5.6 percent, Reis reports.

More apartment buildings are under construction nationwide to respond to rising demand. Reis experts expect a stronger job market will push more people out of living with their parents or being roommates and increase rental demand. Reis predicts the effective apartments will rise 3.3 percent this year to an average $1,118 nationwide.

Source: “Growing Demand for Apartments Pushes up Rents,” The Associated Press (April 5, 2014)

Florida in Top 10 for Non-Flood Water Damage

Florida is one of the top 10 states for water-related insurance claims that don't involve flooding. Overall, that's a bit positive. Since the state is the fourth largest in the U.S. – almost third largest – its rank as No. 8 seems better than average.

However, much of the non-flood water damage in states to the north comes courtesy of winter, such as frozen water pipes that burst or basement flooding.

State Farm Insurance says it paid more than $1.3 billion for more than 175,000 water loss claims in 2013. Most resulted from frozen pipes, flooded basements and broken appliance hoses.

Home flood prevention tips:-

• Pull out everything under sinks monthly and check for moisture on the floor and along the wall.
• Check water lines to ice makers, disposals, dishwashers and other appliances that use water being careful not to kink or puncture water lines as the appliance is moved.
• Consider replacing appliance hoses with a tougher hose that's covered in flexible, braided steel.
• Check drains and gutters – water can seep into homes if leaves and debris block gutters and drain pipes.
• Inspect the roof. Check for loose shingles and make sure edging is tight.
• Inspect window frames and doors for gaps between the sills for caulk that needs replaced. Prime/paint and caulk any damaged wood.
• Review and understand what your insurance policy covers.

State Farm's top 10 states for 2013 water-related claims:-

1. Texas: 21,700 claims
2. California: 17,900 claims
3. Georgia: 10,200 claims
4. Pennsylvania: 9,100 claims
5. New York: 8,700 claims
6. Illinois: 8,100 claims
7. Arizona: 5,900 claims
8. Florida: 5,800 claims
9. Michigan: 5,400 claims
10. Tennessee: 4,400 claims

© 2014 Florida Realtors®

Multifamily REITs Rebound After Slow 2013

Multifamily real estate investment trusts, or REITs, are becoming real estate's "red-hot category" – the most profitable sector of commercial real estate in the first quarter of 2014, according to CNBC.

Apartment REITs are rebounding after a sluggish 2013 and are now posting returns of 12.75 percent, according to the National Association of Real Estate Investment Trusts. Equity REITs in the first quarter were up slightly more than 7 percent.

The continued growth in apartment demand is a big driver behind the rise in multifamily REIT stocks.

"We've seen a big increase in construction from the very depressed levels that we had during the depths of the recession, but in terms of overall construction, we're barely back to what a trend pace would be with a national population the size we have in the U.S.," Calvin Schnure, vice president of research at the National Association of REITs, told CNBC.

Nearly 42,000 new apartment units were completed in the fourth quarter of 2013, the highest since 2003, according to REIS Inc. About one-third of new housing units being built are rental apartments, which is the highest level in 40 years, according to the U.S. Census.

Demand is expected to increase too as the job market improves and more younger Americans move out on their own.

"People are concerned about competition of multifamily with the improving housing market, but this is really a situation where a rising tide lifts all boats," says Schnure. "The rising tide being the number of people who are going to be looking for a place to stay."

Source: "Real Estate's Red-Hot Category: Apartments," CNBC (March 31, 2014)

© Copyright 2014 INFORMATION, INC.

Do Buyers Really Want ‘Green’ Homes?

More than 65 percent of homebuyers recently surveyed say they desire an "environment friendly" home, but only about 15 percent are willing to pay more for a home with such features, according to the National Association of Home Builders' (NAHB) "What Home Buyers Really Want: Ethnic Preferences" study. The study found that energy efficiency was a top priority across races and ethnicities.

But when NAHB changed the way the question was phrased to emphasize the benefits of environmentally friendly features in trimming utility bills, more buyers said they were willing to pay for it.

In the survey, buyers were asked to choose between a highly energy efficient home that saved 2 to 3 percent on utility bills over the life of the home versus a home without those features. When couched as a long-term savings, more than 80 percent of buyers preferred the more expensive energy-saving home.

The NAHB survey looked at ethnic differences in green housing preferences. Whites, on average, would pay $6,774 more for a home with energy efficiency features that lower utility bills; African American buyers are willing to pay $7,578 more; and Asian buyers will pay $8,251 more.

Hispanic buyers were willing to pay the most – an average of $9,146 more for a home with such features, according to the survey.

Source: "What Home Buyers Really Want: Ethnic Preferences (Part IV)," National Association of Home Builders' Eye on Housing Blog (April 3, 2014)

© Copyright 2014 INFORMATION, INC.

U.S. is Safe Investment According to International Buyers

Foreign buyers are showing a preference for purchasing properties in the U.S. over other countries, viewing real estate here as a safe place to put their money, according to the California Association of REALTORS®’ 2013 International Clients Survey. Eighty-five percent of the buyers surveyed say they only considered buying a home in the U.S. On the other hand, 15 percent said they’d consider investing in countries like Canada, Germany, Mexico, China, Singapore, Sweden, and France.

International buyers say they are most drawn to U.S. real estate because of its stable government and financial system that make them feel more secure about their investment. They also indicate that they were drawn to properties in the U.S. for investment purposes, tax advantages, the ability to rent out the properties, change in employment, education, and the proximity to family and friends.

Other findings from the study:

• Sixty-nine percent of international buyers paid all cash for their properties, compared to 27 percent of traditional buyers.
• International buyers spent five weeks on average looking for properties, compared to 10 weeks for traditional buyers.
• Some of the top amenities that international buyers say they wanted are designer kitchens, a wine cellar, sauna, private beach, putting green, heated floors, and outdoor kitchens.

Source: California Association of REALTORS®

Luxury Market Sees Speculative Building Return

Some developers are taking a gamble by building multimillion-dollar speculative homes in posh areas across the country, Forbes.com reports.

For example, London-based developer Est4te Four built a 16,000-square-foot single-family home in the exclusive Los Angeles neighborhood of Holmby Hills. The house is being offered on the MLS for $48 million, making it the most expensive speculative home for sale in L.A., Forbes.com reports.

Alessandro Cajrati Crivelli, the founder of Est4te Four, says that limited inventory and wealth coming in from Russia and China prompted him to want to build a home on spec.

After the housing crisis, speculative building came mostly to a halt.

“The appearance of spec homes in the upper price range is an indication of the maturation of the housing cycle,” says Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA. “It’s an indication of increasing levels of confidence on the part of home builders.”

More luxury builders are testing the waters by building on spec once again. For example, the Farrell Building Company, based in Bridgehampton, N.Y., has some 40 spec homes it’s building that are priced from $2 million to $10 million. It also has six spec homes in Florida priced up to $32.5 million. In Chicago, Environs Development President Ken Brinkman estimated that about 80 percent of his firm’s projects in the last year or two have started on spec, and then resulted in pre-selling during the construction phase.

Some experts argue that spec building in the luxury market, in particular, could prove risky.

“It strikes me as very risky, since I would expect luxury buyers to want more design control than can be afforded them if the house is mostly complete when they make their purchase,” says Dana Kuhn of the Corky McMillin Center for Real Estate at San Diego State University.

However, some builders say that spec building targets a buyer who is too busy to get involved in the construction phase of a home. It’s a turnkey solution for those who want a new home where they can just move in and unpack, they say.

Source: “With Inventory Tight, Speculative Luxury Homebuilding Heats Up,” Forbes.com (April 2, 2014)

Consumer Confidence Rising This Spring

Consumer attitudes are reflecting greater optimism in the housing market heading into real estate's traditionally strong spring selling season, according to Fannie Mae's March 2014 National Housing Survey.

In the poll of 1,000 people, 38 percent say it's a good time to sell a home, up from 26 percent a year ago. The poll also shows that 69 percent of those surveyed say it's a good time to buy, and 52 percent say it's easier today to get financing for a home.

Americans also feel more confident about their personal finances: An all-time survey high of 40 percent say their personal financial situation has improved during the past year.

"The housing recovery continues to proceed in fits and starts," says Doug Duncan, Fannie Mae’s chief economist. "Rising mortgage rates and a lack of supply have dampened housing market momentum. However, we see several positive signs going into this year's spring home-buying season, compared with last year. For example, consumers are less pessimistic about their personal finances and more optimistic about the current selling environment and their ability to get a mortgage. Still, those who are pessimistic about buying or selling a home today tend to point to economic conditions as the primary issue, and most consumers continue to say the economy is on the wrong track. Looking forward, we expect to see a pickup in economic growth later in the year, and this may boost the confidence of prospective buyers and sellers."

However, consumers' home-price expectations softened a bit in the latest survey. The average 12-month home-price-change expectation fell from last month, reaching 2.7 percent, the survey shows. Also, slightly fewer respondents — 48 percent — said they thought home prices would rise in the next 12 months.

Source: Fannie Mae