Foreign buyers see big bargains in U.S. real estate

Foreign investors are finding plenty of real estate deals in the U.S.  and those international investors are flocking to key states to buy their next property. And who is at the top when it comes to purchasing real estate in the U.S.?  It is Mexico, according to a recent study by Credit Sesame, which used National Association of Realtors® data for its findings.  This is true especially for California and Texas, two states that are among the top in having foreign real. estate investors Florida, also among the top, has most of its foreign buyers from Cuba, Haiti and Columbia.

MSNBC reported the following breakdown in the three top states:

 1. Florida: Thirty-one percent of all home purchases are made by foreign buyers, with most coming from Cuba, Haiti and Colombia.

2. California: Twelve percent of all home purchases, with most coming from Mexico, the Philippines, China, India and Vietnam.

3. Texas: Nine percent of all home purchases, with most coming from Mexico, India, Vietnam, China and the Philippines.

Many Americans consider homeownership a key part of achieving the “American dream.” But no group values homeownership more than foreign-born U.S. residents: those who have come to the United States seeking a better life. Did you know that nearly 80% of foreign-born U.S. residents owned a home in 2009 while the national homeownership rate at that time was much less :65.4 percent. (it is currently 66.3%).

What is the makeup of each state when it comes to foreign-born residents? The image below will show you which states are most popular among foreign homebuyers and investors. (Note that these stats refer to the overall population, not homeowners alone.).



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US Real Estate- Twice as many ‘improving housing markets’

The number of real estate markets showing improvement nearly doubled in January with the addition of 40 new metros to the National Association of Home Builders/First American Improving Markets Index (IMI). The IMI now shows 76 improving housing markets, up from 41 in December, with 31 states and the District of Columbia represented by at least one entry.

In Florida, three cities made it onto IMI’s improved list: Jacksonville, Cape Coral and Punta Gorda.

The IMI is designed to track housing markets throughout the US that are improving. The index measures three sets of independent monthly data.. The three indicators are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau.

A metropolitan area must see improvement in all three areas for at least six months following their respective lows before being included on the improving markets list. NAHB uses the latest available data from these sources to generate a list of improving markets.

Other USA metros that showed improvement are Dallas, Denver, Honolulu, Indianapolis, Nashville and Philadelphia. A complete list of all 76 metropolitan areas currently on the IMI is available on NAHB’s website.

Source: 2012 Florida Realtors

US home sales continue to climb.

Existing-home sales rose again in November and remain above a year ago, according to the National Association of Realtors.

Total existing home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 4.0 percent to a rate of 4.42 million in November from 4.25 million in October, and are 12.2 percent above the 3.94 million-unit pace in November 2010.

NAR Chief Economist Lawrence Yun said more people are taking advantage of the buyer’s market. “Sales reached the highest mark in 10 months and are 34 percent above the cyclical low point in mid-2010."  

An elevated level of contract failures continues to hold back a broader sales recovery. Contract failures were reported by 33 percent of NAR members in November, unchanged from October but notably above a year ago when it was 9 percent.

Total housing inventory at the end of November fell 5.8 percent to 2.58 million existing homes available for sale, which represents a 7.0-month supply at the current sales pace, down from a 7.7-month supply in October.

 Regionally, existing-home sales in the Northeast jumped 9.8 percent to an annual pace of 560,000 in November and are 7.7 percent above a year ago. The median price in the Northeast was $240,200, which is 0.1 percent below November 2010.

Existing-home sales in the Midwest rose 4.3 percent in November to a level of 960,000 and are 15.7 percent higher than November 2010. The median price in the Midwest was $133,400, down 4.0 percent from a year ago.

In the South, existing-home sales increased 2.4 percent to an annual pace of 1.74 million in November and are 12.3 percent above a year ago. The median price in the South was $143,300, which is 2.1 percent below November 2010.

Existing-home sales in the West rose 3.6 percent to an annual level of 1.16 million in November and are 11.5 percent higher than November 2010. The median price in the West was $195,300, down 8.4 percent below a year ago.

SOURCE: Florida Realtors®

Warren Buffett on US economy and real estate, part one

CNBC sat down with Warren Buffett in a 3 hour marathon session.  You can read the transcript here (I encourage you to read the entire transcript): Warren Buffet on economy.

Mr. Buffett boils down complexity down into something simple – the sign of genius.  His basic ideas are:

•           Residential real estate is in a depression and the only way out is we have to form 1 million+ new households each year to mop up the excess housing units that were built

•           US government revenues have to move up from 15% of GDP to 19% and move expenditures down from 25% of GDP to 21% of GDP; Buffett has mentioned before that a 3% of GDP deficit is fine, we have done it in the past for many years – the  9-10% of GDP deficit we are currently running is unsustainable.

•           All businesses are doing well and recovering – except for residential real estate which is in a depression 

Here are some portions from the interview:

On U.S. Real Estate

“What is getting killed and what is in a—not in a recession but in a depression is anything connected with residential construction.  Those businesses are in a depression. You have a huge segment of the American economy that's doing really quite well. Then you have this other segment which is in a depression, and that depression has much more effect on unemployment…when we get a million housing units, annually, started, I think unemployment will go down a lot.

…we have households, and we have housing units. We built way too many housing units compared to households. Surprise, we had this huge inventory. We're now creating more households than housing units. We're drawing down on the inventory every day. I don't know how long that takes. I know when it's through, when we've reached something close to a balance, that we will have at least a million households being formed annually. It doesn't change the basic equation.  We are creating more households than housing units at this 600,000 pace of housing starts. You know the answer is coming, you just don't know exactly when. When it comes, it will be a big change. It would be a terrible mistake to try and do some cash for clunkers type thing that would create a whole bunch of houses…So in 2009, we had very little household formation.”

On Inflation

“…if you drop money on households or you drop money on banks…eventually you'll get an increase in prices, and if you do enough of it, you get a big increase in prices.”

On Federal Government Deficits

“…we're going to have to get 15 percent of GDP that's coming in revenue up to 19 (percent), and we're going to have to get 25 percent spending of GDP down to around 21 (percent).”

On Excess Risk Taking by Banks

“…there should be much more extreme penalties for the CEOs, or the departing CEOs, of companies that are important enough to require society to intervene.  And the CEOs walk away rich is, I think--I think it's--I think it's a terrible thing morally; but, beyond that, I think it encourages bad behavior.   whether it's WAMU or Wachovia or Freddie...  ...or Fannie. They shareholders get creamed, but the managers walk away rich…you've got to make it so the CEO of an institution that requires society to bail out its institution, that CEO goes away broke and his wife goes away broke.  The directors pay a big penalty, too.”

On the U.S. Economy

“Right now we have six times the GDP per capita, in real terms, as when I was born. Now, I don't know whether people are happier now or more discontent or what than they were in 1930. But people have a way of adjusting very quickly to things becoming better, and then any little tiny adjustment downward they can get quite unhappy about. So they—they'll have—they'll have plenty of strains in their society, we'll have plenty of strains in our society.

We're going to have to bring our expenditures down to 21 percent or so of GDP, and that's going to require a lot of sacrifice around the country, a lot of breaking of promises we've made.

What has really happened in the last two years, and I'm seeing it in every bit of data I look at, is that the economy has generally kept moving forward. Business after business, you know, Dairy Queens to jet airplanes, it gets better. Except housing is in a depression. Now, you take housing and put it in a depression, not a recession, a depression, and that has a big impact

We don't—the nice thing about it is we're not Japan. We're not Italy.

Italy has no population growth. We are a country where households are formed daily in significant numbers. There was a slowdown in 2009 because of the first impact of the recession, but households are getting formed every day faster than houses are being constructed. That solves itself. Now, it doesn't solve itself as fast as people would like...

...but it does solve itself. And the economy, which is good in many areas, will be very good when that—when that imbalance is worked off.”

See part two of Warren Buffett on the US economy and the Global economy

Gradual improvement for Real Estate in year 2012

Although the housing market struggled to maintain an even footing in 2011, gradual improvement is expected in 2012 and beyond, according to projections at the 2011 Realtors Conference.

According to the National Association of Realtors (NAR), home sales should be stronger based on  a pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could stimulate the real estate market when conditions improve.  Based on NAR’s current projection model, existing-home sales would total 4.96 million in 2011. Read entire article here.