Foreign Buyers Coming to U.S. Are Changing

Residents from other countries are increasingly eyeing U.S. real estate as a good investment, and they’re making up a significant portion of buyers in some markets. But who is coming is changing.

Chinese buyers have been the biggest portion, spending the most of any foreign group on U.S. real estate. They spent $31.7 billion on residential real estate in the U.S. between April 2016 and March 2017, according to the National Association of REALTORS®. But mainland China has since tightened restrictions on how much capital residents can spend outside the country. That has caused some markets to see a drastic decrease of Chinese buyers.

“You turn off one faucet, and another one opens,” says Jonathan Genton, the founding partner and CEO of the Genton Property Group.

Buyers from other countries have been coming in to fill the gap. For example, Genton he’s seeing more buyers coming in from Taiwan, Vietnam, and Thailand and more investors from Dubai, Kuwait, Georgia, and Turkey.

“Everyone recognizes the stability and security of the U.S. market more than ever before,” Genton says. He adds that up to 70 percent of a 59-unit Four Seasons Private Residences project in Beverly Hills likely will be foreigners.

Mauricio Umansky, CEO and founder of The Agency, says he’s been seeing more buyers from Great Britain in the luxury L.A. market. Umansky says that foreign buyers purchased about 10 of the 35 homes that The Agency sold in the Southern California market for more than $20 million in 2017.

“At any given point, who the front runners are changes,” says Karmely. For example, in the 1980s, Japanese buyers were accounting for some of the biggest portion of real estate purchases from foreign buyers in the U.S. In 2017, they made up only 2 percent of foreign property purchases.

As the foreign buyer group changes, Karmely says it’s important to note how U.S.-based real estate still continues to expand and accelerate among international buyers. Their searches are broadening too. For example, in Miami, foreign buyers are looking beyond just the beach and downtown locales. “This change has been transformation,” Karmely says.

“Foreign buyers make up a significant presence in the U.S. luxury market that will only increase as generations come here to study and geopolitical and safety factors continue to play a role,” Shahab Karmely, the CEO of KAR Properties, a New York-based development firm, told Mansion Global.

SOURCE: DAILY REAL ESTATE NEWS

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Driverless Cars Could Fuel An Exurb Boom

Driverless cars may sound like an idea ripped from a sci-fi movie, but the technology is real and expected to hit roadways over the next decade in a big way. As more people warm up to the idea, driverless cars could have a big impact on where people decide to live, according to a new poll from the National Association of Home Builders.

Sixty-three percent of consumers recently surveyed said that if they owned a driverless car they would “definitely” or “maybe” feel more encouraged to move further away from their work. Younger people surveyed said they’d be more likely to move away from work if driverless cars became a safe and reliable commuting option. More than 60 percent of millennial and Generation X members said they might be encouraged to do so, compared to only 18 percent of seniors. 

“Real estate might be the industry that is most transformed by autonomous vehicles,” David Silver, who teaches self-driving engineering at Udacity Inc., told Bloomberg. “It could change real estate from a business that is all about location, location, location.”

Investors such as Ric Clark, chairman of Brookfield Property Partners LP, a large real estate investment firm, is already weighing options of what to do with the space that could one day be freed up by driverless car roadways. Brookfield’s $152 billion in real estate assets include about 175 malls across the U.S. where “the biggest physical acreage is surface parking lots or structured parking,” Clark says. “For years, we have seen this stuff and thought we would love to build apartments or maybe if there is a higher and better use we could build on it.”

Driverless cars could free up areas for entirely new neighborhoods. In New York, for example, parking covers an area equivalent to two Central Parks, according to estimates published by Moovel Lab.

David Williams, technical director at insurer Axa SA, travels more than three hours a day between the northern suburb of Bury St. Edmunds and his work in London. “Imagine if my entire journey was much more flexible, much more integrated—no waiting round on cold platforms and I could be doing something else from A to B,” Williams told Bloomberg. “Would that mean the city effect of increasing house prices spreads further out?”

SOURCE: DAILY REAL ESTATE NEWS

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‘Hemp Homes’ Spark Building Industry

As more states legalize marijuana for recreational and medical purposes, the housing industry is increasingly looking to embrace it as a building material too, The New York Times reports.

North Carolina boasts the first modern U.S. hemp house, which was constructed in 2010. About 50 homes in the country have since popped up with hemp built in.

Hemp structures date back to Roman times. But now, some builders want to bring it back to their markets, since it’s known for being a fast-growing, sustainable product.

“Mixing hemp’s woody fibers with lime produces a natural, light concrete that retains thermal mass and is highly insulating,” The New York Times reports. “No pests, no mold, good acoustics, low humidity, no pesticide. It grows from seed to harvest in about four months.”

As for the smell? “It smells a little like lime,” says Sergiy Kovalenkov, a Ukrainian civil engineer who has built hemp structures in the Ukraine. “We’re using the stock. You cannot smell cannabis—it has nothing to do with smoking weed or cannabis plants. It’s an industrial agriculture crop.”

To clarify, industrial hemp is not the same as the product that can give you a buzz. It contains only 0.3 percent of the substance THC, or tetrahydrocannabinol.

But builders are finding hemp houses can be difficult to build. Even in areas that have made marijuana legal, developers still often must have special permits to build with hemp. International standards also still do not exist yet for building with hemp or codes that regulate how it should be used structurally or safely. 

Hemp is more widely used across the globe as insulation to fill walls and roofs and under floors in wood-framed buildings. It can become stucco-like in appearance, but it’s more like drywall than concrete so it can’t be used for, say, a foundation. 

“In many climates, a 12-foot hempcrete wall will facilitate approximately 60 degrees indoor temperatures year-around without heating or cooling systems,” Joy Beckerman, vice president of the Hemp Industries Associations, told The New York Times. “The overall environmental footprint is dramatically lower than traditional construction.” 

The hempcrete movement is starting to spread. A Washington State company is reportedly using it to retrofit homes; Left Hand Hemp in Denver completed the first permitted structure in Colorado last year.

“When I started Hempitecture in 2013 and presented the concept, venture capitalists laughed at the idea,” Matthew Mead, the founder of Hempitecture, a construction firm in Washington, told The New York Times. “Now there are over 25 states with pro-hemp amendments and legislation, and the federal farm bill has its own provision supporting the development of research toward industrial hemp.”

SOURCE: DAILY REAL ESTATE NEWS

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Seller Willing to Accept $45M and Bitcoins

The cryptocurrency bitcoin is increasingly coming into play in real estate transactions across the globe. One recent listing describes a 9,000-square-foot beachfront Malibu home on the market for $45 million, and the owner says he’s willing to accept bitcoin as part of the payment from a buyer.

“I’ve been interested since [bitcoin] started, and I’m always watching what’s going on,” Wei Tzuoh Chen told CNBC. “It’s going to be the future. It just depends which one is going to be stabilized in the current market.”

Chen says he has already invested in cryptocurrencies. He acknowledges that his neighbors think he’s crazy for accepting bitcoin for his home sale. He realizes the currency is largely unregulated and does carry some risk.

“According to the current situation, if you buy the property with cryptocurrency, it’s difficult to identify the cost of the real estate because it fluctuates so much,” Chen told CNBC. “The government will have a hard time to tax or put a property value on the house you are going to sell.”

Chen says the majority of bitcoin purchasers are outside of the country. “For this type of house and this amount, I think we’ll attract more international buyers than from our country,” he says.

New millionaires who invested in cryptocurrencies may be looking to cash in on real estate. Because crytocurrency can be so volatile, Chen says he only will accept part of the payment in it; the rest in dollars.

“I’m not saying it’s safe,” Chen told CNBC. “I’m just willing to take the risk for investment. Just like everybody else.”

Chen’s home, designed by architect Ed Niles, stands out from other homes in the area. It has multiple angles in every direction and the exterior walls are mostly windows.

SOURCE: DAILY REAL ESTATE NEWS

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Black Accents Make Comeback in Home Design

Black is making a comeback in home design, with black fixtures, appliances, and furniture emerging as hot trends for the new year. Ryan Brown of Brown Design Group in Southern California predicts that black fixtures will replace brass as the most trendy home hardware in 2018. “They look great in modern applications, as well as transitional homes,” he told realtor.com®. “And the best part is no water spots to clean off.”

Matted black furniture also will gain popularity in 2018, says Amy Chernoff, vice president of marketing for AJ Madison, an appliance and fixture retailer. Black goes with anything, and in matte finishes, it’s easier to clean than lighter, polished metals. Also, Chernoff predicts that black stainless appliances—an alternative to the shiny finish of stainless steel likely will become trendier in the new year. “The smudge-resistant, minimal and sleek look was in line with 2017 kitchen trends,” Chernoff told Kitchen & Bath Design News.

SOURCE: DAILY REAL ESTATE NEWS

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4 Ways to ‘Fireproof’ a House

More than 1,000 structures and 260,000 acres across Southern California have been charred since massive wildfires broke out earlier this month. With the blazes still threatening 25,000 more homes, is there anything homeowners can do to protect their houses from a fire? You may not be able to fireproof a home completely, but building experts say there are several measures homeowners can take to lower the risks of sustaining damage. Realtor.com® offers these tips:

Take extreme caution with eucalyptus trees. The oil in eucalyptus trees—which are common in Southern California—is highly flammable and can cause the trees to explode when on fire, warns Los Angeles real estate developer Tyler Drew. He says homeowners should remove these and other large trees near a home’s structure to help prevent fires from spreading to the house.

Keep your yard clear of brush. Bushes, shrubs, dead branches, and vegetation near a home can be dangerous in a wildfire. “Clear brush away from your home, especially if you live in the hills or mountains,” Drew says. “At least 20 yards of brush clearance is what is recommended by most firefighters.”

Reinforce susceptible materials in a home. A house made of wood is more prone to catching fire than homes made from other materials, such as brick, cement block, stone, and ceramic tile, Drew says. “Stucco can work,” he notes, “but the wood beams behind stucco can still catch on fire if the wildfire burns close enough to your home.”

Replace the roof. Certain roofs are more resistant to falling embers and ash than others. “Tile and composite roofing shingles are a must these days, but some homes still use wooden shingles,” Drew says.


SOURCE: DAILY REAL ESTATE NEWS

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New Homes Are Getting Smaller

Developers are continuing to shrink the size of new single-family homes, according third-quarter housing data compiled by the National Association of Home Builders. The median square footage of a single-family home was 2,378 square feet in the third quarter.

In the years following the Great Recession, builders were focused on the higher end of the market, catering to larger-sized homes. But more recently, builders have renewed their focus on the entry-level market, and NAHB predicts square footage of new homes to continue to decrease.

“Typical new-home size falls prior to and during a recession, as home buyers tighten budgets, and then sizes rise as high-end home buyers, who face fewer credit constraints, return to the housing market in relatively greater proportions,” NAHB explains at its Eye on Housing blog. “This pattern was exacerbated during the current business cycle due to the market weakness among first-time home buyers. But the recent declines in size indicate that this part of the cycle has ended, and the size will trend lower as builders add more entry-level homes into inventory.”

SOURCE: DAILY REAL ESTATE NEWS

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Kitchen Updates That Don’t Require a Remodel

If your sellers are looking for ways to improve their kitchen before listing, or if your buyers want to make cost-effective updates to a dated kitchen in their newly purchased home, professional organizer Colleen Klimczak, owner of Peace of Mind Professional Organizing, has five tips.

1. Install under-cabinet lighting. This simple project is low in cost and leaves a big impact, giving the whole kitchen a beautiful glow. Try LED rope lights that plug into an outlet or battery-operated single lights.
2. Clear the counters. This is imperative for sellers. Change out the dish drying rack for a smaller dish drain that fits over one side of the sink.
3. Create kitchen zones. For example, set aside space for a “breakfast zone” where the coffeemaker and toaster sits along with a fresh fruit basket and napkins.
4. Rethink cabinets. If your clients are considering an update, cabinets that reach the ceiling are an ideal use of space. But if that’s out of the question, clear off the dusty tops and declutter the space so there’s visible storage. Place an indoor, shade-friendly plan to add some life to the space.
5. Choose one appliance to update. Consider the kitchen space itself and what would have the most impact. If the kitchen opens into a family room, a quieter new dishwasher could be a game changer for some buyers.

SOURCE: DAILY REAL ESTATE NEWS

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Newbie Buyers Make Smaller Down Payments

About 60 percent of first-time home buyers put down 6 percent or less on a home purchase in September. The median down payment has dropped from 6 percent to 5 percent for first-time buyers, according to the National Association of REALTORS®’ 2017 Profile of Home Buyers and Sellers.

But there are still many potential buyers on the sidelines who may be under the impression they need a bigger down payment before they can buy.

NAR conducted a survey of non-homeowners earlier this year and found that most consumers believe you need a down payment of 10 percent or 20 percent to buy a home.

“They may not be aware that these programs are available, and they may not be taking advantage of them,” Jessica Lautz, NAR’s managing director of survey research and communications, said in the latest Down Payment Report, published by the Down Payment Resource. 

Thirty-two percent of first-time buyers said they saved for more than two years in order to be able to have enough to buy a home. Student loan debt was the most often cited obstacle to saving. The second most cited barrier for saving was credit card debt.

“Despite widespread access to low down payments, looser lending standards, and mortgage rates that are still historically low, potential first-time buyers are putting off buying a home until conditions improve,” according to The Down Payment Report. “For many of these discouraged young families, rising rents and high levels of debt, especially student loan debt, are keeping them trapped in rentals by making it harder to save for a down payment.”

By September, first-time buyers had showed more signs of pulling back. They comprised just 29 percent of sales, down from 34 percent a year prior. Since 2011, the share of first-time home buyers has been below the historic norm of 40 percent.

SOURCE: DAILY REAL ESTATE NEWS

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Rent Price Hikes Are Getting Smaller

Renters may finally be getting some relief. Apartment rents are not increasing as much as they have in the last few years.

None of the major metro areas studied had seen annual rent growth of more than 10 percent. Rents rose 2.2 percent, on average, in the U.S. over the 12 months that ended in the third quarter, according to Yardi Matrix. That marks the slowest rate of increase in rental prices since April 2011.

“We don’t believe it’s time to turn out the lights on the expansion in the multifamily sector,” Yardi notes. “Job growth and social and demographic trends foretell strong demand for the next few years.”

The markets where rents increased the most quickly in 2016 have slowed down by the most in 2017, according to data from Axiometrics. Sacramento still has the strongest rent growth in the U.S., but apartment rents grew by 6.9 percent over the 12 months that ended in the third quarter of 2017. For comparison, a year ago rents rose by nearly 12 percent in that time frame.

Many of the markets that saw home prices plunge by the most during the housing crash are seeing some of the highest rent upticks still.

“Because of the oversupply of housing, some of the hottest markets in the last real estate cycle took the longest to recover,” says Jay Denton, senior vice president of Axiometrics.

Another former housing crash city—Las Vegas—saw the second fastest growth in apartment rents, in which rents increased by 5.8 percent over the 12 months that ended in the third quarter of 2017.

“Las Vegas had a longer, deeper downturn than the rest of the real estate market,” says Denton. “It is just a different place in its real estate cycle. Other markets have had a lot of construction.”

Other markets that saw rents grow quickly that were also considered former “crash cities,” included Orlando, Fla., which was number three on the list with average apartment growth at 4.8 percent; San Diego at number five with rent growth of 4.5 percent; and Jacksonville, Fla., at number six with a 4.4 percent rent growth.

SOURCE: DAILY REAL ESTATE NEWS 

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The ‘Bonus Room’ Makes a Comeback

Home builders and designers say demand is increasing for more flexible living spaces, giving rise once again to “bonus” or “multipurpose” rooms, The Wall Street Journal reports. Such rooms offer extra square footage for owners to create a space that fits their lifestyle. Baby boomers, for example, are showing interest in bonus rooms that could potentially serve as a first-floor master bedroom or suite.

Out of the 20 top-selling floor plans on Houseplans.com, 13 include bonus rooms, according to the site. However, only 14 percent of all plans the site offers contain such rooms. They are usually located off the entry hallway near the main living space and a bathroom. The location makes it easy to transform the space into an extra bedroom, if needed. Bonus rooms also may be located above the garage. Homeowners use these extra spaces for anything from an in-law suite to a home theater.

Some designers say real estate professionals shouldn’t label bonus rooms with a specific purpose when showing a home to their clients. Let buyers imagine for themselves how they'd use the room; this can also make the listing more appealing to them. “When you name it ‘dining room,’ they will always see it as a dining room; they will never get it out of their mind,” says Mark Mathis, co-owner of Hattiesburg, Miss.-based design firm House Plan Gallery. “We have found that labeling this type of area as ‘flex space’ on our floor plans best allows home buyers to decide how a particular space can be used to fit their specific family’s needs.”

SOURCE: DAILY REAL ESTATE NEWS

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Childless Households Shape Real Estate Trends

The fertility rate in the U.S. has dropped to the lowest level on record, and with fewer households having children, consumers’ real estate needs are changing.

In 2015, slightly more than 70 percent of households had no children living at home, a three-percentage-point increase from 2011, according to the Census Bureau’s American Housing Survey. Broken out by age group, those ages 25 to 29 and 35 to 44 who didn’t have children in their household rose by more than 5 percent in that time period, the survey shows. The number of 30- to 34-year-olds without children increased by 4 percent.

The trend in people delaying marriage and having fewer children stands to have an impact on housing over the long term, Lawrence Yun, chief economist for the National Association of REALTORS®, told The Washington Post. “The fact that we’re having smaller-size families, I think, naturally means the demand for smaller-size housing would get greater interest than before,” Yun says.

Robert Dietz, chief economist for the National Association of Home Builders, told the Post that, in general, home buyers tend to seek properties that offer 800 square feet of space per person in the household. About 90 percent of buyers with children younger than 18 purchased a detached single-family house, according to NAR’s 2016 Profile of Home Buyers and Sellers. However, 79 percent of buyers without children also purchased such a property. Childless buyers tend to gravitate toward urban areas and prefer townhouses and condos, according to NAR’s report.

“We’re seeing this trend in many metro markets, so clearly there is a consumer desire and preference for wanting to move closer to the city,” Yun says. “That’s generally associated also with smaller-sized homes because those big McMansions that are being built are typically out in the more distant suburbs where the land is plentiful.” Further, buyers without children say friends, family, shopping, and entertainment influence their neighborhood choices the most, according to NAR.

Dietz says that while single-family housing starts are growing, they are lower than expected, partially because of household formations. Changing demographics will have an influence on what builders build, he says. “In certain markets where you’re going to have an increase in the number of childless households, that does mean that maybe townhouse construction is a greater option than, say, 3,000-square-foot single-family detached homes.”

SOURCE: DAILY REAL ESTATE NEWS

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Climate Change to Trigger Housing Crisis?

Coastal flooding, wildfires, and extreme weather events are posing an increasing risk to real estate. Last week’s Hurricane Harvey will likely go down as one of the costliest hurricanes in U.S. history with projections, so far, coming in at $10 billion to $20 billion in damages. Texas homeowners are left picking up the pieces from record levels of flooding.

The threats of weather-related disasters continues to grow. Freddie Mac’s chief economist last year wrote that an increase in coastal flooding and storm surges will eventually worsen to the point that homeowners, unable to sell flooded properties, will abandon their homes and mortgages. That could trigger a housing crisis, he wrote.

The government has spent $357 billion on disaster recovery in the last 10 years, according to Insurance Journal. The second highest payout on record was in 2016.

The home insurance market is seeing costs rise, and it’s projected to get worse. Over the next 15 years, the U.S. could see higher sea levels and storm surges that could increase the annual cost of coastal storms along the Eastern Seaboard and Gulf of Mexico by up to $35 billion, according to a 2014 analysis by Risky Business.

Flooding poses the biggest threats as the costliest type of natural disaster in the U.S. The National Flood Insurance Program was created to help alleviate the expenses from private insurers, but now the NFIP faces a looming expiration date.

The NFIP has a Sept. 30 deadline for Congress’ reauthorization. The NFIP helps to pay for and provide policies for millions of properties in at-risk flood areas across the country. The program is currently $24.6 billion in debt.

If Congress lets the NFIP lapse, the Federal Emergency Management Agency won’t be allowed to sell or renew flood insurance policies, pay existing claims, or start any mapping or management activities to create accurate assessments of risk, Curbed.com reports.
Carlos Gutierrez, a real estate pro with Florida’s Gutierrez Group in Miami Beach, says the NFIP program is “a key part of the equation in Florida real estate,” as well as in other coastal regions and areas at risk of flooding. Ninety-three percent of the buildings in Miami Beach are located in a Special Flood Hazard Area, which means they are required to have flood insurance for federally backed mortgages.

“We’re depending on the NFIP program,” Gutierrez told Curbed.com. “It could really hurt our industry if it isn’t renewed, and could cause thousands of home sales not to happen.”

SOURCE: DAILY REAL ESTATE NEWS

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