REAL ESTATE TOPICS...Who's buying homes?

 

REAL ESTATE TOPICS...Yale's Robert Shiller: Now Is Good Time to Invest in Real Estate

Nobel laureate economist Robert Shiller of Yale University, who helped develop the S&P/Case-Shiller housing price survey, believes now could actually be the time to buy into the real estate sector.

He told FOX Business Network’s “Cavuto: Coast to Coast” that he wasn’t too worried about record-setting stocks and rising housing prices right now.

“Mortgage rates are still low and there could be an upswing—a continuation of the upswing we’ve seen since 2012,” Shiller said regarding the housing market.

“It seems like if you look at the bond market it’s not exactly the bubble story. But there are big turning points in the bond market,” said the 2013 Nobel laureate in economics, professor of economics at Yale University and the co-creator of the Case-Shiller Index of U.S. house prices.

“One of them was around 1979-1980 when Paul Volcker took over the Fed. And interest rates were way in the double digit range. And they’ve been just coming down ever since. It’s not just the financial crisis—it has been a long trend down. And now they kind of hit zero. They can’t go much lower recently,” he said.

Shiller added that with Donald Trump and his “very strong personality” about to move into the White House, there could be a reversal of the trend.

“We could be in for higher interest rates, both at long and short end,” he said, adding that since inflation is still “under control” the Fed won’t do any “reckless raise” of interest rates.

Meanwhile, the stock market’s rise to record highs after Trump’s presidential victory shows that investors are optimistic that the economy will improve as President Barack Obama leaves office, says Charles Gasparino, author and Fox Business Network senior correspondent

“His promise to cut both corporate taxes and red tape will translate into higher corporate profits so businesses can expand and create jobs,”Gasparino writes in the New York Post. “Real unemployment can finally decline not because people are dropping out of the workforce but because they’re actually working again.”

Trump will come into office with Republicans controlling the Senate and House of Representatives, making economic reforms a realistic possibility instead of prolonged gridlock. Under President Obama, the U.S. economy never exceeded 3 percent yearly growth for the first time since World War II.

“With the GOP controlling the House as well as the Senate, traders see real economic growth on the horizon, not just a Fed-induced stock-market bubble where interest rates are so low there’s no other place to put your money,” Gasparino says.

REAL ESTATE TOPICS...Can a real estate contract be binding if you don't put money down?

By Benny L. Kass

Q: Please resolve a dispute I have with my real estate agent. He says I need to post a money deposit in order to have a binding real estate contract, and I don't agree. He also said the oral promise of my seller to leave the piano in the house is not binding. Is that correct?

A: There is a very ancient legal concept called the statute of frauds. In simplified terms, and as it applies to real estate, this means that in order to have a binding contract to purchase (or sell) real estate, there must be a written document. Oral contracts will usually not be enforced by the courts.

In most jurisdictions in the United States, when a potential buyer makes a written offer to purchase a house, the seller has three options:

1. The offer can be accepted, in which case there is a contract.

2. The offer can be rejected.

3. The offer can be met with a counteroffer. This means that while the seller is interested in pursuing negotiations with the potential purchaser, the seller does not find all the terms of the original offer acceptable. .

If a seller makes a counteroffer, the buyer then has the same three options.

Most real estate transactions are smooth, and work out successfully. However, once in a while, a major dispute arises between the parties, and litigation starts. The first thing any court will want to determine is whether there is a valid contract.

In order to have a binding, legal contract, three basic elements are required:

1. An offer. Typically, the buyer makes an offer. It has been determined by many courts that an advertisement in the local newspaper offering a house for sale at a particular price is not an offer, merely an invitation for the public at large to make a bid (an offer) on the property.

2. Acceptance. The second element needed to make a contract binding is acceptance. Ultimately, there will either be no deal, or someone will accept an offer (or counteroffer) and there will be a contract. Acceptance must be in writing. In recent years, with modern technology, real estate forms can be accepted via fax or by email. However, to be on the safe side, follow any fax or email with a written document containing an original signature.

3. Consideration. This is an elusive concept. Generally, it refers to money. The buyers have put down a good faith money deposit with the broker (or with their attorney), and this constitutes good consideration.

However, what happens if no money is put down with the offer? Does this mean there is no binding contract even if the seller signs the offer? Not really, since consideration also has been interpreted to be "something of value." In this case, the buyer has stopped looking for another house, in the belief there is a binding real estate contract, and the seller has taken the house off the market, based on that same belief. Thus, there would still be a valid contract, although it is always wise to put down some money when you present an offer to purchase real estate.

The lesson to be learned: Put everything in writing. If you, as buyer, want certain items to be conveyed along with the house — such as the washing machine, curtains or even the piano — make sure these items are specifically listed in the sales contract. And conversely, if you, as seller, want to take certain fixtures with you, put that in writing as well.

Don't leave anything to faith — or to oral promises. I cannot guarantee you will get the piano.

REAL ESTATE NEWS...Blackstone's plan to cash in on a $10 billion housing bet

By JONATHAN BERR

Blackstone Group’s (BX) Invitation Homes, the country’s largest owner of single-family residences, is planning to go public next year. The goal is to monetize Blackstone’s nearly $10 billion investment in residential properties that began when the real estate market collapsed during the housing bust, sparking the worst U.S. economic downturn since the Great Depression.

Dallas-based Invitation announced its IPO plans in a confidential filing Tuesday with the Securities and Exchange Commission, according to a person familiar with the deal. Blackstone, whose real estate holdings top $100 billion, probably will sell very little of its stake in Invitation during the IPO. Invitation and Blackstone declined to comment for this story. Details of the IPO were reported earlier by The Wall Street Journal.

According to a recent report by financial services firm KBW, Blackstone rapidly vaulted to the top of the home rental market, acquiring 48,000 properties at bargain prices since April 2012, 70 percent of which are on the West Coast and Florida. Blackstone also was the first firm to issue bonds backed, or securitized, by thousands of rental payments. These are similar to the mortgage-backed securities that many blame for exacerbating the financial crisis. Invitation’s rivals in the home-rental business have also issued the securities.

“Many times, the kinds of homes that these firms are renting out may be larger, may have more high-end finishes than a comparable single-family rental home,” said Sarah Edelman, a housing market expert at the left-leaning Center for American Progress. “Traditionally, single-family rental has been among our more affordable sources of rental housing. There’s a risk here if you move more toward the luxury end, possibly at the expense of our more affordable [homes].”

KBW estimates that Invitation invests about $200,000 per home, which is above the $170,000 industry average, because it focuses on upscale real estate markets with good school systems that can command higher rents. The U.S. has approximately 16 million single-family rental homes, 45 percent of which are owned by investors with just one property, while 1 percent are in the hands of mega-owners with 1,000 or more houses, like Invitation. Larger players have been buying out smaller institutional investors in recent years. 

The timing of Invitation’s IPO also is curious. Several of its rivals, including American Homes 4 Rent (AMH), Starwood Waypoint Residential Trust (SWAY) Silver Bay Realty Trust (SBY), have been public for several years. Moreover, data from CoreLogic shows that home prices have surged 30 percent since 2010, making bargains harder to find. CoreLogic expects prices to rise another 5.4 percent over the next 12 months.

“It will be interesting to see how their profit model fares now that it’s not easy to scoop up affordable stocks,” Edelman said. “I do have concerns that when companies are locked into generating a certain return or in their effort to attract broad investment capital, they’ll need to push up rents.”   

Some media accounts have said some Invitation renters have faced substandard living conditions, but it’s hard to get a clear view of how Invitation operates. That’s because its holdings -- unlike multifamily dwellings such as apartment buildings -- are spread out, and tenants aren’t usually organized. Also, owners of single-family homes don’t have to meet standards as stringent as those their multifamily counterparts do, according to Edelman.

Another thing owners have going for them are the high prices for so-called starter homes in markets such as Miami and Atlanta that would normally attract first-time homebuyers. Said Edelman: “There will still be potential homeowners on the sidelines for some time.”

REAL ESTATE TOPICS... The Multigenerational Household

REAL ESTATE TOPICS...Poll: US House Prices to Rise Almost 5 Percent Next Year

U.S. house prices are set to rise almost 5 percent next year, a bit faster than expected just three months ago despite the real prospect of several interest rate increases, according to the latest Reuters poll of property market analysts.

So far the shock election of Republican Donald Trump as the next U.S. president has done little to change overall views on the housing market, with many saying it was too early to tell but also a significant minority saying their opinion had worsened.

Expectations that Trump's fiscal stimulus plans, through tax cuts, infrastructure spending and reduced regulation, will elevate inflation and lead to swifter rate rises away from the zero bound by the Federal Reserve. That also has pushed mortgage rates higher.

But the relatively fitful economic expansion since the 2008 financial crisis, coupled with poor wage growth despite a historically low unemployment rate of 4.6 percent, still argues strongly against a return to boom times.

"The housing recovery has made steady progress but remains unfinished, based on the economic recovery and the labor market in particular," said Robert Denk, senior economist at National Association of Home Builders. "It's too early to tell what impact Trump's victory will have on the economy."

The poll forecast the S&P/Case Shiller composite index of prices in 20 metropolitan areas would close out this year with a 5.2 percent rise. That followed by 4.8 percent in 2017, recouping nearly all of the roughly 35 percent loss suffered during the financial crisis.

Then it is expected to rise by 4.1 percent rate the following year.

The range of forecasts was broadly unchanged compared to the previous poll. But there was a prediction for house prices to fall outright for the first time since 2012.

When asked about their overall opinion on the future of the U.S. housing market since Trump's victory in the election nearly a month ago, a majority - 14 of 26 - said there was no change, while two said for the better. But 10 analysts said U.S. housing could be worse under the business mogul.

"Our outlook is a lot more volatile now, as very few details exist in terms of future policy. What little does exist tends to skew towards a negative impact," said Svenja Gudell, chief economist at Zillow.

REAL ESTATE TOPICS...How to buy a property without a real estate agent

By Ilyce Glink and Samuel J. Tamkin

I’m planning to buy a property from a friend without using a real estate agent. What is the process to buy a home without an agent? Can I use an attorney to help purchase the property?

Yes, you can buy a home without using a real estate agent. There’s no law that says you have to use an agent to purchase real estate. It’s just that the process is complicated and many people don’t know where to begin.

But if you have a friend who owns a home and that friend is going to sell you the property, you would likely want to hire a real estate attorney to help prepare documents and make sure that those documents not only protect you, but are filed correctly to protect your interest in the property. The good news for you is that many real estate attorneys will charge you a flat fee for preparing the documents and handling the closing.

The first step is to come to a meeting of the mind with your friend about the price you’re willing to pay, the date of the closing, whether you’re going to have any contingencies added to the contract (a home inspection contingency, a mortgage financing contingency and an attorney rider are the most common), and what, if any, furnishing, appliances or fixtures are going to be sold along with the property itself. Depending on where you live, sellers may include appliances like a refrigerator, outdoor patio furniture, light fixtures and built-in-bookcases or Murphy beds. Anything that is going to be left behind will need to be specifically itemized in the contract.

Next, if you are getting a mortgage and don’t have a firm commitment letter from the lender, you’ll want to work with the lender to make sure your financing will go through once the property has appraised out in value. Once your financing is locked in, you’ll be able to satisfy that mortgage contingency.

For the inspection contingency, you’ll need a good professional home inspector who can walk through the property and ascertain that it is in good shape physically. If there is a hidden problem, you or your attorney will need to work with your friend on the purchase. If you’re purchasing the home in “as is” condition, you might still want to have a home inspection so you know what problems you might face in the near future. Or in the case that the home has a serious deficiency, you can still get out of the deal.

Your attorney (or in states that use “closing attorneys”) can conduct or assist you with the closing, but you will still need a title search done to make sure that your friend owns the property, subject to any liens that are discovered and to know the status of the title to the home. The title company can assist in the closing as well. If you are using a lender, the lender will insist that you pay for a lender’s title insurance policy, but we think it’s a good idea to buy an owner’s policy as well. That way, you’ll be protected just in case someone or something unexpected pops up that is a covered item under a title insurance policy.

There are a couple of other things you might want to do: Typically, home buyers do a final walk-through of the property, preferably after the owner has moved out, so that they can make sure the property is in the same condition as when they made the offer to purchase. Since you’re buying from a friend, we don’t imagine that this will be an issue. Lastly, you’ll need to set up utilities in your own name for the new property, to take effect on the closing day.

Depending on the state in which you live, the seller may be obligated to make certain disclosures to you, such as giving you a completed, written seller disclosure form, or if you’re buying a condominium, providing you with a copy of the condo doc, and current rules and regulations. If you are moving into a condo or townhouse development, be sure to check the rules on pets, rentals, and nonfamily members who live with you.

Your attorney can fill in the blanks. Good luck to you and your friend, the seller!

REAL ESTATE NEWS...'Huge drop' in unemployment is giving a clear signal about interest rates

y Patti Domm

November's stunning dip to a 4.6 percent unemployment rate, and the fact the economy is still adding jobs at a healthy clip, should give the Fed the green light to hike interest rates when it meets later this month.

Unemployment was at its lowest since August 2007, and job gains continued to be strong in November , coming in at 178,000, in line with this year's average of 180,000. However, wage growth backtracked, with a surprise 0.1 percent drop in average hourly wages, compared with expectations of a 0.2 percent gain.

"Average hourly earnings is disappointing. The drop in the unemployment rate — this is the best of the cycle. You had a huge drop in the level of unemployment and an increase in employment. They're saying things are improving," said Ward McCarthy, chief financial economist at Jefferies.

Unemployment had been 4.9 percent in October and was expected to stay the same for November. The report also showed that the labor participation rate declined by 0.1 percent to 62.7 percent, signaling fewer Americans in the workforce and a factor behind the fall in the unemployment rate.

Average hourly wages had increased by 0.4 percent in October, a pace that had it continued would signal wage growth heading toward 5 percent annually. Wages had been growing at about 2.5 percent annually. The November 0.1 percent decline was the lowest since December 2014.

After the report, the Dow Jones industrial average was down slightly and bond yields fell. On Thursday, yields rose sharply ahead of the number as speculation swirled that the employment report could be very strong and show wage pressures, which would be a sign the Fed may have to hike more than expected at subsequent meetings next year. The slightly disappointing report brought in buyers for Treasurys, as did concerns about this Sunday's Italian referendum .

"It wasn't a slam dunk number by any means. The wages (number) is the most important, but it's important to know it came off a surge last month," said Diane Swonk, CEO of DS Economics. "It's a hiccup in wages, but not enough to stop the Fed."

There was also a decline in a broader measure of unemployment from 9.5 percent to 9.3 percent, now the lowest since August 2008. The U6 rate captures a wider group , including those who work part time but would like full-time jobs, as well as people who have stopped looking for work.

"The thing that's going to be taken away from this a few days from now is going to be the drop in the unemployment rate to 4.6 percent. Even the U6 number fell. It was a broad-based drop in the unemployment rate," said James Paulsen, chief investment strategist at Wells Capital Management. "At the end of the day, we made another notch down in the unemployment rate and ultimately that's going to be leading to more pressure on wages and costs. With wages down today, that may not be the story today, but it will be in a week. A huge drop in unemployment, … I think that's going to be the part that sticks."

A big focus for markets and economists has been wage growth, which has lagged with stubbornly low inflation. But there are signs that both are picking up, and the November number is going against the trend, said Swonk.

"You've got to take it in context. Last month was an extraordinary jump," she said. "I'm not happy with it, … but at the end of the day the wage number was really strong in October, so you take a moving average and that's what the Fed will do." The Fed rate announcement is expected after its meeting on Dec. 14.

The Commerce Department on Wednesday reported that personal income rose in October by 0.6 percent, the fastest growth rate since April and up from 0.4 percent in September.

REAL ESTATE NEWS...Pending home sales nudged upward in October

By Josh Boak

WASHINGTON (AP) -- The number of Americans who signed contracts to purchase homes edged up slightly in October, a sign that the housing market remains on sure footing after solid price and sales gains this year.

The National Association of Realtors said Wednesday that its seasonally adjusted pending home sales index rose 0.1 percent to 110. Pending sales improved in the Northeast, Midwest and West, while falling in the South.

Many of the contracts were signed when 30-year mortgage rates were averaging less than 3.5 percent, close to a historic low. In the weeks since the presidential election, average rates have jumped above 4 percent, making it costlier to buy a home.

The Mortgage Bankers Association reported Wednesday that applications for both new home loans and refinanced loans dropped over the past week.

Pending sales contracts are a barometer of future purchases. A sale is typically completed a month or two after a contract is signed.

Over the past 12 months, sales of existing homes have climbed 5.9 percent to an annual rate of 5.6 million.

The increased demand has done little to bring more sellers into the market. Sales listings have fallen 4.3 percent over the past year to 2.02 million homes. The shortage has pushed up the median sales price of existing homes 6 percent from a year ago to $232,200.

REAL ESTATE TOPICS....Tiny House Living

by MAGGIE WINTERFELDT

The meteoric rise of the tiny-house movement in recent years has been spurred on by contemporary homeowners' desire for a simpler, unfettered life. While these micro dwellings do come with some great perks — they're inexpensive and low-maintenance, freeing up time and money for other things — they also come with a few lesser-known cons. Before you sell off your belongings and take the dive into the tiny-living lifestyle, get all the information. Check out nine surprising truths of tiny-home ownership below.

Basic Life Functions

Everyday things you take for granted in a standard house, like getting mail and doing laundry, require thought when living in a tiny house. If you decide to downsize, you'll likely find yourself going outside the home to pick up letters at a P.O. box or wash clothes at the laundromat.

Legal Trouble

One of the biggest — and least known — complications of living in a tiny home is the legality of it. Many states have minimum home size requirements that tiny houses don't meet, making them illegal dwellings. There are some ways to navigate around this, such as having the house reside on land where it's a secondary accessory dwelling to an approved primary house or trying to have it registered as an RV. But these are complicated issues that require serious research. Ignore them, and you could find your tiny home with an eviction notice on it.

Clutter Reality

The beautiful images of tiny homes that fuel your daydreams have been styled to Pinterest perfection. In reality, tiny homes get messy just as fast, if not faster, than traditional homes. In such a tight space, it begins to feel cluttered the second an item is out of place.

Entertaining Limitations

Say goodbye to big dinner parties. With a good floor plan, you can squeeze one other couple in, but otherwise you'll need some outdoor space to accommodate company. And when it comes to having overnight guests, you'll need a fold-out chair and an adventurous guest (and yes, that was guest singular). There just isn't room for more.

Forced Intimacy

If you plan on moving in with another person, prepare to get up close and personal. There's no private space to escape off to for alone time. You'll be constantly connected and have to compromise on basic things such as what to cook for dinner (no room to prep two meals) to what TV show to watch (only one set).

Plumbing Considerations

Depending on how often you plan on moving your home and where you plan on moving it to, there are several plumbing options. Homes can be built to plug into sanitation and electricity infrastructure in RV parks, have a pressurized water hookup to connect to a hose when parked in a backyard, or even collect rainwater and have compostable toilets for those looking to go off the grid. All require more work than plumbing in traditional homes.

Health Changes

Before taking the plunge, consider how your circumstances might change within the next few years. Changes in health or a growing family can seriously impact your ability to live in a tiny house; for example, it will be nearly impossible to navigate your way up to a loft bed if poor health causes your mobility to be limited or you're heavily pregnant.

Lifestyle Proclivity

If you're a homebody or one who enjoys decorating the house and tending to the yard on the weekend, you may not be suited for microhome living. Those who prefer being in the great outdoors and detest home maintenance — and generally live their lives outside of their home — tend to fare best in the microhome community, as domestic activities and decorating are extremely limited.

Downsized Belongings

One of the biggest perks is also one of the biggest challenges to small-space living: getting rid of things. On one hand it's very liberating to toss most of your belongings, but on the other hand downsizing means you have to get rid of some sentimental and valued pieces. If you're not willing to part with Grandma's treasured dress collection or heirloom antique furniture, then you might not be ready for a microhome.