Friday, July 11, 2014

The 10 Priciest Places to Live in the World

AILY REAL ESTATE NEWS | FRIDAY, JULY 11, 2014
In Hong Kong, you might pay $6.64 in U.S. dollars for a cup of coffee, or $6,960 to rent an unfurnished, two-bedroom apartment. Hong Kong landed No. 3 on Mercer’s latest annual Cost of Living Survey. The survey is geared to give those who are working abroad insight into the cost of living and is often used by employers to develop compensation packages for people with international assignments.
To arrive at its list, Mercer researchers analyzed cities in five continents, measuring the comparative cost of more than 200 items in each location, such as housing, food, clothing, transportation, household goods, and entertainment. They used New York as a baseline city to compare against the other cities.
“Despite moderate price increases in most of the European cities, European currencies for the most part slightly strengthened against the U.S. dollar, which pushed most Western European cities up in the ranking,” Nathalie Constantin-Métral, who compiled the survey, told Forbes. A rise in the cost of rentals has also pushed some European cities up in the rankings, particularly Copenhagen, Amsterdam, and Frankfurt, according to the study.
The following are the most expensive cities in the world in 2014, according to Mercer’s survey:
Exchange rates are benefiting foreign buyers:
1.     Luanda, Angola
2.     N’Djamena, Chad
3.     Hong Kong, Hong Kong
4.     Singapore, Singapore
5.     Zurich, Switzerland
6.     Geneva, Switzerland
7.     Tokyo, Japan
8.     Bern, Switzerland
9.     Moscow, Russia
10.   Shanghai, China
Source: “The Most Expensive Cities in the World,” Forbes.com (July 10, 2014)






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Top Amenities Buyers Will Make Sacrifices For

DAILY REAL ESTATE NEWS | THURSDAY, JULY 10, 2014
Home buyers are showing some willingness to pay more for certain amenities in a home, according to the latest PulteGroup Home Index Survey of more than 1,000 adults ages 25 to 65.
Take the Pulse of Buyers' Desires
What's surprising is that buyers say they'd give up some pretty alluring draws about a property for certain amenities: Forty-four percent surveyed say they're willing to give up a location near public transportation in exchange for certain amenities, and 35 percent say they'd give up better schools and proximity to entertainment and shopping.
So what are these amenities that home buyers want so badly? Fifty-one percent surveyed say they want their next home to be larger than their current residence, and 64 percent say they prefer a move-in ready home.
Among the most important features home buyers identified:
  • "His and her closets" in the master bedroom (31%) and spa-like master bathrooms (23%)
  • A large eat-in kitchen area (23%) and a kitchen island (22%)
  • At least one bathtub in a home (54%)
"In addition to the more common home options, we're starting to see regional trends emerging among home buyer preferences," says Ryan Marshall , PulteGroup Inc.'s executive vice president of homebuilding operations, marketing and sales. "From outdoor kitchens in Florida, to spice kitchens in California, shoppers are increasingly discerning when it comes to home features that could be the deciding factor in their next move."
Folding, accordion-style glass doors are popular in the Southwest, while multi-generation floor plans and screened-in porches are popular in the Southeast, according to the survey. In the Northeast, balconies off the kitchen and rooftop terraces are sought-after, while "Jack 'n' Jill" bedrooms are in high demand in the Midwest.
The most important areas to home buyers when choosing a new home: kitchen (29%), bedroom (22%), and living room (18%).
"Consumers today aren't just looking for the biggest house on the block. They're looking for more efficient use of space and a greater area allocated to 'workhorse' spaces, like the kitchen," says Marshall.  "Home buyers want unique features and amenities and will do what it takes to find the home they truly want, even if they have to pay more for a move-in ready home."


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Tiny Homes Spark Big Movement

DAILY REAL ESTATE NEWS | THURSDAY, JULY 10, 2014
A 164-square-foot home may sound like a squeeze to most Americans, but to some home buyers, it may very well be the perfect fit.
“Dramatic downsizing is gaining interest among Americans, gauging by increased sales of plans and ready-made homes and growing audiences for websites related to the [tiny home] niche,” Bloomberg reports. National interest in the search term “tiny house” has been soaring since May, according to Google trends. A+E Networks Corp. started airing “Tiny House Nation” this week, a series that highlights the growing small-home movement.
Tiny homes, defined as 500 square feet or less, allow people to cut their housing expenses, live simply, and go mortgage-free.
Why Bigger Isn't Always Better
Such homes weren’t considered so tiny by historical standards. In 1950, single-family homes averaged 983 square feet, according to the National Association of Home Builders.
But the tiny home movement has grown at a time when new homes have bloomed to the biggest on record. The median size of new single-family houses was at a record 2,384 square feet in 2013. Only 1 percent of home buyers are purchasing a home that is 1,000 square feet or less, according to housing data from the National Association of REALTORS®.
“Since I got into the small-house game 15 years ago, every year seems like it’s the biggest ever,” says Cotati,Calif.-based architect Jay Shafer, who founded Tumbleweed Tiny House Company in 1999 and later Four Lights, both micro-building and design companies. “It shows people how little some need to be happy, and how simply they can live if they choose.” Shafer, his wife, and two young children share a 500-square-foot home.
“Tiny houses are no longer strange,” Debby Richman, the company’s chief marketing officer, told Bloomberg. “They are now ‘cute.’ The cultural mores have changed.”
Who’s occupying these “tiny” homes? The largest share — 23 percent — of “tiny home” inhabitants are between ages 31 and 40, according to The Tiny Life blog, which conducted a nationwide survey of more than 2,600 people. Sixty-one percent of respondents said they had zero credit-card debt.
“Wherever you find expensive housing on the East Coast or the West Coast, you find a higher concentration of tiny houses because people understand the need,” Shafer says.
Source: “Tiny Houses Big with U.S. Owners Seeking Economic Freedom,” Bloomberg (July 9, 2014) and “Tiny Houses Offer Big Potential in Some Areas,” The Associated Press (July 8, 2014)




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Thursday, July 10, 2014

Survey: Lenders Fear Another Housing Bubble Is Brewing

DAILY REAL ESTATE NEWS | WEDNESDAY, JULY 09, 2014
Mortgage bankers are fearful that another real estate bubble is on the horizon, according to a quarterly survey of 203 bank risk managers from the United States and Canada conducted by FICO. Fifty-six percent of respondents said that an “unsustainable real estate bubble is inflating.”
The Bubble Debate Continues
"The home loan environment has bifurcated," says Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. "Six million home owners in the U.S. are still underwater on their mortgages, with the average negative equity a whopping 33 percent. Yet with home prices soaring in many cities, total home owner equity in the U.S. is at its highest level since late 2007. That doesn't feel like a healthy, sustainable growth situation. No wonder many lenders in both Canada and the U.S. are concerned about the risk in residential mortgages."
But real estate experts mostly have downplayed housing bubble fears in recent months. In fact, a new report finds that home prices are still undervalued by 3 percent nationally. Trulia’s most recent Bubble Watch report found that at the current pace, home prices are expected to fall in line with long-term fundamentals – neither over- or undervalued – by the last quarter of 2014 or the first quarter of 2015.
“Much of the recent house-price appreciation is a result of market correction for the significant undervaluation caused by the price declines in the late aughts,” Mark Fleming, chief economist at housing data provider CoreLogic noted in recent months. “There is no need to fear a bubble for at least a few years to come, if at all.”
FICO’s survey also asked bankers about the most common concerns they have in the underwriting process on consumer loans. The most common concerns cited by bankers: “high debt-to-income ratio” in approving loans (59 percent); “multiple recent applications for credit” (13 percent); and “low FICO score” (10 percent).
"As consumer confidence picks up and people increase their borrowing, lenders are understandably concerned about growing indebtedness," says Mike Gordon, FICO's executive vice president of sales, services and marketing. "For the last two quarters, around 65 percent of our respondents said they think credit card balances are headed higher. Those are the two highest figures we've ever seen in this survey. When I talk with bankers, they tell me they're happy to see growing consumer optimism, but they're wary of a return to reckless borrowing."
Source: FICO and “Study: Home Prices Undervalued by 3%,” REALTOR® Magazine Daily News (June 30, 2014)



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Survey: Buyers, Sellers 'Not on the Same Page'

DAILY REAL ESTATE NEWS | THURSDAY, JULY 10, 2014
Home buyers and sellers are “not on the same page” when it comes to the state of the housing market, according to a new Redfin survey of 707 of its agents and partner agents across 35 U.S. markets. Buyers and sellers are taking a more aggressive stance in the market, with some sellers overpricing their homes and more buyers refusing to get in bidding wars, the survey found.
In This Guide:
“In May, 40 percent of sellers surveyed by Redfin said that they planned to list their homes above market value, even though home sales had dropped by 9 percent since the year before,” says Nela Richardson, Redfin’s chief economist. “Typically, it takes sellers six to nine months to adjust to a price change, but this latest shift is longer. Prices have moved down and then up so much over the past five years that it’s even more difficult for sellers to have a realistic baseline for what their homes are worth in the current market.”
Fifty-eight percent of Redfin agents say that sellers are holding unrealistic expectations about the value of their homes, up from 49 percent in the previous quarter. Meanwhile, buyers are showing less willingness to chase after a home, as they face affordability and financing hurdles, the survey found.
“Buyers who have been searching for a long time may still try to win deals with aggressive offers,” Richardson says. “However, new buyers in the market are much less willing to chase an escalating sale price to compete with multiple bids. The demand side of real estate is moving from ‘please take my offer’ to ‘take it or leave it as you please.’ Home buyers’ willingness to walk away from a deal that’s a bad fit is good for them and is ultimately healthier for the housing market.”
So is it a seller’s market or a buyer’s market? It depends on who you ask. Twenty-four percent of Redfin agents surveyed say that “sellers have all the power,” a drop from 35 percent three months ago.
Rising inventories have been beneficial for buyers who are less willing to participate in a bidding war, but they are facing other challenges, such as access to credit and affordability, the survey finds. The top challenges Redfin agents identified as growing problems for buyers are: lack of affordability; qualifying for a mortgage; saving enough for a down payment; and worries about the economy.
Source: Redfin



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Wednesday, July 9, 2014

Mortgage Applications Post Solid Jump

DAILY REAL ESTATE NEWS | WEDNESDAY, JULY 09, 2014
Mortgage applications reversed course last week after several weeks of softening demand, as both applications for home purchases and refinances showed an increase in activity, the Mortgage Bankers Association reported Wednesday. The MBA’s overall index of mortgage application activity showed demand rose by 1.9 percent for the week ending July 4.
Recent MBA Mortgage Reports
Separated out, mortgage applications for home purchases, viewed as a leading gauge of future home sales, jumped 3.7 percent, while refinancing applications rose 0.4 percent last week.
The 30-year fixed-rate mortgage rose last week by 4 basis points, averaging 4.32 percent for the week from 4.28 percent the week prior, the MBA reports. The MBA’s survey reflects more than 75 percent of the U.S. residential mortgage application market.
Source: “Mortgage Applications Rose in Latest Week: MBA,” Reuters (July 9, 2014)



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Builders Say Labor Shortages Grow More Widespread

DAILY REAL ESTATE NEWS | WEDNESDAY, JULY 09, 2014
The real estate industry has called for homebuilders to ramp up construction to meet inventory shortages. But homebuilders increasingly are facing significant labor shortages that is making it more difficult to complete projects, a new study shows.
A June 2014 survey from the National Association of Home Builders shows that the industry is facing shortages of labor and subcontractors that have become “substantially more widespread since 2013.” Shortages are particularly notable for basic skills like carpentry and framing, the NAHB notes.
The Homebuilding Shortage Continues
Forty-six percent of builders reported a shortage of labor in 2014, the highest shortage reported since 2000 and slightly higher than at the peak of the housing boom in 2004 and 2005, when the United States was averaging about 2 million housing starts a year, the NAHB notes in its report.
Today, annual housing starts remain mostly under 1 million. New-home construction has only about partially recovered from its 2008 downturn and labor shortages are persisting despite relative slowdown in activity compared to previous years, the NAHB notes.
Builders say a shortage of subcontractors is raising their costs. On average, builders said their direct labor costs on the same house rose by 2.9 percent, while subcontractor costs grew by 3.8 percent.
Three out of five builders say the labor shortages have caused them to pay higher wages or subcontractor bids (65%); raise home prices (62%); and created difficulty in completing projects on time (60%). Thirty-six percent of builders said the labor shortages were making some projects unprofitable, and 18 percent of builders reported having to even turn down some projects.
Source: “Builders See Shortages of Labor And – Especially – Subcontractors,” National Association of Home Builders Eye on Housing Blog (July 8, 2014)




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