There might be a few folks that are kicking themselves for not buying in 2012 or 2013, when mortgage rates and home prices were at historical lows, but they can find comfort in the fact that the process going forward may not be as chaotic. I predict we’ll return to a more traditional 9-month real-estate cycle, primarily because previous year’s activity was spurred by investor purchasers who bought properties throughout the year, had little to no contingency terms, and paid all cash for the deal. With the decrease in REO properties and defaulted sales; in collaboration with increased prices this past year, Investors tend to exit the market, leaving purchases to the “owner-occupant” buyer.
In 2014 will be the end of double-digit price gains seen in many metro markets, as we return to a more moderate level of growth. This is a good sign that today’s prices will encourage more homeowners to sell; so look for the “For Sale” signs to spring-up on lawns as current homeowners now have the equity to sell, and move-up into better zip-codes and bigger homes. New construction from builders will also add to more inventory as Builder confidence in the market for newly built, single-family homes improved four points to a 58 reading according to the National Association of Home Builders.
“The recent spike in mortgage interest rates has not deterred consumers as rates are still near historically low levels,” said NAHB Chief Economist David Crowe.”
While American Buyers may still compare Rent vs. Buying as mortgage interest rates rise, foreign buyers are continuing to show interest in our real estate market. In 2014 the competition among buyers for owner occupied primary homes, may not be from your fellow American dream-catcher, but rather the foreign overseas buyer.
Previously the nation’s housing markets during the economic crisis of 2009 had attracted scores of international investors seeking to capitalize on a weak U.S. currency and extremely low property prices. Many of them were attracted to the hardest hit areas of Nevada, New Mexico, and Texas that had been severely beaten by the housing crisis.
Today, foreign investors have a different agenda. They are looking for deals on “trophy-properties” to add to their asset portfolios. The Asian and European buyers are looking for prestigious real estate such as those found in the luxury home market of Manhattan and Miami and along the California coastal communities from Newport Beach to the Bay Area.
The National Association of Realtors (NAR) recorded buying from 68 countries, with Canada, China, Mexico, India and the United Kingdom accounting for about 53 percent of the transactions. These foreign investors may not look simply for short-term profit potential, but rather to “park” their money in a more politically stable government and economy, as well as the possibility of entering the U.S. for permanent residency and betterment of their children’s higher education and quality of life. In my market area of Southern California, I see lot of Asians who are buying real estate around University locations as an investment, but their kids are going to school here, so they live in the home. For them it’s an investment in their child’s future, not just real estate.
Lastly, keep in mind real estate is a micro-centric environment and the recovery is varied across many local markets – I can’t speak in generality, but I am personally optimistic about 2014. I know there are some that are still healing their wounds from the recession and previous housing bust, but consumer optimism is climbing back. According to Trulia’s latest survey, 74% of Americans said that homeownership was part of achieving their personal American Dream and feel that now is a better time than ever to invest in real estate.
There are some rules in transferring the money into the US due to the Patriot Act, but it’s a matter of dealing with an experienced Realtor who will structure the deal to assure a smooth and quick escrow. Many investors select to work with our company, East Lion Realty & Mortgage because we not only help them Buy, Sell and Finance real estate, but we also offer property management services while they wait to relocate to the States.
-Ashish Trivedi President and Broker
EAST LION REALITY & MORTGAGE
East Lion Investments Inc.
With over 20 years of experience in the industry, we pride ourselves in being the leader in real estate and finance. East Lion will provide customized services to meet your needs. Essentially we are your personal real estate concierge at your service with the ability, knowledge and skills to provide you full personal attention on a multi-transactional level. Our total service and complete personal attention is what makes us unique and raises the bar in integrity and dedication to our clients’ real estate goals.