Posts Tagged ‘Important Factors’
U.S. Real Estate Markets With Consistent Price Appreciation
Real Estate Advisor asked:
Buying home, condo or any other real estate in a market that is protected from a bursting bubble is every investor’s dream. Knowing where to look for these bubble-proof markets and how to identify them is crucial.
There are some important factors that investors should consider when searching for stable investments such as single-family homes, condos or any other type of real estate. Some of these factors include a fast growing population (which positively impacts the demand for housing), a solid and diverse economy (which impacts employment rates and subsequent demand for housing), rising incomes (which impacts buyers’ ability to purchase real estate), a developing infrastructure (which contributes to the appeal of a city or community), and restrictions on future real estate development (which limits future supply of real estate). Investing in real estate within communities that meet these criteria may prove to be more profitable than communities that are missing one or more of these factors.
A recent report by Business 2.0 Magazine identified U.S. cities that have consistently demonstrated price appreciation in the real estate market. The October 2006 issue of the Magazine identified the top 5 real estate markets that demonstrated an upward price trend over a long period time. The top-ranking cities were:
1. San Francisco, California
2. Los Angeles, California
3. Seattle, Washington
4. Boston, Massachusetts
5. New York City, New York
San Francisco topped the list with an average annual home price appreciation of 4.2% from 1949 to 2006. In contrast, the national average was 2.3%. Strong restrictions on real estate development and a limited geography helped push San Francisco to the top slot.
Los Angeles ranked second in the report. The average annual home price appreciation in Los Angeles was 3.7% from 1949 to 2006. Reductions in available land and increasing restrictions on further development helped pushed Los Angeles to the number 2 slot.
Home prices in Seattle, which was third on the list, demonstrated an average appreciation rate of 3.2% from 1949 to 2006. While Seattle made the top 5 list, recent easing of building restrictions may cause Seattle to fall out of the top 5 over the next few years.
Boston was fourth in the rankings. The city has seen annual home prices appreciate by 3% over the period from 1949 to 2006. A strong increase in per capita income contributed to Boston’s high ranking.
New York City follows close behind with an average annual home price appreciation of 3% from 1949 to 2006. A limited geography, large population, and finite number of properties contributed to New York’s high ranking.
While there is no guarantee that any of the real estate markets listed previously are truly “bubble proof,” the factors described above may help investors find the profitable markets and avoid “bubble” markets. Since the real estate market is constantly changing, be sure to seek out the services of a skillful real estate agent to help you navigate your next real estate purchase.
La Mirada Real Estate
Buying home, condo or any other real estate in a market that is protected from a bursting bubble is every investor’s dream. Knowing where to look for these bubble-proof markets and how to identify them is crucial.
There are some important factors that investors should consider when searching for stable investments such as single-family homes, condos or any other type of real estate. Some of these factors include a fast growing population (which positively impacts the demand for housing), a solid and diverse economy (which impacts employment rates and subsequent demand for housing), rising incomes (which impacts buyers’ ability to purchase real estate), a developing infrastructure (which contributes to the appeal of a city or community), and restrictions on future real estate development (which limits future supply of real estate). Investing in real estate within communities that meet these criteria may prove to be more profitable than communities that are missing one or more of these factors.
A recent report by Business 2.0 Magazine identified U.S. cities that have consistently demonstrated price appreciation in the real estate market. The October 2006 issue of the Magazine identified the top 5 real estate markets that demonstrated an upward price trend over a long period time. The top-ranking cities were:
1. San Francisco, California
2. Los Angeles, California
3. Seattle, Washington
4. Boston, Massachusetts
5. New York City, New York
San Francisco topped the list with an average annual home price appreciation of 4.2% from 1949 to 2006. In contrast, the national average was 2.3%. Strong restrictions on real estate development and a limited geography helped push San Francisco to the top slot.
Los Angeles ranked second in the report. The average annual home price appreciation in Los Angeles was 3.7% from 1949 to 2006. Reductions in available land and increasing restrictions on further development helped pushed Los Angeles to the number 2 slot.
Home prices in Seattle, which was third on the list, demonstrated an average appreciation rate of 3.2% from 1949 to 2006. While Seattle made the top 5 list, recent easing of building restrictions may cause Seattle to fall out of the top 5 over the next few years.
Boston was fourth in the rankings. The city has seen annual home prices appreciate by 3% over the period from 1949 to 2006. A strong increase in per capita income contributed to Boston’s high ranking.
New York City follows close behind with an average annual home price appreciation of 3% from 1949 to 2006. A limited geography, large population, and finite number of properties contributed to New York’s high ranking.
While there is no guarantee that any of the real estate markets listed previously are truly “bubble proof,” the factors described above may help investors find the profitable markets and avoid “bubble” markets. Since the real estate market is constantly changing, be sure to seek out the services of a skillful real estate agent to help you navigate your next real estate purchase.
La Mirada Real Estate
Selecting a Good Price for your Home Purchase
Escapeso Austin Real Estate asked:
Establishing a good price to offer on the home you have selected is a big step in reaching the goal of actually buying the right home for you. Your Realtor has helped you select the right Lender for your portfolio and has also worked with you ((to)) select a good neighborhood and to understand the current dynamics of your real estate market. Now you need to begin to put all this together to craft a price point to use in ((your)) negotiations with the Seller. Selecting a good price to submit as your offer is a key point to your success in securing a contract and in closing the transaction. In addition to the price, there are other important factors to consider at this time, such as amount of down payment, options, contingencies, a feasibility period, etc. but first let’s consider the price point.
The price point is the maximum price you are both willing and able to pay for the home selected. How much are you willing to pay for right house? How much are you able to pay? These numbers may vary depending on the transaction at hand. For example, for a multitude of great reasons, you may absolutely want the house. So, you are willing to pay “what-ever-it-takes” to close the sale; but in reality you are only able to afford a finite amount. Or, you have a letter of credit that ensures you are able to afford any house you want but how much are you willing to pay for this size house, in this neighborhood at this time in the market cycle?
The “Right” price brings your willingness and ability in sync and is a price that will keep the Seller at the table to agree to a Contract for the Sale. It should reflect current and expected market conditions and be reasonable. You do not want to insult the Seller who listed the house at their (hopefully realistic) price point and you do want to open the door to negotiation. At the same time some sellers are unrealistic about price or don’t accept that they might be in a poor market. At this point you need to look for a seller with more reasonable expectations. Once your price point is defined you are almost ready to make an offer. You should now review you financing strategy and determine how much of a down payment you want to make. With a large down payment, the amount to be financed will be less. Your willingness to select the right down payment amount will impact your ability to hit your price point.
Unless you are going to pay cash for the house you will need to make a down payment of 0 – 25% of the sale price and finance the remainder. If you have great cash reserves to put at-risk, a 0% down payment may be available. A 20% down payment may be required in order to avoid mortgage insurance payments. In other instances, the down payment is a fixed percentage of the Sales price, perhaps 5% or 10% and has been pre-determined by the Seller or the Seller’s Agent or perhaps the Lender. Discuss this with your Realtor, and then move forward with a clear understanding of your financing plan.
In addition to price and down payment, you may want your offer to include a contingency on finalizing your financing, or on your ability to sell you current residence, or in consideration of other factors. The sale may also require an appraisal, a survey, an inspection, definitely a title search and possibly a feasibility period. (The feasibility period is a defined period of time in which you verify certain factors and information to determine the impact all this new information has upon you decision to purchase.) Your Realtor will be able to help you with all of these considerations. It is very important to have selected a Good Realtor early in the process.
Armed with this information, you are now ready to make an offer. Remember, the offer will include a sales price and any option or feasibility period, general financing or other contingencies. The seller will respond with acceptance or a counter. Should the seller counter, then you do a bit of back and forth negotiations until you come to agreement on your contract to purchase. With the negotiated agreement all parties will sign and initial, contingencies excepting, a closing date will be set.
La Mirada Real Estate
Establishing a good price to offer on the home you have selected is a big step in reaching the goal of actually buying the right home for you. Your Realtor has helped you select the right Lender for your portfolio and has also worked with you ((to)) select a good neighborhood and to understand the current dynamics of your real estate market. Now you need to begin to put all this together to craft a price point to use in ((your)) negotiations with the Seller. Selecting a good price to submit as your offer is a key point to your success in securing a contract and in closing the transaction. In addition to the price, there are other important factors to consider at this time, such as amount of down payment, options, contingencies, a feasibility period, etc. but first let’s consider the price point.
The price point is the maximum price you are both willing and able to pay for the home selected. How much are you willing to pay for right house? How much are you able to pay? These numbers may vary depending on the transaction at hand. For example, for a multitude of great reasons, you may absolutely want the house. So, you are willing to pay “what-ever-it-takes” to close the sale; but in reality you are only able to afford a finite amount. Or, you have a letter of credit that ensures you are able to afford any house you want but how much are you willing to pay for this size house, in this neighborhood at this time in the market cycle?
The “Right” price brings your willingness and ability in sync and is a price that will keep the Seller at the table to agree to a Contract for the Sale. It should reflect current and expected market conditions and be reasonable. You do not want to insult the Seller who listed the house at their (hopefully realistic) price point and you do want to open the door to negotiation. At the same time some sellers are unrealistic about price or don’t accept that they might be in a poor market. At this point you need to look for a seller with more reasonable expectations. Once your price point is defined you are almost ready to make an offer. You should now review you financing strategy and determine how much of a down payment you want to make. With a large down payment, the amount to be financed will be less. Your willingness to select the right down payment amount will impact your ability to hit your price point.
Unless you are going to pay cash for the house you will need to make a down payment of 0 – 25% of the sale price and finance the remainder. If you have great cash reserves to put at-risk, a 0% down payment may be available. A 20% down payment may be required in order to avoid mortgage insurance payments. In other instances, the down payment is a fixed percentage of the Sales price, perhaps 5% or 10% and has been pre-determined by the Seller or the Seller’s Agent or perhaps the Lender. Discuss this with your Realtor, and then move forward with a clear understanding of your financing plan.
In addition to price and down payment, you may want your offer to include a contingency on finalizing your financing, or on your ability to sell you current residence, or in consideration of other factors. The sale may also require an appraisal, a survey, an inspection, definitely a title search and possibly a feasibility period. (The feasibility period is a defined period of time in which you verify certain factors and information to determine the impact all this new information has upon you decision to purchase.) Your Realtor will be able to help you with all of these considerations. It is very important to have selected a Good Realtor early in the process.
Armed with this information, you are now ready to make an offer. Remember, the offer will include a sales price and any option or feasibility period, general financing or other contingencies. The seller will respond with acceptance or a counter. Should the seller counter, then you do a bit of back and forth negotiations until you come to agreement on your contract to purchase. With the negotiated agreement all parties will sign and initial, contingencies excepting, a closing date will be set.
La Mirada Real Estate