Coming Housing Boom Could Mean It’s Time to Add Raw Materials

In its November report, mortgage security firm Freddie Mac called 2017 the “best year in a decade” for the housing market by a variety of measures. These include low inflation, strong job growth and historically-low mortgage rates. This assessment is very encouraging, not just for homebuyers and builders and the U.S. economy in general, but also for commodities, resources and raw materials as we head into 2018. Although past performance is no guarantee of future results, it’s still instructive to look back at how materials performed the last time the U.S. was ramping up housing starts and mortgages. The last housing boom, which peaked in 2006, was accompanied by elevated commodity prices. We could see a return to these valuations over the next couple of years on higher demand, a stronger macroeconomic backdrop and cyclical fundamentals, as shown in the following chart courtesy of DoubleLine Capital: Speaking on CNBC’s “Halftime Report” last week, DoubleLine founder Jeffrey Gundlach said he thought "investors should add commodities to their portfolios” for 2018, pointing out that they are just as cheap relative to stocks as they were at historical turning points. “We’re at that level where in the past you would have wanted commodities” in your portfolio, Gundlach said. “The repetition of this is almost eerie. And so if you look at that chart, the value in commodities is, historically, exactly where you want it to be a buy.” A Wealth of Positive Housing Data There’s more to support the commodities narrative than cyclicality. December’s National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI)soared to 74, eight points up from the November reading and its highest report since July 1999.

Why you want Amazon to be your new neighbor

And the chosen city is likely to get an economic jolt -- particularly to its housing market. The selected city will get an immediate boost to jobs and wages, said Javier Vivas, director of economic research for Realtor.com. It will also push up home prices and lead to new home construction in neighborhoods within commuting distance from the headquarters location, he added. Just how much home prices will rise in Amazon's chosen city will depend on a variety of factors: the existing inventory, recent home price performance, demand and the space available for new construction. "The impact in markets where there has been single-digit appreciation ... we could see a jump, at least in the short term, to double digits of 10%-20% or even more appreciation for the first year," he said. The big winners in the chosen city will be current homeowners who will likely see their home appreciation rise when Amazon moves in. "If you are in a larger house and ready to downsize or move, this will be a pure gain for you," said Stijn Van Nieuwerburgh, professor of finance and director of the Center for Real Estate Finance Research at New York University Stern School of Business. Another indirect advantage for the winning city: Rising home values will likely to lead to higher property taxes, which could help boost a city's budget and services. "As property taxes and revenues go up, that can go to schools and improve their quality and better fund programs ... and infrastructure," said Van Nieuwerburgh. "If you are a first-time homebuyer in the selected city, this is bad news," said Van Nieuwerburgh.

Achieving Financial Wellness in 2018 and Beyond

However, since most members work as independent contractors, or brokerage owners/managers, they don’t have access to employer retirement savings plans, making it especially challenging to plan for long-term financial security. Turning the Corner Changing course requires action. Recognizing the importance of the challenge, 2017 NAR President Bill Brown pledged to help members take charge of their financial lives. Major recommendations and initiatives stemming from the PAG’s work include: New Financial Wellness Program The PAG’s top recommendation focused on engaging members on the importance of financial wellness and wealth-building, including negotiating with a national financial services firm to provide personalized financial and investment planning services with valuable member benefits for those that participate. This past November, NAR announced that Bank of America Merrill Lynch had been selected to develop a financial wellness program with customized member benefits. The new Bank of America Merrill Lynch services will be offered through NAR’s REALTOR Benefits® Program. Investing in Real Estate Even though REALTORS® are intimately familiar with the benefits of building wealth through real estate, only 30 percent of members own investment properties. NAR’s eight-hour course titled “Real Estate Investing: Build Wealth Representing Investors and Becoming One Yourself” is an excellent resource for honing a smart investment strategy. Selling Your Business With proper planning, many brokers, agents and teams can position their business to be a salable asset upon retirement. Working together, we aim to help all members achieve strong financial footing by offering resources and other tools for wealth-building, business-planning, and investing in real estate.

How to Let Your Mission, Vision, and Goals Drive Your Business

When I first started my wholesaling business, I had no vision, no purpose. For eight years, I conducted business without a clearly defined mission or core values. At this time, I hired a business coach to help me define my company’s vision, core values, and goals. Once you have your mission, vision, and core values in place, the next thing you’ll need to do is set companywide goals. Setting Goals When I hired my business coach, he took me through a book called Scaling Up. If you are setting goals but you aren’t keeping score, how do you know if you’re winning the game? Setting Metrics This business is a numbers game. During our team meetings, at least once a month, I mention the core values just to remind our team. During our team meetings, we also take the time to congratulate team members who are living out our core values. Conclusion My goal with this month’s post is to help you paint the vision of what you want your wholesaling business to be—to help you set goals and break down bigger goals into achievable quarterly, monthly, weekly, and daily goals.

Amazon pick for second HQ likely in overheating housing market

Amazon said that it expects to invest more than $5 billion and plans to grow its second headquarters into a “full equal” to Amazon’s current headquarters in Seattle. But what else might come with that much corporate investment and new high-paying jobs? And for half of the 20 markets on Amazon’s shortlist, home prices are already on the verge of overheating. The 20 markets on Amazon’s list are: Atlanta, Georgia; Austin, Texas; Boston, Massachusetts; Chicago, Illinois; Columbus, Ohio; Dallas, Texas; Denver, Colorado; Indianapolis, Indiana; Los Angeles, California; Miami, Florida; Montgomery County, Maryland; Nashville, Tennessee; Newark, New Jersey; New York City, New York; Northern Virginia; Philadelphia, Pennsylvania; Pittsburgh, Pennsylvania; Raleigh, North Carolina; Toronto, and Washington, D.C. Of those, 19 are in the U.S., and a newly released analysis from CoreLogic shows that home prices in 10 of those 19 U.S. markets are already overvalued. CoreLogic monitors the health of the housing economy through historic home price changes and other market conditions including sustainability of prices in the market, referred to as the CoreLogic Market Condition Indicators. The MCI analysis defines an “overvalued” market as one where home prices are at least 10% higher than the long-term, sustainable level, while an undervalued housing market is one where home prices are at least 10% below the sustainable level. Image courtesy of CoreLogic.) Regardless of which city Amazon picks (and the retail monolith has given no further indication of which one of the 20 markets it is going to choose), home prices are expected to rise in the winning city. “As leaders at Amazon continue to narrow their location choices, the housing situation is an important consideration,” Nothaft said. “Denver and Nashville lead the pack with home price increases at more that 8%, but CoreLogic research indicates that these markets are overvalued right now.

Watch out for this fake realtor.com leads scam

Online leads are the lifeblood of many real estate businesses, and some agents and brokers pay a pretty penny each month to companies like realtor.com and Zillow to generate these leads with ZIP code-targeted ads and preferred placement on their sites. Footer discovered, not all leads are good leads — in fact, behind those leads may be scammers looking to make a buck off unsuspecting agents. On January 7, about three weeks after he updated his profile, Footer received an email offering one pre-qualified real estate lead as a trial for realtor.com’s lead generation service. To receive the lead’s full information, which included a phone number and email address, all Footer had to do was pay $10. “But I thought, well I did just sign back up with the Realtor association … and maybe this is just a [teaser] ad to buy an ad from them.” So, Footer sent the $10 using his PayPal account and got a follow-up email with Sherri Kramer’s full phone number and email address. He looked up Sherri Kramer on Facebook and found a profile that matched the Dallas/Fort Worth area code he was given. Another member of the Facebook group had received the exact same lead as Footer, and she wanted to make sure it wasn’t a scam. “The leads are normally shared. Footer said he spoke to a customer service representative who said the company was aware of the scam and was “working on it.” Footer said he recognizes that email scams are common and that he should be more careful the next time around, but he’s wary of the fact that realtor.com hadn’t sent out a warning about the scam that new users, like him, are especially susceptible to believing. “Our customer care team is standing by to answer any customer questions.” Lastly, Farrell says agents should always contact their service provider to verify any “suspect communication,” before following through on buying a lead or any other service.

How to Get a Building Permit: Don’t Renovate Without It!

That's right—even though you own your house, you still need to get permits for structural changes, to ensure that your changes will be "up to code," as they say. Here’s everything you need to know about how to get a building permit. Do you need a building permit? How to apply for a building permit The great news is that getting a building permit is easier than you think—mostly because you probably don’t have to do it yourself. Unless you’re a pretty slick DIY-er, chances are good that your project is going to require a contractor, and that’s the person to rely on for the building permit process. First of all, contractors will know the ins and outs of the process for obtaining building permits in your local area, and they’ll also know exactly which permits you need, from structural to electrical to plumbing. Asking how much a building permit costs is a little like asking how much a house renovation will cost—prices vary wildly. The good news is that the upfront permit price will cover all additional inspections that the city will make as the work progresses, including the final sign-off. “Any work with a permit attached usually requires one or more inspections to be performed by licensed inspectors, to verify the work was done according to code, the plans on file, and any other requirements,” says McHugh. Building permit paperwork to keep Once the dust has settled—literally—on your renovation project, a final inspection will occur.

U.S. median home value reaches all-time high

The median U.S. home value has risen 6.5 percent year-over-year to an all-time high of $206,300 — a number that is only expected to increase in 2018, thanks to double-digit decreases in inventory. According to Zillow’s December Real Estate Market Report, nationwide inventory has fallen 10 percent year-over-year — the third consecutive year of annual declines. In high-priced and high-demand markets such as San Jose and Las Vegas, for-sale inventory has fallen 41 percent and 27 percent year-over-year, respectively. Simultaneously, in those same markets, home price appreciation has skyrocketed. Median home values in San Jose climbed 21 percent year-over-year to $1,171,800, while Las Vegas home values grew 14 percent to $246,700. “Tax reform will put more money in the pocket of the typical buyer, but will limit some housing-specific deductions. Overall, this should increase demand for the most affordable homes and ease competition somewhat in the priciest market segments.” “On the supply side, the market is starving for new homes, but it won’t be easy for builders struggling with high and rising land, labor and lumber costs,” he added. “Aging millennials and young families may be able to find more affordable new homes for sale this year, but they’ll most likely be in further-flung suburbs with more grueling commutes to urban job centers.” Buyers aren’t the only ones grappling with rising prices — renters are dealing with a 2.6 percent year-over-year rise in median rents ($1,439), the highest rate of appreciation since June 2016. Sacramento knocked Seattle out of the top spot for rent appreciation with an 8 percent year-over-year increase to $1,838. See the full list here.

New home construction rises in 2017, closes year on positive note

On Thursday, the Census Bureau and HUD provided a look at the December data on new home construction, and the report shows that building permits, housing starts, and housing completions all increased in 2017. That’s 8.2% below the revised November estimate of 1,299,000 and is 6% below the December 2016 rate of 1,268,000. But despite December 2017 being a weaker month than the previous month or the same time period in 2016, housing starts for the year will still up over 2016. The report shows that there were an estimated 1,202,100 housing units started in 2017. That’s up 2.4% from the 2016 figure of 1,173,800. Privately owned housing completions in December came in at a seasonally adjusted annual rate of 1,177,000, which is 2.2% above the revised November estimate of 1,152,000 and 7.4% above the December 2016 rate of 1,096,000. According to the report, there were an estimated 1,152,300 housing units completed in 2017, which is up 8.7% from the 2016 total of 1,059,700. The report shows that privately owned housing units authorized by building permits in December came in at a seasonally adjusted annual rate of 1,302,000. For the year, there were an estimated 1,263,400 housing units authorized by building permits in 2017. That’s up 4.7% from the 2016 figure of 1,206,600.

3 Times in My Real Estate Career When Failing Was a Success

Below are 3 investment stories when failing was a real estate success. While the asking price was under $1,000 to purchase this 3-bedroom mobile home, I told the seller that I would be very happy to purchase this property the next day, Monday. Still I would first need to speak with the manager and walk through the last two bedrooms before we would be able to purchase the home. Lesson Learned: I was almost pressured into not following proper due diligence by skipping a thorough walk-through of the entire mobile home and also not getting approved at the park first. One of the properties was a 3-bedroom and the other a 2-bedroom. The last time I followed up with the seller, the mother informed me they had sold their mobile homes to another buyer. This was a turning point in how I treat and love myself. The Real Estate Failure Before I started investing in mobile homes, I spent my small life savings mailing single family home sellers, hanging signs, knocking on house doors, making offers with real estate agents, and making offers to sellers with absolutely no deals to show for it. From that first mobile home investment there would be many more to come. As an active real estate investor, you will continue to learn, grow, and evolve in your real estate investing business.

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4 Reasons Why Real Estate Wholesaling Doesn’t Work for Newbies

If you’re new and haven’t truly started, or new and are not having success, you may find yourself in one of the following categories: Your skeptical You’re afraid to make a mistake You’re misinformed or over-informed You’re Inconsistent Let’s briefly dive into each one of these. You’re Skeptical Something very common in real estate wholesaling: You start to believe it’s to good to be true. You’re Afraid To Make A Mistake This is all psychological. People who are afraid to make mistakes can talk themselves out of doing anything. By not being afraid and doing the little things consistently, you will luck into perfect deals. If I make a mistake (after doing my research of course) and the end result is not what I planned, then I find where I went wrong and try again. When there’s too much information, newbies begin focusing on all the information — and not application. You’re Inconsistent This is a major momentum killer in real estate wholesaling. You get started doing something and then stop. You get started again and then stop.

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