Inefficiencies in the Current Real Estate System In the real estate industry as it currently exists, investors are often required to invest in entire properties. There are only so many investors with enough capital to invest in real estate, due to the fact that even the most affordable properties can be very costly, compared with other investment options. Real Estate Investment Trusts Many people point to Real Estate Investment Trusts (REITs) as solutions where individuals have greater ability to invest in real estate. Blockchain technology grants the ability to unlock the potential held within the current real estate market, introducing a whole new world of liquidity and opportunity for investors. Benefits of a Blockchain-Based System In simple terms, blockchain application could allow real estate ownership to be delegated, traded or decentralized in other ways via tokens that represent fractional ownership of the underlying property or asset. SwissRealCoin is another blockchain solution looking to eventually provide global application for the tokenized real estate market. HiP is yet another company looking to change the world through blockchain-based real estate. The token is merely a fee on all trades." Bluenote is one more company in the blockchain property space, but with slightly different goals. Providing blockchain based proof that energy efficiency is the source of that profitability, can unlock the potential of $6.5 trillion in global real estate value, and solve climate change too."
New York City real estate has recovered well from the recession, but it still may not be the best investment for your money, experts say. Since the housing market collapse in November 2011, nearly 500,000 homes were bought and sold in the city, earning a median return of 33%, according to a new report from the real estate listings site StreetEasy. But the Big Apple is falling behind the national market, as home values across the country rose 45.1% since mid-2012, noted a recent study from StreetEasy’s sister company, Trulia. Additionally, StreetEasy found that those who bought New York City property in the two years before the crisis and sold during the recovery earned a median annual return of just 1.7%, or a $60,000 cumulative gain on a median-priced home. Comparatively, the S&P 500 more than doubled since the city’s housing market bottomed out, increasing 125% for an annual return of 13%, making stocks a safer investment for those seeking healthy returns in a 10-year period, Long added. The trouble with buying and selling homes are the added expenses, including closing costs and property maintenance, he said, whereas stock portfolios require little oversight. “It’s obviously a lot more liquid - if the stock market’s increasing rapidly, you can sell that day.” However, “the real estate market is not just simply an investment, for a lot of people it’s their home,” he said. It’s a pied-à-terre.” If you do want to treat housing as an investment opportunity, the best place to put your money is in a real estate investment trust, or REIT, advised Michael Tanney, founder and managing partner of Wanderlust Wealth, a fiduciary financial advisement firm in Manhattan. Another bonus is that a financial adviser can connect a REIT investment to a tax-deferred retirement account, so your returns are pure profit. REITs can also be part of a diversified investment portfolio that includes allocations to real estate, fixed income, emerging markets and other assets.
Buy shares in real estate investment trusts (REITs). Private mortgage funds lend money to real estate flippers who buy, improve and resell properties. Independent home lenders offer investment property home loans with as little as 15% down, so you could buy a $200,000 property with $30,000 cash down. Let’s say home prices rise 5% next year. Real estate also tends to move with inflation. Timing your rental property mortgages to pay off by the time you retire creates an inflation-hedged income stream. After the real estate crisis, median home sale prices hit a low point of $148,000 in 2012. If you buy with a 15- to 30-year mortgage and don’t sell your rental property, home price changes won’t influence you. Real Estate Investment Trusts (REITs) Pros And Cons Real estate investment trusts (REITS) take money from shareholders to invest in real estate, such as residential or commercial properties, or mortgage-backed securities. To cash out home equity, you have to either sell a home you’ve built equity in, refinance or take out a reverse mortgage.
Real estate is REAL. Rather than an alternative retirement investment, real estate can be a key vehicle for growing one’s IRA account. By researching real estate investments and sponsors, you can gain the confidence to make your own choices. Many of the traditional brokerages that hold IRAs and 401(k) accounts will not move the funds to non-traditional investments; therefore, you will need to direct the funds from your current account to an IRA custodian who works with self-directed accounts. Custodians such as Provident and IRA Services Trust Company have successfully worked with individuals to direct their IRA investments. What Are the Rules for Investing Directly in Real Estate? When the property sells, the proceeds will also go directly back to the custodian or to the IRA checkbook account and can be reinvested once another opportunity presents itself. What’s an Argument Against Using an IRA to Invest in Real Estate? Research the investment sponsor who will be managing the real estate on your behalf. If you go the self-directed route, you will still work with a custodian who places your funds for you.
As millennials age, it’s not a question of whether they will settle down. A couple strolls through downtown Rogers, Ark. Courtesy of the Rogers-Lowell Area Chamber of Commerce It’s not lifestyle choice that’s driving buyers from big cities, says Susan Wachter, a professor of real estate at the Wharton School of the University of Pennsylvania. “You can’t necessarily become a homeowner and live in Manhattan,” she says. “Millennials, in general, are moving where they still have the ability to buy.” Whether you’re a millennial in the market for the first time or just looking for a thriving spot to resettle your family, MONEY wants to help. And we added a new metric that directly compares home prices with income—emphasizing the kind of balance that makes a community a good fit for working families. As it turns out, the best places to find a job, buy a house, and settle down are large suburbs or small cities where the cost of living is proportional to income. Take, for example, this year’s top spot: Frisco, Texas. While there’s a lot to love about Frisco, part of its appeal is the city’s relatively low cost of living compared with its higher incomes and booming job growth. If you’re considering a move, we hope this ranking, filled with towns and cities that offer jobs, affordable living, and community, give you the tools you need to find your perfect place.
“It was going for the American Dream,” Payne, now 61, said recently as he sat in his living room. It is an improvement from 2012, when average prices hit bottom and properties with severe negative equity topped out at 29 per cent, or 12.8 million homes. Developments in outlying communities typically suffer in downturns. But a comeback has been harder this time around, analysts say, because the home-price run-ups were so extreme, and the economies of many of these Midwestern and Eastern metro areas have lagged those of more vibrant areas of the country. He said land restrictions and sales to international buyers have helped buoy demand in those areas. These and other casualties of the real estate meltdown are easy to overlook as homes in much of the country are again fetching record prices. The Paynes’ gated community of Penn Estates, in East Stroudsburg, Pennsylvania, is among scores that sprang up in Monroe County during the housing boom. Nearly 40 per cent of the 9,800 homes with mortgages in this county about 80 miles northwest of Chicago are underwater, according to the ATTOM data. Some houses that went for US$225,000 during the boom are now worth about US$85,000, property records show. But those fees may be a big deterrent for many would-be buyers at Candlewick Lake, said association board member Randy Budreau.
But rentals aren't a slam-dunk either. Or you could find yourself over-paying in a boom market. First, and most important, the good increase in home prices in the last year means that demand for all housing is strong in these markets, both single-family and rentals. We calculate an "income" price for each market and compare this with the current average home price to see if prices are high or low compared to local income. It's not a precise measure - real estate isn't science - a 10 percent swing one way or the other doesn't mean much, but it shows that from our list only Orlando and Sacramento are close to over-priced territory, near 20 percent, while most of the markets are well below it. The importance of being within the normal range of the "income" price is that you don't have to worry about buying into a boom that can eventually bust. The chance that the average home price in a normal market will ever fall below today's price is almost zero. I've thrown in some stats about recent population growth and the current average home price because some markets have grown faster than others, and some are more expensive to invest in. In these markets you have a better chance investing in apartments, or by splitting single-family houses into several rental units. It's a good time to invest in rentals.
"But you'll only want to have 5% of your portfolio in real estate," he says. Investing in real estate equity through ETFs, mutual funds or real estate investment funds provides exposure to the upside of real estate appreciation. Another option is investing in real estate risk, which comes with more fixed returns. Real estate equity Real estate investment trusts, or REITs, are a common way to diversify into real estate equity. A real estate ETF, like Vanguard's VNQ, offers investors publicly traded equity REITS and other real estate investments. The T. Rowe Price Real Estate Fund (TRREX), with $5.3 billion in assets, is a giant among actively managed real estate mutual funds. Newer online platforms, like Fundrise, Rich Uncles or Realty Mogul allow investors to get into diversified real estate portfolios for a lot less than the large funds. Realty Mogul offers access to private investment deals or you can invest in its REITs, which have a minimum investment of $1,000. "I enjoy investing in the online platforms because I can see the properties that I am investing in," says Rose. Other platforms for investing in real estate debt, like AlphaFlow, offer a portfolio of real estate loans rather than investments in individual loans.
No credit? Charleston, WV Median home list price: $147,300 Share of borrowers with a 649 FICO score or lower: 39.1% Although the state capital of West Virginia is a college town, the city's overall population is aging. This has opened the door for first-time buyers seeking move-in ready, three-bedroom homes near downtown, says local real estate agent Margo Teeter of Old Colony Realtors. "Someone with poor credit ... has to go where the [home] prices are lower, " says Monique Youngblood, mortgage broker with US Mortgage Lenders. Buyers can find new homes in South Lakeland for around $180,000, says local Realtor® John Martinez of Coldwell Banker Residential Real Estate. Those programs require a minimum credit score of 620 and can include 100% financing for those who qualify. Median home list price: $936,050 Share of borrowers with a 649 FICO score or lower: 4.3% The market in Santa Cruz may not be quite as crazy as it is just over the hill in San Jose (where homes are a median list price of $998,000). Ann Arbor, MI Median home list price: $350,000 Share of borrowers with a 649 FICO score or lower: 6% Ann Arbor, home of the University of Michigan, is the quintessential college town, dotted with circa 1900 brick and wood-frame homes. Durham, NC Median home list price: $356,300 Share of borrowers with a 649 FICO score or lower: 7.2% Every Tuesday, when James, the Urban Durham Realty owner, asks her 25 agents to raise a hand if they’ve put in or received offers on homes for their clients in the past week, almost all hands are in the air. Most buyers need to be able to meet the strict requirements and high credit scores for a jumbo loan.
Home prices in the United States have never been higher. The culprits are a crazy tight job market, rising wages and the fact that the homeownership rate is rising again after bottoming in 2016. Here are three growing headwinds the housing market faces: Affordability Thanks to the resolve of Federal Reserve chairman Jerome Powell, who is resisting President Trump's calls for a slowdown of the rate hike pace, monetary policy continues to tighten. That's pushing up long-term interest rates, with the 30-year Treasury yield pushing back over the 3 percent threshold recently, up from less than 2.7 percent in December and a low of 2.1 percent in the summer of 2016. As a result of rising mortgage rates and higher home prices, Gluskin Sheff economists estimate that housing affordability has crashed to lows not seen since 2008, well off the highs seen in 2011 and 2012 when a combination of lower prices and lower rates helped put an end to the housing collapse. Sales activity A slowdown in new home construction during the housing crisis resulted in a backlog of demand for brand-new homes. But now sales activity is rolling over, threatening to break the recent trend of rising activity. According to the Urban Institute, the homeownership rate of millennials between the ages of 25 and 34 is about 8 percent below Gen X and baby boomers at the same age. If millennial homeownership matched previous generations, there would be 3.4 million more homeowners today, they estimate. Indeed, a study by Fannie Mae's Economic and Strategic Research group warns of a "mass exodus" on the horizon as the "homeownership demand from younger generations is insufficient to fill the void left by multitudes of departing older owners."