Banks and lending institutions have been at the center of the US real estate storm for the last three years and it is no wonder that many of them have gotten into trouble. What surprises me is that there is an “Unofficial Problem Bank List” that now includes 644 institutions for an aggregate assets value of $326 billion. A very informative article to this effect was just published by calculatedriskblog.com and it gives full detail on which institution is in trouble and the reasons for it.
Actually it is no surprise that these banks are in trouble considering the sharp reduction of lending activity, just dropped to the low levels of 1997, and considering the staggering amount of foreclosures still waiting to come out. What is actually amazing is that many banks still manage to survive despite everything, thanks to the support funds they are getting form the government and that would be intended in promoting lending and reducing foreclosures.
But now, despite the government props, banks are actually starting to fall off the chart again, some just disappear and other are acquired by other banks and merge with it. Many of the recent additions are banks traded at the stock exchange, so the crisis is getting also to the bigger institutions.
Warren Buffet, the billionaire entrepreneur become very famous for his foresight, recently sent his annual letter to his shareholders. This year he has a special section dedicated to real estate where is is directly involved because Berkshire Hataway Inc, his company, owns the house manufacturing company Clayton Homes.
According do Buffet’s analysis the manufactured homes market is in very serious trouble because the economy is still slow and because of the number of new houses that started production in 2009 (housing starts) is the lowest in 50 years in the US. The overall figure being: 554,000 compared to the 2 million annual production that was going on a few years ago.
New house starts (new construction beginning) is at the lowest in 50 years.
It is a dramatically strong reduction that has serious impact on employment (it is actually pretty easy to find tradesman and construction people available for work today) but that is helping the recover of the general real estate market.
Indeed, with so little new homes being constructed or manufactured, the inventory on the market as a chance of being unloaded faster. Actually January has been a very slow month after the rush of the buyers who wanted to take advantage of the tax credit that was supposed to end in December 2009, but Buffet sees the dramatic drop in new houses as a very good indicator for the overall real estate market and he estimates that within a year “the residential housing problem” should largely be behind us.
Looking at the figures, 650 thousand net housing units were added during 2009 and during there were not as many new households: about 650 thousand, therefore just enough to balance the houses that had been added but not enough to seriously reduce the inventory, which should instead start reducing for real in 2010. How fast? It depends on what the banks do with their foreclosure backlog and how people will take advantage of the tax credit and of the government support to new first time home buyers.
I have been working on expanding the reach of my marketing in selling houses and I have been collecting some useful advices of which I provide the first ten which would be valuable for both a local as well as an international real estate buyer.
The luxury kitchen of a ghouse for sale in Texas
They all require some work therefore it is better to learn them early, before you get to the actual sale, but you can always catch up later on. Some of them are particularly relevant for distant buyers, that is people who are not in the area and cannot see the house directly but that are interested in moving or they want a second investment home for vacation or for getting cash flow from the rent.
Research the area for any type of touristic amenities that could attract the distant buyer and collect videos or pictures of the most interesting ones and make them available online, possibly on your own site or on a free platform like blogger.com, tumblr.com, Facebook and so on. You will use this same platform to also make available pictures, videos and text about the following points.
Network with people in the area so to gather information about the neighborhood that would make the house more interesting.
Research the school district where the house is located and check to see if there are private schools that can provide assistance to foreign students of any age. If you’ll sell to a family, this is an important aspect. Sometimes international investors buy properties in the US near a university where they plan to send their kids. The more information you have and you can make available, the better.
Locate the major centers of entertainment that are available. Restaurants and movie theatres should be close by. But major attractions can also be at some distance from the house: up to two hours of traveling by car would be acceptable for somebody planning to buy a vacation house.
Any fitness center in the neighborhood? Do they allow seasonal memberships? Any park, tennis court, swimming pool can be an important element while making the decision.
Level of maintenance. Within reason, the house should be in move in condition. A remote buyer won’t have the time, resources and willingness to make repairs.
Have a professional photographer produce a visual tour of the house with a wide angle lens that will show clearly every room. This element alone can procure you a sale when you are dealing with a distant buyer.
Is there a hospital or a clinic near by. When you have families moving over or you have elderly buyers, this can be an important element to research and advertise.
Evaluate the market and determine a correct price. If the pricing is way off you will delay markedly the sale. Also be ready to explain to a remote buyer how did you determine the price.
Study ads by your competitors to see what buyers are responding to and stress these elements in your communication.
These are general advices that work also for you when you are evaluating a house that you want to purchase as your main residence or an investment.
Roberto Mazzoni
P.S. I have found a booklet that lists 89 more tips that you can employ. Is part of a whole package on how to sell your home and is available on Clickbank (click here for the affiliate link). I have got the whole package and found it quite interesting for the price. You might want to check it as well.
A tribute to my family that is supporting me in many ways during this awesome adventure.
I have just reviewed an interesting training package written for Realtors and home owners who want to speed up the sale of a property in this slow market. I found it quite interesting and I want to tell tyou about it in this post. First of all it is compiled by home owner who tried various ways to sell a property and then finally found a way so elicit a lot of interest in the property he had been desperately trying to sell.
A luxury bath in a house for sale in Nevada.
The story begins with this 46 years old guy who, after living a care-free life as he describes it, ended up divorced, living with his mom and verging toward a financial catastrophe. He then decided to sell a rental house that he had been owning for 20 years and found a Realtor that, after running some comps, gave him a price he was very comfortable with. The Realtor also added that with such a price the house was going to attract a lot of interest. Read the rest of this entry »
Commercial real estate is going to be the next wave of massive foreclosures and that it will provide investment opportunities for international investors as well as domestic investors. The difference is that commercial real estate is more risky than residential because it is not just enough to get a very strong discount on the price, but the property remains unprofitable whatever is the acquisition price if it cannot attract enough tenants, either individuals or businesses.
International investors can get visas and green cards if they invest in commercial real estate.
So some commercial properties are simply condemned and will not be able to be salvaged following a typical investment strategy where investors would be looking for a middle term return (lets say in 18 months).
So there are now projects that are trying to salvage some commercial properties with the issuance of visas and green cards for international investors who wish to invest long term some sizable amount of money into a project they would not be able to control directly (there are specific rules on how this is performed that I won’t describe here).
The interesting fact is that the US government is already moving to put some brakes on the commercial real estate imminent dive by offering full access to the country to foreign investors that are willing to put some cash at risk in exchange of this opportunity.
It is quite an interesting trend, which I don’t think was heard of before, and it will definitely produce results since several people will be interested in in having the US for some other business and will pay this “price” happily despite any risk.
Roberto Mazzoni is president of several ventures specialized in international real estate and international business opportunities. Also blogger, journalist, Web 2.0 fan.
