Low prices and interest rates mean it is a good time to buy in the US

Residential markets in the United States are presenting some unique opportunties for buying that simply haven’t been seen before, it is claimed.

It is the fact that prices are at decade lows and interest rates are at historic lows that makes the market so attractive, according to says Margaret Kelly, chief executive officer of RE/MAX, the leading global real estate franchisor with more than 80,000 sales associates in 80 countries.

She sees the market improving in 2012, but there are some outside factors that could possibly slow the recovery.

‘This year a crisis like the European debt situation could trigger inflation and send mortgage rates up, or prices could rise. This is the year many people will look back and wish they had bought a home because these conditions aren't going to last forever,’ she explained.

With an extensive background in housing finance and a new position on the board of the Kansas City Federal Reserve, Kelly has access to the best available data but she does not pay much attention to national real estate figures.

She believes that buyers and sellers ought to realise that real estate statistics vary widely from community to community. Since there is no such thing as a national real estate market, she considers the dissemination of national data misleading to the public.

She reckons the best thing is to talk to an agent in your area. Also RE/MAX publishes its own monthly housing report covering 53 metropolitan markets across the nation. It its most recent version, November home sales were 8.1% higher than November 2010, the fifth consecutive month to show a year on year sales increase.

At the same time, the number of homes for sale, or inventory, continued to fall for the 17th straight month. November home prices were 1.4% higher than October, making it the fifth month in 2011 that prices have risen month on month. However, home prices remained 4.2% lower than prices in November last year.

‘Markets are stabilising. Rates are low for buyers. Investors are accounting for 20 to 25% of sales and foreign buyers are accounting for $82 billion in sales,’ she said.

‘There is a huge pent up demand for home ownership. Home ownership rates will rise because even in the minds of the majority of renters, the American dream of home ownership is still very much alive. It's an incredible time to buy and if you don't, you just might regret it,’ she added.

Source: http://www.propertywire.com/news/north-america/us-real-estate-buyers-201202236203.html

U.S. is top 2012 property investment pick

NEW YORK - The United States will remain the top choice of most global commercial real estate investors in 2012, but the country has lost ground to Brazil which ranked No. 2 this year, according to a survey released Sunday.

While the United States offers the most stable and secure option in commercial real estate, investors said improvement in rent and occupancy growth and the repeal of a 1980 foreign investment tax would have the strongest impact on their investment decisions, according to the 20th annual survey of Association of Foreign Investors in Real Estate (AFIRE) members.

For about the past year or so, investors in U.S. commercial real estate have focused on gateway cities such as New York, Washington, Boston, San Francisco and Los Angeles, driving prices up and yields down.

Meanwhile commercial property in Brazil, with its bubbling economy and safer investment environment, has become a hot spot for global investors. Sao Paulo, Brazil's largest city, jumped to the fourth best city for real estate investment dollars in 2012, up from 26th place last year.

The United States is still very desirable and was second behind the UK in attracting cross border investment in 2011, according to Real Capital Analytics preliminary figures.

"The negative is it doesn't promise a whole lot of capital appreciation because the prime markets are already fully priced," AFIRE Chief Executive Officer James Fetgatter said. "By no means will Brazil replace the U.S., at least not in the forseeable future. Brazil is considered now a much safer place to invest and a place where you can get capital appreciation and good yield."

AFIRE'S survey respondents hold more than $874 billion of real estate globally, including $338 billion in the United States.

Sixty 60 percent of respondents said they plan to increase their investment in U.S. real estate in 2012, down from a record 72 percent last year, according to the 20th annual survey.

Some 42.2 percent said they believed the United States in 2012 would offer the best opportunity for the price of their commercial real estate investments to increase, down from 64.7 percent last year's survey.

The United States lost ground to Brazil, with 18.6 percent saying Brazil's property market offered the best growth opportunity for their investment dollars. That's up 14.2 percentage points, moving Brazil up to second place from fourth, and pushing China down to No. 3, according to the AFIRE survey.

Seventy percent of respondents picked one of the three countries as their favorite, while the remaining 30 percent had top choices from 13 other countries on five continents.

Respondents said they would invest more in U.S. commercial property if the fundamentals of rent and occupancy growth were stronger.

Another U.S. barrier respondents cited was the Foreign Investment in Real Property Tax Act (FIRPTA). The 1980 act, originally designed to protect farm property from foreign ownership, subjects foreign buyers to both their domestic and U.S. taxes when they sell their investment, unless their home country has a taxation treaty with the United States.

FIRPTA opponents have argued that the act unfairly penalizes foreign investors of real estate. Such double taxation does not apply if they buy U.S. stocks or bonds.

As for the top cities for foreign investment in 2012, New York remained No. 1. London moved up to No. 2 from No. 3, swapping ranks with Washington. Sao Paulo was fourth, and San Francisco moved up to No. 5 from No. 10 last year.

Europe's sovereign debt problems and looming recession pushed most of the countries there - except for a few such as Switzerland and Poland - off the map for real estate investors. Germany lost about half its support among respondents in terms of stability and price appreciation, according to the survey.

Emerging markets also seem to be getting more popular among potential investors. Respondents identified 25 countries they would consider for investment, up from 18 last year. Brazil topped the list, with China in second place, as each did last year. Turkey moved up to No. 3 from No. 7 last year. India and Vietnam each dropped down one spot, to No. 3 and No. 4 respectively. Appearing for the first time were Colombia, at No. 10, Hungary at No. 12, and Qatar at No. 17.

As for U.S. commercial real estate, respondents said that this year they would most likely invest in apartment buildings, the fourth consecutive year multifamily topped the list. Of all the types of U.S. commercial real estate, the multifamily sector has not only recovered from the post-2007 real estate slump but rents and occupancy are even stronger than before.

Warehouse and distribution centers ranked second, up from No. 5 last year. Office properties were third, up a notch from No. 4. Retail properties - shopping centers and malls - slipped to No. 4 from No. 2. Hotels ranked No. 5, down from No. 3 last year.

The survey was conducted in the fourth quarter by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business.

Source: http://www.abs-cbnnews.com/global-filipino/world/01/01/12/us-top-2012-property-investment-pick

Distressed commercial real estate in retreat?

Distressed commercial real estate in the United States — including properties in default, foreclosure or taken back by lenders — totaled $171.6 billion in October 2011. That is a dip from the recent past.

The level of distress began to plateau when it reached $191.5 billion in March 2010, and it has stayed in the $175 billion to $190 billion range until now, according to data from Real Capital Analytics.

We think those levels should continue to come down in a meaningful way in 2012 and beyond, assuming interest rates cooperate and economic expansion accelerates. The real test of the distress plateau is likely to be seen in 2012 and 2013, when about $300 billion in loans comes due each year.

Nationally, the office sector represents the largest share of distressed commercial real estate at $41.9 billion. That is $5.6 billion less, or 11.8 percent, since the peak in October 2010. Apartments have the second-highest level of distress, with $35.6 billion in troubled loans — a $1.8 billion (4.8 percent) drop since October 2010.

Land and other property types have the third-highest level of distress with $29.8 billion in distressed assets, a decline of $3.4 billion, followed by retail with distressed assets at $28.6 billion, an increase of $2.1 billion or (7.9 percent).

Hotels dropped from second place in October 2010 to fifth currently, falling $14.1 billion (36.8 percent) to $24.2 billion. Industrial property has by far the lowest volume of distressed assets but its total has been rising since October 2010. At that time there was $8.6 billion in distressed industrial assets; currently there is $11.6 billion of distress, an increase of 34.9 percent.

Stressed real estate: where Washington ranks

While the volume of distressed commercial real estate properties is significant, also consider the looming volume of stressed property. These properties have characteristics of concern in the short term — maturing loans, bankrupt tenants, underperformance, financially troubled owners, or other significant obstacles that could potentially lead to distress in the future.

Manhattan has the highest total volume of distress with $11.8 billion, followed by L.A.-Orange County with $10.0 billion. South Florida has $971 in distressed property value per capita, the largest amount per capita after Manhattan, which has $2,388 per capita. Houston has the lowest amount among the markets we track at $111 per capita.

Among the 10 markets we track, the Washington area has the fourth-lowest level overall of distressed assets (excluding stressed) at $1.4 billion, while Baltimore has the lowest, at $330 million. But stressed assets are much higher in Washington at $3.1 billion, fourth-highest among the 10 surveyed cities. Distressed real estate per capita is $253 per person in the Washington area, fourth-lowest among the 10 markets, while Baltimore has $121 per capita which is the second-lowest of the 10 cities surveyed.

Mike Donnelly is a senior associate at Delta Associates. Staff at Delta Associates contributed to this article. For more information, please visit www.deltaassociates.com.

Source: http://www.washingtonpost.com/business/capitalbusiness/distressed-commercial-real-estate-in-retreat/2011/12/19/gIQAO3YUHP_story.html