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Think Real Estate is Expensive In Your City? Think Again!

It’s no secret that home prices have surged over the past few years, particularly in the already price Northeastern United States and the West Coast. It’s sad when you live in one of these areas, and see that you could have 2 or 3 times the house for the same price in the south or midwest…

But quit your crying, it could be worse! Forbes has just published a list of the World’s Most Overpriced Real Estate Markets. Here’s a taste:

Monaco’s housing market earned a P/E ratio of 74.07. What’s more, the well-earned moniker of “tax haven” apparently doesn’t apply to transaction costs, which rack up to a 20% premium when buying and selling a property.

Rome landed at No. 2 with a P/E of 50.51; it’s a slow growth market, which remains very expensive. Representing North America in the world’s top 10 were Los Angeles (5th place at 26.88) and Vancouver (6th at 26.81).

Who cares about cities outside the US you say? Well, Forbes supplied a list of America’s Most Overpriced Real Estate Markets as well.

Take San Diego. A slumping housing market, where only 5% of residents can afford the median home, and a high price-to-earnings ratio made the oceanfront city our most overpriced real estate market. Had weather been included as a statistical measurement, there’s no doubt San Diego would have avoided our list of top 10 most overpriced cities–but we didn’t factor in sunshine.

We incorporated a second metric: an affordability index. Calculated from National Home Builder Association and Wells Fargo (nyse: WFC - news - people ) data, the affordability score is the percent of the population who can afford to buy the median-priced home, assuming a 6% mortgage rate. In a city like Los Angeles, No. 4 on the list, a wee 2% of homes are affordable for residents pulling down a median income.

(emphasis mine)

Read on and thank God, your lucky stars, or whoever it is you thank, that you aren’t crying yourself to sleep in your checkbook every night like the folks in these cities.

Tags: affordable homes, real estate prices, home prices, expensive real estate, expensive homes, affordable real estate, unaffordable homes, unaffordable real estate

July New Home Sales Rise as Real Estate Market Continues to be a Mixed Bag

The media would often have us believe that the current mortgage crisis has us on the verge of some massive economic collapse, yet we continue to see strength in the economy and surprising numbers in certain sectors of the real estate market.

The mortgage situation isn’t something to ignore, but we heard the cries of “real estate bubble about to burst!” while in reality it put up record numbers. We still hear those cries today, but it’s tough to take the alarmism seriously given the history. All we’ve seen thus far is a relatively moderate slowdown - a deflation rather than a pop - and it shouldn’t come as a surprise. Shouldn’t anything putting up record numbers year after year eventually slow down?

Most of the problems we’re experiencing are related to mortgage loans taken by people who couldn’t afford to pay them. This isn’t to say they can’t impact us, but it’s important to put the current problem in context.

All that said, the real estate picture continues to be a mixed bag. Every month or so the analysts are “shocked” by positive numbers put up in the housing sector. They certainly don’t put the legitimate concerns to bed, but they do deal a blow to the chicken littles out there.

Today we learn that “new-home sales” rose a significant amount in July. Again, it’s not the rosiest all around picture, but it certainly should calm the nerves of folks who continue to brace for the worst… as they’ve been told to do for years:

Sales of new homes perked up, while factory orders took off in July, raising hopes that the economy can safely weather financial turmoil that has shaken Wall Street.

The Commerce Department reported Friday that new-home sales rose 2.8 percent in July, after falling 4 percent in June. The increase in July lifted sales to a seasonally adjusted annual rate of 870,000 units. A second report showed that orders to factories for big-ticket goods jumped 5.9 percent in July, the most in 10 months.

Of course, the surge was localized:

By region of the country, the improvement in sales in July reflected gains in the West and the South, where sales went up by 22.4 percent and 0.6 percent respectively. Sales, however, tumbled 24.3 percent in the Northeast and were down 0.9 percent in the Midwest.

And again, it’s not all good news:

Even with the overall increase in home sales for July, sales are down a deep 10.2 percent from a year ago, underscoring the toll of the housing slump.

But it’s important to keep in mind that no bubble has been “popped”, and we continue a slowdown that has (so far) been pretty manageable. Before the chicken littles get you too spooked over the mortgage crisis’ implications, consider this: Who would have thought we’d not survive steady $3 per gallon gas prices, but have a booming economy in the face of it?

Tags: real estate sale, real estate slowdown, new home sales, new real estate, home buyers, house sale, new real estate sales, home buying, housing, home sales, real estate market

Healthy Northern Virginia Real Estate Market Bucks National Trend

There’s been a lot of doom and gloom in the media over the nation’s current real estate situation, but rarely do you ever hear about those areas of the country who’s real estate markets are telling another story.

Northern Virginia is one of the areas who’s real estate market continues to thrive:

While the real estate market across the national capital region is mixed, according to housing sales and price data released Wednesday, new numbers from a local real estate trade association show the market in Northern Virginia is strong.

Average home prices in Northern Virginia have increased by 3 percent to $554,274, while the number of home sales inched higher by 0.1 percent from July 2006, according to the Northern Virginia Association of Realtors.

The AVERAGE home price is over half a mil? Ouch! But it could be worse.

If you can afford it, Virginia is arguably one of the best places you could choose to live on the east coast. You’ve got mild winters, hot summers (but not insanely hot), and a pretty good all around quality of life. I guess the only important thing to remember is MAKE SURE YOU CAN AFFORD IT…. or else you could wind up looking like this guy:

Tags: northern virginia real estate, n virginia real estate, va home listing, va real estate, virginia real estate market, virginia real estate, virginia home listing, northern va real estate

Forbes Lists the “Least Affordable Real Estate Markets”

Yesterday I told you about Forbes’ list of the “Most Affordable Real Estate Markets”, so I thought it only fair that I also present you with their list of the “Least Affordable”.

Number one on their list isn’t much of a shocker:

Given those numbers, it’s no surprise that Los Angeles tops our list of the nation’s least affordable real estate markets. We determined our ranking by combining the NAHB/Wells-Fargo index with our rating of home price to earnings, which measures how many years of gross income it would take to buy a home at the median sales price. The lower the number, the more affordable a house is for the median home buyer.

The others aren’t exactly a surprise either:

Rounding out the top ten least affordable markets are San Diego, Calif.; New York, Miami, Fla.; Sacramento, Calif.; Las Vegas, Nev.; Seattle, Wash.; Boston and Orlando.

Read the rest for an explanation of how Forbes developed this list…

Tags: hot real estate market, affordable homes, expensive homes, affordable real estate market, real estate market, unaffordable real estate, real estate, hot real estate, expensive real estate, affordable real estate

Does Your City Make Forbes’ “Most Affordable Real Estate Markets” List?

It’s no secret that home prices have seen an out of control surge in places like the northeast and west coast of the United States, making homes virtually unfordable to anyone except the super rich in some cities. But that’s not the case everywhere…

From Forbes.com comes the list of the most affordable real estate markets in the country:

Homeowners in Indianapolis know what that’s like. Its residents don’t have to scrimp and save to afford a home at the median price. There, the bulk of the housing stock is well within reach of the average household. Savings depleted? According to our calculations, it would take just two years of gross salary to become a homeowner there.

Cleveland and Detroit are also reasonably priced. But affordability isn’t limited to the Midwest. Pittsburgh, Atlanta and Greensboro, N.C., made our list as well.

Forbes addresses the critics who scream “rust belt” anytime they’re presented with the fact on the affordability of home ownership in of these many cities. While acknowledging that some cities like Detroit and Cleveland aren’t the healthiest markets, this isn’t always the case:

Other areas on our list, however, such as Dallas and Atlanta, are experiencing growth, yet remain affordable.

Price-to-income affordability in Dallas was seventh best overall, and just under 70% of homes sold in Atlanta in the first quarter of this year were available to the median income-earning household. Prices can remain affordable in fast-growing cities when there are high rates of new-home construction and relaxed growth restrictions.

Additionally, as someone who lives in the northeast, and who grew up with the unaffordability of Boston real estate being common knowledge, I found their comparison to Raleigh, North Carolina’s real estate market extremely interesting:

High demand doesn’t necessarily impede affordability either.

Examine the difference between Boston and Raleigh, N.C.; since 2000, Boston has experienced steady emigration, while Raleigh has welcomed new residents.

But during that time, Boston home prices increased by 16.7%, and median income-earning households can afford about half of what they could seven years ago. In Raleigh, home prices have grown by 37%, but the share of median income earners who can afford homes has only dropped by 3%, all while the city underwent a population boom.

What gives? A high increase in new-home construction and growth policies not overburdened by regulation acted as price reliefs in Raleigh. Boston doesn’t have such policies and hasn’t seen a great deal of new-home construction.

Both Raleigh and Charlotte, N.C., just missed making the list, landing at Nos. 12 and 13, respectively.

Read the rest to find out if you’re in one of these buyer’s markets.

Tags: hot real estate markets, cheap real estate, affordable cities, affordable real estate, city real estate, median income real estate, hot real estate, available real estate, Real Estate, real estate market

Does a Foreclosure-palooza in Some Cities & States Mean a Deal For You?

Just last week CNNmoney.com posted an article listing the top ten cities in the United States facing sharp increases in home foreclosures. This comes only weeks after they published an article focusing on the most “ruthless foreclosure states“, which focuses on the amount of time one can lose there home in various states across the country. You don’t have to look far to find countless articles on this hot news item.

What does this all mean for you? At this point, it’s anyone’s guess. We heard for years, experts tell us that there was a “housing bubble” that was set to “pop”, but it never did did it? The housing market has in fact had a very manageable slowdown, with the primary bumps in the road being folks foreclosing on properties they bought, but couldn’t actually afford, often with adjustable rate mortgages.

These aren’t bad people, and we should certainly all have sympathy for them, but the lesson we learn is a simple one we should have already known - buy within your means… And DON’T get an adjustable rate mortgage!

Now, the question is… does the surge in foreclosure activity provide you with a buying opportunity? Certainly it doesn’t take a genius to recognize that with home sales slowing down, and more homes coming on the market, it has gone from being one of the best sellers markets a year ago, to a buyers market with a lot of further potential today.

Obviously there’s never a guarantee when home prices will go back up, and how quickly, and in what regions, so do your research. If you’ve been on the fence about getting in to the real estate market, this is a great time to look in to it more seriously. But don’t go wild with the buying opportunity unless you’ve got good reason to believe it will provide you with a big pay off in your region. You’d hate to get stuck with properties that have barely increased in value and require a lot of work to sell 5 or 10 years down the road.

Tags: home foreclosing, buyers market, foreclosing, real estate market, home foreclosure, real estate, foreclosure, cnnmoney, housing bubble, foreclosed home, cheap real estate, foreclosed

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