Billionaire Says Real Estate is Best Investment Possible

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Billionaire money manager John Paulson was interviewed at the Delivering Alpha Conference presented by CNBC and Institutional Investor. During his session he boldly stated:

“I still think, from an individual perspective, the best deal investment you can make is to buy a primary residence that you’re the owner-occupier of.”

Who is John Paulson?

Paulson is the person who, back in 2005 & 2006, made a fortune betting that the subprime mortgage mess would cause the real estate market to collapse. He understands how the housing market works and knows when to buy and when to sell. What do others think of Paulson? According to Forbes, John Paulson is:

“A multibillionaire hedge fund operator and the investment genius.”

According to the Wall Street Journal, Paulson is:

“A hedge fund tycoon who made his name, and a fortune, betting against subprime mortgages when no one else even knew what they were.”


Future Homeowners Share American Dream

Future Homeowners Share American Dream

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Two recently released reports indicate that both young adults (Millennials) and teenagers (Generation Z) still see homeownership as an important piece of their future success. A report by The Demand Institute, Millennials and Their Homes: Still Seeking the American Dream, revealed that the Millennial Generation is optimistic about their financial future and still believe in homeownership. The findings were based on a survey of millennial households (ages 18 to 29). The report predicted that:

  • 8.3 million new Millennial (Gen Y) households will form in the next five years
  • $1.6 trillion will be spent on home purchases by Millennials and $600 billion on rent over the next five years

Millennials optimistic about their finances and homeownership

Of those surveyed:

  • 74% expect to move within the next five years
  • 79% expect their financial situation to improve
  • 75% believe homeownership is an important long-term goal
  • 73% believe homeownership is an excellent investment
  • 24% already own their home and
  • An additional 60% plan to buy a home in the future
  • 44% do think it would be difficult to qualify for a mortgage

What about the next generation (today’s teenagers)?

A recent survey by Better Homes and Gardens® revealed that Generation Z (teens ages 13-17) is very traditional in their views toward homeownership and is willing to sacrifice to attain the American Dream. Findings from the survey show:

  • 82% of Gen Z teens indicate that homeownership is the most important factor in achieving the American Dream.
  • 89% said owning a home is part of their interpretation of the American Dream
  • 97% believe they will own a home
  • 77% percent chose owning a home over owning a business

Bottom Line

It seems that the belief that homeownership as a huge part of the American Dream still beats in the hearts of the young people of this country.


4 Reasons to Buy Before Winter

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It’s that time of year, the seasons are changing and with them bring thoughts of the upcoming holidays, family get togethers, and planning for a new year. Those who are on the fence about whether now is the right time to buy don’t have to look much farther to find four great reasons to consider buying a home now, instead of waiting.

1. Prices Will Continue to Rise

The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released recently projects appreciation in home values over the next five years to be between 11.2% (most pessimistic) and 27.8% (most optimistic).

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of next year.

An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.

3. Either Way You are Paying a Mortgage

As a recent paper from the Joint Center for Housing Studies at Harvard University explains: “Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.

Bottom Line

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.


Still a Great Time to Buy a Home…but HURRY!!

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Kevin Kelly, Chairman of the National Association of Home Builders (NAHB), recently explained that:

“With interest rates near historically low levels and strengthening job growth, now continues to be a great opportunity to buy a home.”

We couldn’t agree more. However, we must realize that, with prices and interest rates both projected to increase, waiting could cost us.

There are two organizations that look at the affordability of purchasing and actually measure it over time. The National Association of Home Builders has their Housing Opportunity Index (HOI) and the National Association of Realtors’ has the Housing Affordability Index .

Both indexes are reporting the same thing. The cost of buying a home is beginning to increase leading the affordability indexes to dip.

Both indexes say we passed the bottom of the housing market

According to NAHB’s HOI housing affordability dipped slightly in the second quarter of 2014. NAHB’s Chief Economist David Crowe explains:

“The second quarter HOI reflects the slow but steady march toward the historic levels of price appreciation and interest rates that result in affordability levels we experienced before the mid-2000s boom.”

According to NAR in a recent Economists’ Outlook post, home affordability is down from both one month ago and one year ago in all regions.

Michael Hyman, Research Assistant at NAR said:

“At the national level, housing affordability is down for the month of June due to higher prices and qualifying income levels despite the lowest mortgage rates of the year.”

In a recent article, the Wall Street Journal also revealed that the cost of home ownership is higher than any time in over five years:

“Housing affordability hit its lowest level in nearly six years in June as home prices continued to climb.”

 

Bottom Line

If you were waiting for the bottom of the market, you missed it. Yet, with prices below values of seven years ago in most parts of the country and interest rates near historic lows, it is still a great time to buy a home…but hurry!


Don’t Get Caught in the ‘Renter’s Trap’

In a recent press release, Zillow stated that the affordability of the nation’s rental inventory is currently much worse than affordability of the country’s home sale inventory. The release revealed two things:

  1. Nationally, renters signing a lease at the end of the second quarter paid 29.5% of their income to rent
  2. U.S. home buyers at the end of the second quarter could expect to pay 15.3% of their incomes to a mortgage on the typical home

Furthermore, renters pay more than the average of 24.9% that was paid in the pre-bubble period while buyers actually pay far less than the 22.1% share homeowners devoted to mortgages in the pre-bubble days.

Don’t Become Trapped

If you are currently renting you could get caught up in a cycle where increasing rents continue to make it impossible for you to save for a necessary down payment. Zillow Chief Economist Dr. Stan Humphries explains:

“The affordability of for-sale homes remains strong, which is encouraging for those buyers that can save for a down payment and capitalize on low mortgage interest rates… As rents keep rising, along with interest rates and home values, saving for a down payment and attaining homeownership becomes that much more difficult for millions of current renters.”

Know Your Options

Perhaps you already have saved enough to buy your first home. HousingWire recently reported that analysts at Nomura believe:

“It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.

It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

Freddie Mac came out with some comments on this exact issue:

  1. A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
  2. Freddie Mac’s purchase of mortgages with down payments under 10 percent more than quadrupled between 2009 and 2013.
  3. More than one in five borrowers who took out conforming, conventional mortgages in 2014 put down 10 percent or less.

Bottom Line

Don’t get caught in the trap so many renters are currently in. If you are ready and willing to buy a home, find out if you are able. Have a professional help you determine if you are eligible to get a mortgage.


3 Companies Announce Relocation to Allen

3 Companies Announce Relocation to Allen

With increased business moves to North Texas, Allen a city of more than 90,000, is appearing more often on corporate radar screens.   In fact three businesses have announced relocations to the city – coming from California, New Jersey and Illinois – all looking for lower taxes and a can-do business climate in Texas.

·        CVE Technology Group Inc., a New Jersey-based electronics company, has just announced relocation of its headquarters to Allen’s Enterprise Business Park.    By next year, CVE plans to have 1,200 workers in Allen, making it the city’s largest employer. 

·        Kone Americas’ is consolidating its regional operations in Allen.   Work is starting on a new office and research facility for Kone on the east side of U.S. 75. The company will be lead tenant in a 102,000-square-foot office building.   As part of the new project in Allen, a seven-story test facility will be built.

·        MonkeySports, Inc in Corona, Caifornia announced in May that it was relocating to Allen.    The online retailer of hockey equipment also plans to open a sporting goods superstore. MonkeySports said it’s trading California for Texas in a search for a more favorable business climate.  The sporting goods firm plans to hire an additional 150 workers in Allen this year.

–          Dallas Morning News

DFW Home Prices Up 5.2%

Dallas-Fort Worth home prices were up 5.2 percent in the second quarter from a year ago, according to the latest Realtor survey.   Nationwide, prices were up 4.4 percent, the smallest increase since 2012, according to the National Association of Realtors.  Analysts have been forecasting a slower rate of home price growth this year.  DFW home prices have cooled dramatically from the 9 percent rise in the first quarter.

          Dallas Morning News

 


DFW Home Prices Expected to Rise Into 2015

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DFW Home Prices Expected to Rise Into 2015

​Dallas-Fort Worth home prices have continued to rise year-over-year by 8 percent in June, with forecasts expecting the trend to continue into next year.  From the previous month, North Texas home prices rose 1.6 percent, according to the Home Price Index report released Tuesday by Irvine, Calif.-based CoreLogic.   Nationally, home prices increased 7.5 percent year-over-year in June, with prices increasing 1 percent from May to June.  “Home price appreciation continued moderating in June with its slight month-over-month increase,” said Mark Fleming, chief economic for CoreLogic, in a statement.  The return to moderation is expected to continue throughout the United States and Fleming said it could alleviate concerns over diminishing affordability of homes and the risk of another asset bubble.  Even with the moderation, CoreLogic forecasts home prices will to continue to rise in the future, with projections estimating national home prices will increase 5.7 percent from June 2014 to June 2015.  The Dallas area should expect slightly greater than a 6 percent increase in the same period.

          Dallas Business Journal

Texas Ranks as Fastest-Growing State for Tech Jobs in 2014

Texas is the fastest-growing state for technology jobs, beating out New York, Florida, Massachusetts and Washington.  The Lone Star state’s 5.99 percent increase in tech jobs leads the nation in the first half of 2014, according to a report by Dice.com, a career website for IT and engineering professionals. The report studied the highest percentage of growth and the most new positions added, using U.S. Bureau of Labor Statistics data.  Texas has added 8,100 positions this year as the state continues to look for employees in mobile, big data and software development in cities including Dallas, Austin and Houston, according to the report. The state now ranks as the second-largest workforce in technology, following California.

          Dallas Business Journal

 


Dallas-Ft Worth’s Economic Growth Outpaces Texas

Dallas-Ft Worth’s Economic Growth Outpaces Texas

The Dallas-Fort Worth economy has grown faster than the state average and its employment has increased faster than any other Texas major metro area in the first half of the year, according to a report issued yesterday by the federal reserve Bank of Dallas.  DFW employment has grown 4.5 percent this year through June, compared with 3.5 percent growth with Texas.  Local job creation in the second quarter (5.5 percent or 42,600 jobs) outpaced first quarter growth (3.4 percent or 26,500 jobs).  Most of the region’s employment gains have come from fast growth of the Dallas economy, which has added jobs at a 5.4 percent pace in the first half of the year.  The professional and business service sector saw the most growth.  Manufacturing is the only local industry to lose jobs (-700) in the first six months of the year.

          Dallas Business Journal

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Housing Buoyed by 20-Year High for Vet’s Loans: Mortgages

America’s fragile housing recovery is getting a boost from military buyers using VA mortgages as the U.S. draws down troops after more than a decade of combat in Iraq and Afghanistan. About 4.7 million full-time troops and reservists served during the wars and many are now able to take advantage of one of the easiest and cheapest paths to homeownership. The program’s share of new mortgages, at a 20-year high, is also increasing as other types of government-backed loans have grown more costly.  “The reduction in uncertainty for the returning vets allows them the freedom to spend more, including buying housing,” said Sam Khater, deputy chief economist at CoreLogic Inc., an Irvine, California-based property-data firm. “VA buyers are coming into the market in higher and higher proportions and tend to be first-time buyers, one of the missing drivers in the recovery in housing demand.”  VA loans accounted for 8.1 percent, or $19.5 billion, of mortgages made in the first quarter, up from 6.9 percent in 2013 and less than 2 percent a decade ago, according to newsletter Inside Mortgage Finance.

          Bloomberg

 


Influx of Professionals to DFW Raising Home Prices

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Influx of Professionals to DFW Raising Home Prices

Along with the lean inventory of houses for sale in the area, the factor that’s most fueling home price increases in North Texas is the large migration of professional workers to the area. “All these companies relocating to the Dallas-Fort Worth area – that will continue to put pressure on housing prices,” said Bernard Weinstein, economist at SMU. “As long as we have people moving here who have built up a lot of equity in another state, we will continue to see price inflation.” Thousands of jobs coming from California and the Midwest are a significant contributor to the recent gains in home prices, agents and analysts say. For these buyers, Texas prices are still on the cheap side.

– Dallas Morning News

Home Price Increases Throughout Metroplex

Local home prices are more than 45 percent above where they were at the worst of the recession in early 2010.   North Dallas and North Dallas suburbs have had steady price increase for the past three years.  Now the increase in home prices have spread to Northeast Tarrant County and in southern Dallas County.    The median prices in home prices increased 19 percent in Southlake this past year, 15 percent in Colleyville and 12 percent in Keller.   But it was southern Dallas that has had the largest increase in the past 12 months:  Lancaster, 24 percent, Oak Cliff, 22 percent, Cedar Hill 20 percent, Mesquite, 17 percent and Duncanville 16 percent.

          Dallas Morning News

California Developer Comes to North Texas

A California-based developer that does large residential communities all over the country has opened a new Dallas office.  Newland Communities, which bills itself as the largest private developer of planned residential and urban mixed communities, said it plans to use the Dallas office operation to acquire land and build projects throughout North Texas.   Newland previously worked on the Stonebridge Ranch community in McKinney which it completed in 2008.  Since then the company has had no major projects in the Dallas area.  The developer has six communities in the works in the Houston and Austin area.  Newland, which is based in San Diego, has 40 projects currently underway in 14 states.  They plan major investment in the Dallas area.

          Dallas Morning News


Top 5 States From Which People Move to Texas

Texas has a net gain of 701 people daily from the other 49 states, most notably from five states:  California, Louisiana, Illinois, New York and Michigan.  This does not include from immigration or growth by natural causes.   In fact, in the last few years Texas has gained $27.34 billion in wealth migration within the United States, with a significant chunk of that coming from California.    Below is the breakdown of personal income wealth transfer from the five most significant states.

Gained Wealth From:

$6.40 billion

California

$3.45 billion

Louisiana

$2.40 billion

Illinois

$1.76 billion

New York

$1.44 billion

Michigan

–          CNN, May 202, 2014

 

Frisco & McKinney Ranked Among Fastest Growing Cities in Nation

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The new Dallas Cowboys headquarters in Frisco

The adage “everything is bigger in Texas” is holding true as populations swell and towns grow with new residents.  Data released by the U.S. Census Bureau shows that Texas is home to seven of the 15 fastest-growing cities in the nation between 2012 and 2013. Frisco ranked second with a 6.5 percent population increase, and McKinney ranked 13th with a 3.9 percent increase.   The report also highlighted Grapevine as the only Texas to grow to larger than 50,000 residents between 2012 and 2013.  Other Texas cities making the fastest-growing list include San Marcos (ranked first), Cedar Park (fourth), Georgetown (seventh), Odessa (11th) and Pearland (15th).

–          Dallas Business Journal, May 22, 2014

 

Editorial: California Bad For Business; Texas Great for Business

CEOs ranked California last in survey 10 years in a row, Texas 1st for 10 years.

For the past 10 years, Chief Executive magazine has surveyed hundreds of CEOs across the country about their experiences conducting business in various states.

It has used these surveys to rank the states’ business climates based on tax and regulatory regime, quality of workforce and quality of life. And for the tenth year in a row, California has come in dead last in the rankings.

 

On the other end of the spectrum, Texas topped the list, also for the tenth straight year. The best states for business were dominated by those in the South. Rounding out the top five states for business were Florida, Tennessee, North Carolina and South Carolina. Two of California’s neighboring states, Arizona and Nevada, also performed well, ranking seventh and eighth, respectively.

 

The worst states for business were high-tax states with powerful union interests. Besides California, the bottom five included New York, Illinois, New Jersey and Massachusetts.

 

Some of the CEOs’ comments about California’s business climate were quite telling – and sobering:

• “California goes out of its way to be anti-business, and particularly where one might put manufacturing and/or distribution operations.”

• “We relocated our corporate office from Los Angeles to Atlanta in 2006 largely because of the regulatory and unfriendly tax environment in the state of California. . . . Would make the same decision if I had to do it all over again.”

• “California could hardly do more to discourage business if that was the goal. The regulatory, tax and political environment are crushing.”

 

Chief Executive magazine Editor-in-Chief J.P. Donlon illustrated how California’s tangle of red tape has led to its shameful performance in the survey. “The Economist reports that it takes two years to open a new restaurant in the Golden State compared to six to eight weeks in Texas,” he wrote. “The task of unraveling the byzantine layers of regulations seems insurmountable. The jungle is too thick to be pruned. That’s why Carpenteria California CKE Restaurants (owner of Carl’s Jr.) is committed to opening 300 restaurants in Texas, but has no plans for new restaurants in California.”

The lesson in all this is that greater economic freedom leads to an improved business climate and greater prosperity. “If there is a pattern in the survey,” Donlon wrote, “it is that states have diverged in recent years in their experimentation with economic freedom. Those lightening the burden of government have generally improved economic growth over those insisting that state-directed spending and governance is best.”

Though the temptation to dictate others’ affairs is strong, especially when politics and powerful special interests are involved, putting one’s nose in another’s business is not good for business.

If the Golden State is to regain its luster, it need only remove the shackles it has placed on people to start businesses or work in the occupation of their choosing, and to generally pursue any interests they have that do not violate the rights of others.

–          Orange County Register, May 14, 2014