Home Flipping is Hot Again

Home flipping zoomed to a six-year high in the second quarter of 2016, as more investors eyed properties to spruce up and turn over for a quick resale. 

A total of 51,434 single-family homes and condo sales were completed flips in the second quarter of this year, up 14 percent from the previous quarter and up 3 percent from a year ago. It is the highest number of home flips since the second quarter of 2010, according to the Q2 2016 U.S. Home Flipping Report, released by ATTOM Data Solutions. 

“Home flipping is becoming more accessible for smaller operators thanks to an increasingly competitive lending environment with more loan options for real estate investors, who are also benefitting from the historically low mortgage interest rates,” says Daren Blomquist, senior vice president at ATTOM Data Solutions. “That favorable lending environment for flippers has helped to fuel the recent flipping frenzy we’ve seen over the past five quarters.” 

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Homes flipped in the second quarter accounted for 5.5 percent of all single-family and condo sales. A total of 39,775 investors (both individuals or institutions) completed at least one home flip during the quarter, the highest number of home flippers since the second quarter of 2007, the report showed. 

“We’re starting to see home flipping hit some milestones not seen since prior to the financial crisis, which is somewhat concerning, but there are a couple of important differences in the home flipping of 2016 compared to 2006 when home flipping peaked during the last housing boom,” Blomquist says. “First, home flippers are realizing a much bigger gross ROI in 2016, averaging 49 percent in the first two quarters compared to an average gross ROI of just 27 percent in 2006. Second, while an increasing number of flippers are financing their purchases, more than two-thirds are still using cash to purchase compared to about one-third using cash to purchase back in 2006.” 

Homes that were flipped in the second quarter took an average of 185 days to flip, up from 182 days a year ago. 

We at Landmark Group are here to help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Millennials Will Be Renting for a Lot Longer

The U.S. housing market continues to move ahead, but a generation of home buyers is being left behind.  

That’s the conclusion of an analysis of home ownership by John Burns, a real estate consultant and author who has crunched the numbers in a new CNBC report.  

Home ownership rates have fallen across all age groups since the housing collapse in 2009, but the biggest drop has been among the millennial generation.

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Burns predicts the home ownership rate will continue to fall through 2025. Which means that millennials will be renting for a lot longer than their parents’ generation did. 

In 2004, when the overall home ownership rate peaked at just under 70 percent for all age groups, those born in the 1970s were 25–34 years old, moving out on their own and forming new households.  

With mortgages easy to get, almost 50 percent of that age group owned their home. That’s 5 percent higher than the average rate since 1981, according to Burns’ analysis.  

Today, with mortgages harder to get and memories of the housing bust fresh in buyers’ minds, the home ownership rate among 25–34-year-olds has fallen to just 39 percent.  

A decade after the peak, that 1970s generation, now 35–44 years old, has also seen its grip on home ownership eroded by the housing bust. Its current 59 percent home ownership is 7 percent below the norm for that age group, and the lowest rate for 35–44-year-olds since the data became reliable in the early 1980s, Burns said.  

Though the home sales are still rising, they’re still far from the early 2000s boom. Looking ahead, Burns doesn’t see home ownership rates moving back to those pre-bust levels.  

Based on his estimates, the overall home ownership rate will fall to just 60.8 percent by 2025, the lowest since the mid-1950s. That forecast assumes roughly 15.9 million people born after 1960 will become home owners and some 10.6 million older home owners from earlier generations will pass away or no longer own their homes. That works out to a net gain of 5.2 million more home owners by the middle of the next decade.  

We at Landmark Group are here to help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Bellevue Among Best Military Towns for Investing

Real Estate investors are eyeing military towns as a great place to invest in a single-family rentals. 

“Acquiring (single-family rentals) near military bases may be one of the best real estate investment strategies, for a variety of reasons,” says Don Ganguly, CEO of HomeUnion. “For example, military service members are employed by the federal government, which provides greater employment certainty than the private sector. Demand from service men and women is stable, particularly as the military limits overseas deployments following two protracted wars. In addition, the military compensates service members based on market-rate rents, rank and dependents, giving landlords incentive to lease to military personnel and their families.” 

HomeUnion identified the top military towns for investing in single-family rental properties based on average cap rates. The towns must have a military base with a population of active duty personnel and their families of 15,000 or higher. 

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The study finds that the majority of the single-family rentals near military bases that offer the highest returns tend to be primarily located in the South and Midwest, says Steve Hovland, director of research for HomeUnion. 

The following metro areas, listed by their military housing area rents, are the best places to invest in housing near military bases, according to HomeUnion’s analysis: 

∙ Fort Sam Houston, San Antonio, Texas: $1,294

∙ Fort Drum, Watertown, N.Y.: $1,238

∙ Offutt AFB, Omaha, Neb.: $1,193

∙ Fort Jackson, Columbia, S.C.: $1,145

∙ Fort Hood, Killeen, Texas: $1,097

∙ Fort Gordon, Augusta, Ga.: $1,078

∙ Robins AFB, Warner Robins, Ga.: $965

∙ Fort Benning, Columbus, Ga.: $914

∙ Sheppard AFB, Wichita Falls, Texas: $883

∙ Fort Sill, Lawton, Okla.: $822 

We at Landmark Group are here to help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Real Estate Gets Its Own Stock Category

Real estate companies have been included in a category with banks and insurance firms since 1999 in stock markets across the globe. But that changes at the market close today. Real estate will have its own dedicated category. 

The Wall Street Journal reports that the move likely will prompt analysts to pay closer attention to real estate investment trusts. 

The Global Industry Classification Standard separates companies into 10 industries, like energy and health care. The groupings allow investors to follow broad trends. The new category for real estate will now make number 11 in the groupings. 

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The growth of the real estate sector prompted the move. Real estate market capitalization is $1.48 trillion and accounts for 3.5 percent of the global equities market, according to the European Public Real Estate Association. What’s more, REITs have been one of the top performing asset class for more than 20 years. U.S. REITs total returns over the past 25 years are 12 percent compared with 9 percent for the S&P 500, according to Green Street Advisors. 

“There is going to be more money looking at the sector,” says Matthew Norris, executive director for a real estate fund at the Grosvenor Group, a London-based property firm. “This is going to bring real estate into focus.” 

We at Landmark Group are here to help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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This Is the Time to Invest in Real Estate

Columnist Jeff Reeves with MarketWatch says right now is the best time ever to invest in real estate. He discounts fears by some about another housing crisis brewing – the uptick in “liar loans” or “Alt-A mortgages” and return of house flipping. He says any such bubble fears amount to “a lot of hogwash.” 

“Whether it’s stricter lending standards, a shift in attitudes among borrowers or simply the nation getting wiser about the risks of real estate, we’re hardly seeing irresponsible buying in 2016,” writes Reeves, who is also the editor of InvestorPlace.com. “What we are seeing is a healthy housing market that continues to steadily and organically appreciate.” As such, he says it’s prime time for investors to jump in. 

Home prices are on the rise: Median home prices are above pre-recession levels and even reaching new highs in some locales. Appreciation is growing about 5 percent each year. Some appreciating markets – notably Las Vegas and Florida metros like Miami, Tampa and Orlando – still have real estate values below pre-crash levels. 

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Companies are stepping in to help more people become investors too. For example, Investability, an online real estate marketplace, says it offers tools like cash flow calculators that allow those interested in investing to input estimated vacancy rates and rental incomes from potential properties. 

“Historically people invest within a 10-mile radius around their own home,” says Dennis Cisterna, chief revenue officer at Investability. “But in 2016, people want to invest in markets outside their own neighborhood.” 

Other crowdfunding companies like Fundrise and RealtyShares are allowing people with less money to jump in as investors too. Fundrise requires $1,000 to join while RealtyShares requires a $5,000 minimum investment. 

“Nobody should put all their savings into one or two properties, but in a diversified portfolio, there is a very good argument for real estate investments in 2016,” writes Reeves. 

Indeed, Reeves quotes Luba Nikulina, global head of manager research at Willis Towers Watson, in his article: “The shift away from equities and bonds into alternatives has gained momentum, among most institutional investors around the world, as these strategies have helped to manage risk through diversity.” 

We at Landmark Group are here to help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Student Housing Is Booming

Investors are snatching up more student housing properties than ever before. “Last year was the biggest year ever, investment sales-wise,” Fred Pierce, president and CEO of Pierce Educational Properties, told the National Real Estate Investor. This year is on pace to be even bigger. 

Investors have purchased more than $3 billion in student housing properties from the start of 2016 through mid-May. That is up from $2.1 billion over the same time period in 2015. 

“Interest in the student housing sector is as high as it’s ever been and is increasing,” says Doug Opalka, senior managing director for Holliday Fenoglio Fowler. 

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One recent mega deal comes from a partnership of institutional investors – including the Canada Pension Plan Investment Board, GIC and The Scion Group – which is about to close a $1.4 billion deal to buy University House Communities Group Inc. The company owns 13,000 student housing beds. 

“That is going to create additional investment sales,” says Pierce, adding that big portfolio sales often lead to spin-off transactions. 

What’s more, the private fund manager Harrison Street recently acquired Campus Crest for $1.9 billion. Campus Crest owned 38,000 student housing beds. 

Student housing is typically viewed by investors as a stable investment with consistent yields and a sector that tends to be more resistant to any economic downfalls, according to National Real Estate Investor. 

We at Landmark Group are here to help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Retail Market Remains Rife with Contradictions

Lower vacancy rates, little new construction and weak rent growth mark today’s commercial real estate market. The historically low levels of available space are sparking a slow return of new construction, though cautious developers remain picky about location,CoStar reports. 

The economic forces of creative destruction have been hard at work in the U.S. retail market. The sector has been a case study in contradictions, marked by the growing demand from an emerging set of new retailers that have added hundreds of new stores across the country, even as many established chains in the old order scale back, close stores or go bankrupt.  

Looking at the national retail occupancy numbers, one would consider the recovery in the retail property sector to be complete. Retail vacancy rates across the country are well below those of the previous cycle and continue to trend lower. Shopping centers and malls absorbed another 25 million square feet in the second quarter, more than double the new retail space added to the market during the same uyear-ago period, according to CoStar’s Midyear/Second Quarter 2016 Retail Market Review and Forecast.  

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Yet the tepid rate of rent growth, which has has held stubbornly at about 2.8% annual growth since 2014, has kept retail bottled up as the last CRE property sector still shy of its pre-recession rent peak. 

One nagging factor in retail’s ongoing store closures, which have been rising again since the beginning of the year following lackluster holiday sales. Most recently, Office Depot disclosed it has added 300 more stores to its store closure list set to shutter by 2019. They are in addition to the 400 stores already slated to close this year as part of cost-cutting move following its failed merger with Staples. The Sports Authority bankruptcy and closures by Sears and other department stores have left vacancy holes in many shopping centers.  

Casualties in the apparel sector have also plagued landlords. Luxury brand Coach will shutter 250, or 25% of its North American stores. In June, Ralph Lauren announced the closing of 50 stores across the U.S. Japanese apparel maker Uniqlo has scrapped its second American expansion, closing five stores.  

Despite this, the U.S. retail vacancy rate shrunk to 5.7% in the second quarter of 2016, its lowest level since the recession in 2007, thanks to robust expansion by trendy food stores and all types of restaurants.  

“From a high-level perspective, the fundamentals outlook indicates the market is quite healthy,” said senior real estate economist Ryan McCullough, who joined Suzanne Mulvee, director of U.S. Retail Research for CoStar Portfolio Strategy, in presenting the second quarter and midyear update.  

We at Landmark Group are here to help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Developers Look to Older Generation

Demographic trends dictate that demand for senior living accommodations is on the rise. Studies show that by 2060 there will be about 98 million Americans age 65 and above. That’s more than double the corresponding population today, according to the U.S. Department of Health and Human Services.

 

Real estate investment brokerage Marcus & Millichap’s first-half 2016 senior housing report said private equity investors have spent billions of dollars on senior housing properties. The report said returns on those investments are “holding steady in the mid-7 percent area. That’s more than triple the highest-yielding Treasury bonds available today.

 

The older population is growing faster in the Omaha area than nationally. The nation’s over-55 population is projected to increase about 62 percent from 2010 to 2040, the same population in a five-county Omaha area is to jump 83 percent, according to data from the University of Nebraska at Omaha’s Center for Public Affairs Research.Apartment buildings Apartments Multifamily housing Real Estate Rental properties Senior market

 

At the same time, data shows the younger population between 24 and 55 years old is to increase only by about 26 percent in the Omaha area and 15 percent nationally.

 

To meet current and future demand, developers already have built, are working on or plan to build numerous senior focused living units across the Omaha metro area. Project locations include Aksarben Village, Hillsborough, Sterling Ridge and other sites across the metro.

 

The new senior-oriented housing ranges from apartment rental units to owned townhomes. Services range from simple living to assisted living to full-time care.

 

The multitude of projects involves tens of millions of investment dollars, thousands of new units and thousands of jobs to build and operate the facilities. It’s a huge financial boon to the community as it prepares to house its aging population far into the future.

 

We at Landmark Group are here to help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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Some Wonder If Apartment Market Slowing

Rents are climbing and construction of new multifamily units spiked over the past five years. The apartment market has been golden, but some investors are starting to wonder if the sector is showing some signs of slowing.

 

The apartment market “is increasingly jittery over supply, absolute rent levels, asset pricing and the potentially wobbly employment backdrop,” David Toti, a REIT analyst with BB&T, said recently in a note to investors.

 

Equity Residential recently revised its outlook lower for the apartment market. It recently had exited the Florida market and now has a bulk of holdings in San Francisco and the New York City area.

 

“Clearly 2016 will not turn out to be the year we had originally expected due to deteriorating market conditions in San Francisco and New York City, which combined made up 50 percent of our initial growth forecast for the year,” Equity Residential CEO David Neithercut said on a quarterly earnings call last week. “These markets have turned to become quite volatile.”

 

Instead, markets that they hadn’t expected to give them the most growth – Boston, Washington, D.C., Seattle and Southern California – are performing better, Equity Residential notes. They say that oversupply has become a big problem in some markets.

 

AvalonBay, which holds a mixture in higher-priced markets and close-in suburbs, also is concerned the market is softening. “This trend appears to be largely demand-driven as economic and job growth fell short of expectations for the first half of the year, and declining business confidence and investment no doubt was a contributing factor as recent uncertainty and global events have left businesses hesitant to make new commitments,” AvalonBay CEO Timothy Naughton said on the company’s earnings call last week.

 

Rents are still rising across the country. However, more landlords are offering concessions. For example, AvalonBay offered renters four times the monetary concessions in the second quarter compared to a year ago, CNBC reports.

 

Also, commercial lending has tightened lately with loans getting smaller. That will constrict construction and lead to a more balanced market on the high end, CNBC reports.

 

We at Landmark Group are here to help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call.

 

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A Peek at the Not Distant Future

This week, we are taking a look at the world of tomorrow. Massive changes are in store in the not distant future.

Posting on WorldHealth.com, Dr. Robert Goldman, M.D., PhD., offers some exciting and sometimes frightening insight into what lies ahead for mankind.

In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide. Within just a few years, their business model disappeared and they went bankrupt. What happened to Kodak will happen in a lot of industries in the next 10 years – and most people don’t see it coming. Did you think in 1998 that three years later you would never take pictures on paper film again? Digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore’s law. So as with all exponential technologies, it was a disappointment for a long time, before it became way superior and went mainstream in only a few years.

Now the same thing is happening with Artificial Intelligence, health, autonomous and electric cars.

Software will disrupt most traditional industries in the next 5-10 years.

Uber is just a software tool, they don’t own any cars, and are now the biggest taxi company in the world. AirBnB is now the biggest hotel company in the world, although they don’t own any properties.

Artificial Intelligence: Computers are becoming exponentially better in understanding the world. This year, a computer beat the best Go player in the world, 10 years earlier than expected. In the US, young lawyers already don’t have jobs. You can get legal advice (more or less basic stuff) from IBM Watson within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So if you study law, stop immediately. There will be 90% fewer lawyers in the future, only specialists will remain.

Watson already helps nurses diagnose cancer, four times more accurately than human nurses. Facebook now has a pattern recognition software that can recognize faces better than humans. In 2030, computers will become more intelligent than humans.

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Automatic cars: In 2018 the first self driving cars will appear for the public. They will be mainstream just two years later. Around 2020, the complete automobile industry will start to be disrupted. You won’t want to own a car anymore. You will call a car with your phone, it will show up at your location and drive you to your destination. You will not need to park it, you only pay for the driven distance and can be productive while driving. Our kids will never get a driver’s licence and will never own a car. It will change the cities, because we will need 90-95% fewer cars for that. We can transform former parking space into parks. Each year 1.2 million people die in car accidents worldwide. We now have one accident every 100,000km (62,000 miles), with autopilot driving that will drop to one accident in 10 million km (6.2 million miles). That will save a million lives each year.

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Cities will be less noisy because all cars will run on electricity, which will become incredibly cheap and clean. Most car companies might become bankrupt. Traditional car companies try the evolutionary approach and just build a better car, while tech companies (Tesla, Apple, Google) will try the revolutionary approach and build a computer on wheels. A lot of engineers from Volkswagen and Audi are terrified of Tesla.

The real estate business is bound to change. Because if you can work while you commute, people will move further away from their job sites.

Learn much more about tomorrow at:

http://www.worldhealth.net/news/predictions-technology-health/

Meanwhile, if you are seeking today’s opportunities in real estate, we at Landmark Group are here to help you find them. We can help you with any real estate need – buying, selling or renting residential, retail, office, wholesale or industrial property. We can also help you maintain, renovate or manage your property. Just give us a call

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