Simply Junior

Out of all the predictions made in regards to the United States economy and real estate scene, many believe that Texas will serve as a hot spot when it comes to buying a house. This means that both buyers and sellers should keep their ears to the ground in regards to the real estate boom that is taking place in Texas. Despite the increases in short-term interest rates that have created a considerably slowed-down housing market, Texas still provides a hearty housing economy. With a little help from a solid low unemployment rate, increases in personal income, and overall low interest rates, the Texas real estate market is thought to prove quite beneficial in the coming years.

For those planning to purchase a home in the summer, you will surely be in luck, especially when you aim to make your residence within the great state of Texas. Today, the million-dollar question of the day pertaining to Texas real estate asks the details on what makes this state so special when it comes to the buying and selling of real estate?

For starters, when you take a look at the housing markets spread across Texas; you will notice that they have kept a consistent pace in providing some of the most affordable shelter throughout the country. Across the nation, cities such as Killeen, Texas (rated fifth least expensive) have been mentioned in housing market reports alerting the public that Texas is indeed a hotbed for residential advancements. Numerous cities in Texas are leading the way in creating a market that easily competes with the national average.

If there were ever a place to situate yourself in Texas, Killeen seems like the place to be. Since 1994, the city has been recognized as a destination that provides housing seen well below the national median. According to a Coldwell Banker survey, the city still presents the fifth lowest prices in regards to Texas real estate. Looking for additional reasonably priced cities located in Texas? Try checking out the ins and outs of El Paso and College Station.

The Lowdown on Killeen, Texas Real Estate

Are you new to the area and wondering what to expect if you’d like to take advantage of the exceptionally satisfying Texas real estate prices in Killeen? This particualar city accommodates more than 100,000 residents, who rely on the close proximity to Fort Hood, a large military base comprised of soldiers and their families. Some of the related activities and attractions found in the city include Central Texas College, the University of Central Texas, rodeos, stock car racing, as well as numerous dining, shopping and entertainment opportunities.

Overall, exploring Texas real estate is highly recommended if you are considering a move to the South. With great weather and great housing opportunities, you can’t go wrong.

Everyone knows that the commercial construction industry got hammered after the global financial meltdown. And it really hasn’t recovered very well, and although the residential housing market got hit quite a bit harder than the commercial sector, there are plenty of unoccupied buildings with no tenants, unoccupied high-rises, and empty warehouse buildings. The question is, as we are moving into 2011; how does the industry look now?

Is there any money to be made in commercial construction in 2011? Yes and no, and most of the industry believes it will be a rebuilding year. Luckily, Land Costs should remain relatively decent in most US markets. Still, we can expect labor costs to skyrocket – mostly due to increases in illegal immigration enforcement, meaning sub-contractors will be hiring US citizens not cheap labor and paying them under the table. Plus, let’s not forget the realities of the new ObamaCare phase-ins on health insurance.

Many Municipalities and County Governments are requiring LEEDs construction techniques and energy efficient structures. Some states are putting overlay laws on top of local ordinances, building codes, rules, and regulations. That will certainly drive up costs. Also, in some cases Union Labor may often be required because they will be the only folks certified to build LEEDs standard buildings.

But, those are not the only considerations, as you can expect Workmen’s Compensation insurance is only going one-way, and that’s up. And then there are materials, which must be considered in the cost analysis also. Chinese made materials such as aluminum, steel, and other products could be hit with significant tariffs and many building materials from China have already have been due to anti-dumping filings at the WTO.

Yes, 2011 will be a rebuilding year, but it will also be a war zone out there, and it will prove that only the strong survive in this industry. I hope you’ll please consider all that.

It’s hard to ignore the financial changes that have occurred in the last few years. Over the past five years, the housing market has failed, the job market has folded, and more and more young Americans are finding the economic climate necessitates going back to school or moving back in with their parents. Times are changing, for better or for worse, and the way people are spending their hard-earned money is changing along with them. Below are just a few ways it has changed in recent years.

A Changing Society

Society’s spending habits have changed significantly since 2005, which many consider the high-water mark of our debt-driven purchasing ways. Americans as a rule were more likely to charge things to credit, and to make more frequent and larger non-essential purchases: big televisions, the latest entertainment equipment, second cars, and the like.

Now, however, the paradigm has shifted. Studies suggest that Americans are now more interested in making fewer purchases, and making them with cash rather than on credit. Mid-level extravagant spending is down, and consumers are back to focusing on basic purchases.

Hard Habits to Break

Spending extravagantly on consumer goods is a hard habit to break. People are often reluctant to give up certain consuming habits, even when they become difficult to maintain, or even downright impossible. However, it is important to remember that humans are incredibly adaptable. While change may be hard initially, once it becomes a regular way of living.

The Benefits of Frugality

Studies have shown that living frugally actually has a number of benefits. By saving for larger purchases, we are more satisfied with them, and for longer. We enjoy the process of desiring something almost as having it, and by saving up for something and then purchasing it, we extend the enjoyment we take from it.

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There are four main reasons for this assessment.

The first of these is that British Columbia is enjoying period of unprecedented growth and prosperity. This period of economic prosperity forms the bedrock upon which the Vancouver housing market can consolidate its position.

In the February 20,2007 Budget and Fiscal Plan for 2007/08-2009/10 which was released by the Ministry of Finance , the outlook for the BC economy in general and the Real Estate Market in particular, is exceptionally bright.

The second item to consider is the influx of immigration that is expected to flood into British Columbia the years leading up to the BC Olympic Games. The Council projected that “total net migration” to British Columbia would continue to rise to unprecedented levels. In 2007 alone, projections averaged from a “low of 35,423 people to a high of 55,000 people”. The general expectation is that this trend will continue in to increase in the coming years with the anticipation that “total net migration to average about 47,000 people in 2008, rising to over 50,000 through the 2009 to 2011 period”.

The third area of consideration is the inflation of the Canadian Dollar and its effects on interest rates and the Real Estate Market. The expectation is that Bank of Canada will raise interest rates an average of “4.08 per cent” in 2007. Over the long term the rates should hold fairly steady or even come down slightly. The “Council’s forecasts for the Bank of Canada’s overnight target rate averaged 4.13 per cent in 2008, falling to 4.01 per cent over the 2009 to 2011 period”.

The last piece of information needed to navigate in the complex Real Estate Market, is the forecast for Real Estate Market movement in British Columbia and its implications for you as a home-buyer. The news is good, according to the bi-annual press release published by The British Columbia Real Estate Association (BCREA). In the Housing Forecast Report, Cameron Muir, BCREA Chief Economist gives us this insight, “The market has shifted away from strong sellers’ conditions and is expected to operate in a band between a strong balanced and weak sellers’ market over the forecast horizon.

I recently attended Arizona 2011 – Real Estate and Business forecast which had a number of excellent featured speakers including Elliott Pollack, renowned economist from the Phoenix area. I’d like to share with you the overall sentiment as well as the analysis of various real estate and business sectors.

First Elliott started of the show with his signature analysis of the local, state and national economy. The overall consensus was that we’re looking at another year of stagnation in 2011. In other words, 2011 will resemble 2010 in most ways – abysmal. The year of year improvement will be minuscule. As we move forward, 2012 will be better than 2011 and so forth but we won’t see an marked improvement and substantial growth until 2013-14 when things should start to return to normal. Everything is predicated on the national economy improving and while there are signs that things are improving ever so slightly, we are still a few years away on that front as well. Of course, so much is dependent on what happens nationally and even more so, globally with the economy. Elliott went on to point out that Phoenix has historically suffered from emphatic boom-bust cycles and that we are poised for another boom cycle. All the indicators point towards to future population and employment growth as we move forward which will support our housing market.

Moving on to some of the other speakers and specific real estate market segments, the consensus was that residential housing is near or at bottom. Will probably get slightly worse next year as more foreclosures hit the market and must be absorbed. But we are already at rock bottom pricing so can’t go much lower. This means another year of tremendous housing affordability and ability to find incredible value for housing and investment.

Apartments are the first real estate product type in the investment sector to show improvement and signs of upwards movement. We are pretty much at the bottom for apartments. Class ‘A’ and ‘B’ apartments didn’t really suffer too badly in this recession and there are signs that they are improving. Rents are up and concessions are down in these asset categories which positively affect cash flow and market value. There are simply more potential buyers for the nicer product than there are buildings for sale. I can personally vouch for this as I have been involved in numerous bidding wars for quality assets in good locations. This invariably means someone is willing to overpay, usually.

Class ‘C’ is being neglected in a big way right now and that’s where the sales inventory is located. Too much inventory and not enough buyers means downward pressure on value and pricing. It is getting to the point where some lenders are willing to dump properties to get out from under them. This is also the sector affected by the highest vacancy rates in the 20-25% range because they are invariably in the areas affected by the SB1070 legislation that scared a lot of Hispanics out of the city and across the border. Some of those areas in Glendale, West and central Phoenix have been decimated by vacancies as the rental pool has shrunk. What this means is that there is now an opportunity to purchase real estate assets for cents on the dollar and benefit from the end of this temporary crisis. This is probably where some of the best deals are located but they need experienced investors that understand how to turn a property around.

Apartment financing is available and getting better.

Industrial is the next real estate asset class that is set to recover. Still a couple of years away, but there are signs that it is bottoming out and positive absorption is starting to edge down vacancy rates. Retail and office are still light years away from recovery and should only be touched by the most experienced and knowledgeable investors.

We also had a speaker that talked specifically about the residential rental market. Single family homes and condos as investments. He stated that he is managing more homes than ever and vacancy rates are lower than he has ever seen and rents are moving up. He manages over 900 homes and has a 4% overall vacancy. What’s driving this sector is the number of homeowners losing their homes in short sale and foreclosure and in need of rental housing until they can repair their credit. The best residential housing markets for investments are where the newer subdivisions were built from 2003-2007 on the fringes of the Valley. Even as far out as Buckeye. So, where we are positioned and selling a lot of homes as investment is ideal – Avondale, Goodyear and surrounding areas.

As it stands with any type of investment, if you hang around and wait for the indicators to show a turnaround, you are already late. You have to be able to anticipate what’s happening with the leading indicators and jump in before everyone else. It’s really not that risky if you make sure to stick to buying properties that have positive cash flow.

So when are we going to see an upswing of housing values? My thoughts are 2-3 years and once it starts, it will accelerate fairly quickly (NOT as quickly as the last boom). Why? because we will have A LOT of homeowners that lost their homes and have repaired their credit so they are ready to re-enter the housing market. Couple this with an improving economy and more people moving into town and our oversupply of housing should be gobbled up pretty quickly. Prices will have to escalate enough to motivate the investors to sell their inventory so I think you could see a run-up of values in the 20-30% range within a 2 year period when this market segment re-opens(or until cash flows turn from positive to negative on single family housing). Once it is tapped out, I expect values to appreciate a more normalized level of 2-5% per annum. That’s just my opinion.

Now lets briefly examine the last few months of sales activity for residential housing. After monthly inventory increases in Aug and Sept, the market showed signs or restabilizing in Oct and leveled off and improved slightly in November (speaking about overall inventory levels). Prices have softened a bit further in the third and fourth quarter of this year, but not significantly. I expect a slow improvement beginning in January when everyone gets back into the swing of things.

The bottom line is there has never been a better time to buy residential housing in Metro Phoenix (being selective). Astounding affordability and positive cash flow on single family homes in a major US metro market makes now the time to get involved and snap up properties to reap the benefits over the next 5-10 years. Don’t wait until it’s too late. Let us help you acquire a portfolio of real estate that will make you money now and appreciate well into the future.