Markets With the Largest Increase in Rent in 2014

Another Top-10 List -- Markets With the Largest Increase in Rent in 2014

 

As with all pricing, rent is a function of the interaction of supply and demand.  In many markets, construction has not kept pace with job growth, and rents continue to climb.  Compounding that is an increase in renters in general as mortgage lending standards restrict many from becoming homeowners.

 

This week I gave several presentations in Minneapolis-St Paul, a market where job growth is far outpacing construction of new rental units.  In the latest 12-months, while the Twin Cities has had 12,629 residential building permits issued, job growth was 42,500.  That works out to 3.36 net new jobs per new dwelling.  In a normal market,  each new dwelling requires from 1.25 to 1.5 net new jobs. From an economic perspective, construction could double in the Twin Cities and still not result in an over-built market, assuming that job growth continues at that pace. 

 

So where are rents expected to increase the most?  Reis, a nationwide source of market information, analytics and data, compiled a list of the top-10 growth markets.  They include:

 

 

 

To read the entire article clickhttp://www.multifamilyexecutive.com/rent-trends/top-10-rent-growth-markets-of-2014_o.aspx?dfpzone=home&utm_source=newsletter&utm_content=jump&utm_medium=email&utm_campaign=MFEBU_121213&day=2013-12-12

 

In the past, markets have been overbuilt and rents have retracted.  That may well be the situation in Washington, D.C. today.

 

In general, renters will see rising rents in 2014.

Home prices remain at least 20% below peak

Years after the bubble burst, home prices in 12 states remain at least 20% below local peak levels, pointing to a lopsided recovery for the U.S. housing market, according to data released Tuesday.

Nevada’s home prices in October, including distressed sales, were 41% below a 2006 peak, the largest drop from bubble levels, despite explosive growth of 26% over the past year, according to CoreLogic, an Irvine, Calif.-based provider of financial and consumer information. Prices in Florida and Arizona in October were more than 30% below local peak levels.

But the picture on the national level is much milder. In October, national home prices were down 17% from a bubble peak.

Here’s what’s happening: While homes prices in some states are still recovering from sharp bubble drops, others recently hit new peaks. According to CoreLogic, home prices in 10 states have hit fresh peaks this year.

So what does this mean for a housing bubble?

“We went through the biggest housing bubble in U.S. history in the 2000s, and there is a knee-jerk reaction among some people who think, well, maybe we are doing that again,” Yale economist Robert Shiller, a home-price expert and Nobel Prize winner, said in a recent Barron’s interview. “But you have to consider that these are very rare phenomena, and it was such a decisive break at the end of the last housing bubble that we might not be psychologically ready for another bubble.”

The 2014 housing market is just around the corner

The housing market is just around the corner from the new year, and besides an onslaught of new regulations, the year 2014 is also estimated to bring a new high: 5% mortgage rates.

By the end of 2014, Frank Nothaft, chief economist with Freddie Mac, predicts that mortgage rates will approach and perhaps touch 5%, mostly due to theFederal Reserve’s quantitative easing.  

At some point the Fed will scale back their bond purchases, Nothaft said, but when they will start and how gradual it will be, is very unclear.

“I do think in the first half of the year they will announce something on tapering, and they will start to pull back. But when you have a big investor like the Fed scale back their purchases, it will lead back to an uptick in yields, which will translate into higher mortgage rates,” Nothaft said.

Personally, Nothaft said he believes that if Janet Yellen is nominated as chairman, one of her first acts will be to get a consensus statement from theFederal Open Market Committee that is as transparent as possible as to what the Fed will do about tapering.

And while mortgage rates will take a hit from the tapering in the beginning, the pull-back will be gradual in order to avoid further volatility, he estimated.

But the true consequence of tapering and 5% rates falls into the hands of the borrowers.  

“As rates climb, I see the issue lying in move-up houses,” said Chris Randall, Real Estate Mortgage Network Capital Markets Vice President. “It will be much harder for the family to make the next step as interest rates rise. Supply will be tight and there will be a lot of people trying to make the next step.”

There will be a lot of consolidation across the industry and fewer players and refinance shops in the market, Randall explained.  

Overall, Nothaft emphasized that affordability will remain high in most markets, but not in all.

“Even if rates go up to 5%, given the level of house prices and family income, most markets would remain affordable, and the monthly PITI would be below 28%. But high-cost markets are a challenge,” Nothaft said.

Furthermore, if rates do continue to increase, it will reinforce Freddie Mac’s estimate that 2014 will usher in a purchase-driven market, which will be the first time since 2000.

However, Nothaft cautioned that a purchase-driven market will not make up for the lack of refinance volume and predicts $1.4 trillion in primary mortgage originations for 2014.

As a result, Randall said lenders need to drive their purchase business and make sure they are doing things efficiently. Most lenders who have been around awhile and are more prepared will be OK, but those who are not will have difficulties. 

Confidence is the Result of Practice in Real Estate

By Justin Thorn


If there are ten hungry Tigers going after the same Antelope, only one will get the prize, and the other nine will starve. Real Estate Agents are a lot like those Tigers. Not everyone can have every listing, so the trick becomes finding ways to boost your real estate business, and gain the edge over your competition. This might be easier said than done   Unlike Tigers, the vast majority of us don’t have sharp teeth, natural camouflage or the instinctual drive to stalk and kill… (which is undoubtedly a good thing). However, we do have an extensive array of tools that we can use to gain that upper hand, and in turn, increase business. One of those tools is Confidence. Being sure of who you are, what you represent, and what you’re talking about is going to give potential clients an increased desire to take in what you have to say, and ultimately list their home with you.



I was inducted into the world of door-to-door salesmanship, for a small subsidiary of Comcast Xfinity by a close friend. The first couple weeks, the only money I made, was when my friend would shell out commissions to keep me interested. I was a TERRIBLE salesman. I had doors slammed in my face, I didn’t know what I was saying half the time, and if they said they would think about it, I would say ‘okay’ and leave. It was only when we started having mandatory training meetings in our office, and making us act out what we were going to do, did I start to make sales on my own. I gained the necessary confidence needed to be a salesman, because I already knew what I was going to do. I didn’t have to worry about what I was going to say, because it came naturally. I started to sell more and more, and I had less and less rejections. People wanted to listen to me because I was confident.



Confidence is a product of Role-Play. Role-play gives you a chance to practice everything that you would do or say to a potential client, without the harsh reality of knowing you’re bringin’ home the bacon. In my opinion, role-play is one of the greatest ways to become proficient at something. Role-play allows you two things: Firstly, you have the opportunity to practice what you would do or say to a client, until you have honed your skills and are confident in what you’re all about. Secondly, on the flip side, you have a wonderful opportunity to be the client. This gives you an altered perspective on the process of buying or selling a home, and it may cause you to change the process in which you present yourself when prospecting real estate leads.



Role-play works best if you practice with another real estate agent who you feel comfortable to mess up and experiment with different prospecting techniques. If you practice nervous, you will present nervously. This could be a spouse, a friend, but ideally another real estate agent (two birds with one stone). Practice scripts, your demeanor, how you treat your clients, and your overall ‘method’ of obtaining a listing. Leave no stone unturned, you never know what aspect of your presentation will catch a ‘prospective’ client’s eye and make you more favorable as their ‘prospective’ Agent.





Justin Thorn is a music man. He plays more than 8 instruments including: the piano, banjo, accordion, guitar, cello, violin, and viola. He is passionate about sharing his love of music with other and teaches orchestra for 11 year olds. The REDX family loves Justin for his contagious positive attitude. Our client’s love Justin because he is an awesome instructor and has a knack for teaching the REDX like no one else.

Real Estate a Safe Option to Buying Gold

New Short Sale Guidelines for Fannie Mae & Freddie Mac

Starting November 1, Fannie Mae and Freddie Mac are playing by new rules: a new set of guidelines to stimulate short sales by streamlining the process, opening doors to let homeowners out of underwater mortgages.




Short sales have become a popular tool of foreclosure prevention, with Fannie Mae completing over 70,000 short sales last year, and nearly 40,000 in the first half of 2012. For a homeowner experiencing negative equity—the current value of the home is less than the mortgage balance due—a short sale is often the best choice to retain as much credit as possible.

The basics of the new Fannie and Freddie short sale guidelines are as follows:



■Homeowners with certain hardships can be eligible without being in default. Those hardships include death of a borrower or co-borrower, divorce or legal separation, illness or disability or a distant employment transfer.

■Reduction in documentation required.

■Limit of $6,000 to subordinate lien-holders (this is supposed to prevent subordinate lien-holders from scuttling the deal while they try to negotiate a higher payoff).

■Eligibility for military families who get Permanent Change of Station orders.

Note, these new short sale guidelines apply to Fannie Mae and Freddie Mac loans. To find out if your loan is owned by Fannie Mae or Freddie Mac, visit either www.fanniemae.com/loanlookup or www.freddiemac.com/corporate

Short sales soon to be more costly for sellers

The Mortgage Debt Relief Act of 2007 expires December 31. This may not sound important, but what the act does is relieve those people selling their homes for less than is owed to the bank of any tax consequences (in most cases).




There are currently 11 million homeowners more than 90 days past due on their mortgage and some of them could get a a "relatively" new start if they could sell their home instead of going through foreclosure. However, the current law will be expiring soon and the short sale process is notoriously slow.



I am not advocating short sales, I would much rather see home owners ride out the down time and that can often be done with a refinance using one of the Freddie Mac, Fannie Mae, FHA or VA programs for underwater customers. However, there are home owners that need to move and a short sale is the way to get that done.



This area is starting to see a turn around in the real estate market and property values are following, although slowly. A Realtor(r) specializing in short sales is the best way to go if needing to get the process accomplished. A mortgage lender that is fast and efficient is invaluable when needing to close on a short sale after approval has been received from the owning bank. If looking to refinance under one of the above programs, contact a reputable loan officer for assistance. I would suggest looking in the region, rather than a national chain (which are often just lead generators) due to speed, accuracy and cost.



Right now is the time to get the ball rolling. Rates have been and continue to be at historic lows for those refinancing and the sooner the short sale is behind, the sooner the seller can start re-establishing their credit.


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