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RealVestFunding.com
WHY
MAKE IT ALL SO DIFFICULT?
I’ve been reviewing about half a dozen loan
applications and requests for joint ventures every
week. This might be a new way to drive me nuts.
What I ask is very simple. The deals have many more
details but the basics are still there. We will
always need to know about the players.
• Who is the owner? Why did they buy or build the
place in the first place?
• Who is the buyer? If it is a loan, tell me about
their experience level, available cash and the
source?
• What is the reason for selling? How important is
that?
• How many children do they have and what are their
approximate ages?
The financing is next.
• What are the first, second and third position
loans.
• Where are they in the process of getting new
financing?
• Would they consider using Realvest instead?
• Are any of the loans in default? Why?
• Is there a plan for fixing this? What is the
source and the plan?
• What is the timeline of this deal? How fast do
they need the financing?
This is just the beginning of the usual list we use
with sellers of houses and it will work to get what
you need for commercial deals as well.
DO ask me questions by sending an email to
bernard@zick.com.
Download and print a
Joint Venture Intake Sheet.
Download and print a
Mortgage Loan Intake Sheet.
For more information, go to
www.realvestfunding.com.
ZickHomeLoans.com
Second-Home Market Surges, Bigger Than Shown in
Earlier Studies
WASHINGTON
(March 1, 2005) – A new study shows sales of second
homes surged in 2004, and that investment property
and vacation homes make up a significant portion of
the overall housing market, accounting for more than
one-third of residential transactions, according to
the National Association of Realtors®.
The new study, based on two surveys, shows that 23
percent of all homes purchased in 2004 were for
investment, while another 13 percent were vacation
homes. In addition, there was a record of 2.82
million second home sales in 2004, up 16.3 percent
from 2.42 million 2003. The investment-home
component rose 14.4 percent to 1.80 million sales in
2004 from 1.57 million in 2003, while vacation-home
sales rose 19.8 percent to 1.02 million in 2004 from
850,000 in 2003.
David Lereah, NAR’s chief economist, said earlier
studies underestimated the number of second-home
sales because a very small percentage of surveys
mailed to second-home addresses were returned. “We
found excellent results for studies looking at
owner-occupied homes, but this is the first time
anyone has come up with a methodology for capturing
a representative market share for vacation- and
investment-home owners,” he said. “In fact, given
the size of the market, we can assume that many
individual owners have more than one investment
property.”
Previous studies had indicated the total stock of
second homes purchased for investment or recreation
was 6.6 million units. “The lion’s share of
second-home sales in earlier studies were vacation
homes, and previously reported figures for the total
number of second homes in the U.S. coincide with the
current figures we have for the number of vacation
homes,” Lereah said. “However, we’ve seen a shift
over the last few years with a growing number of
second-home buyers purchasing primarily for
investment. This led us to a new examination and
understanding as to how much larger investment homes
are as a share of the overall housing market.”
An examination of 2003 data from the Census Bureau
shows there are 43.8 million second homes in the
United States, including 6.6 million vacation homes
and 37.2 million investment units, compared with
72.1 million owner-occupied homes.
“In essence, our definition of second homes has
changed with the buyer shift toward investment
property,” Lereah said. “In examining Census data to
determine the number of investment units, we see
that second homes are a much larger share than the
conventional mind-set of them being mostly vacation
homes.”
NAR has no data to differentiate between individual
or corporate investment-home owners of the existing
housing stock. The sales figures shown in the study
are for individual buyers, and the market share of
investment purchases rose 1 percentage point in 2004
from 22 percent of transactions in 2003. An e-mail
survey of home buyers, incorporating new
methodology, was used to determine second-home sales
data.
A second survey, conducted by mail and used for
demographic and related data in the 2005 National
Association of Realtors® Profile of Second-Home
Buyers, underscores the e-mail findings.
NAR President Al Mansell, CEO of Coldwell Banker
Residential Brokerage in Salt Lake City, said the
market is evolving. “We’re finding that the
distinctions between vacation- and investment-home
buyers are such that we’re really looking at two
very different markets,” he said.
For example, 86 percent of vacation-home buyers do
not rent their property compared with only 21
percent of investment buyers. It appears that the
majority of investment homes are actually a renter’s
primary residence, and only 10 percent of investment
buyers intend to use their second property for
recreational purposes.
The typical vacation-home buyer is 55 years old and
earned $71,000 in 2003, while investment-property
buyers had a median age of 47 and earned $85,700.
For properties purchased between mid-2003 and
mid-2004, the median price of a vacation home was
$190,000 compared with $148,000 for investment
homes. In contrast with the last available full-year
price data in 2001, vacation homes have appreciated
12.8 percent from $168,500, and investment homes
have risen 25.4 percent from $118,000.
Nearly one out of five second homes will become
primary residences after retirement – 27 percent of
vacation homes and 14 percent of investment
property. “In addition, buyers were looking to
diversify portfolio investments,” Mansell said.
“This is now the most frequently cited motivation
for purchasing a second home.”
In listing the reasons why they bought second homes,
respondents said there were some differences
depending on the type of home. Overall, 30 percent
of buyers wanted to diversify investments, 28
percent sought rental income (37 percent investment
vs. 7 percent vacation homes), 14 percent wanted a
personal or family retreat (29 percent vacation vs.
8 percent investment), 6 percent planned to use for
vacations (16 percent vacation vs. 2 percent
investment), and 5 percent had extra money to spend.
“Because the typical second-home buyer is a baby
boomer, it’s likely over the next decade that
second-home sales will remain historically high,”
Lereah said. “The boomers are still in their peak
earning years and have both the wherewithal and the
desire to purchase vacation homes and investment
properties.”
Ninety-two percent of all second-home buyers see
their property as a good investment. In addition, 38
percent said it was very likely they’d purchase
another home within two years, breaking down to 47
percent of investment buyers and 16 percent of
vacation-home buyers.
Investment properties of recent buyers tend to be
located close to the primary residence of owners,
with a median distance of 18 miles, while vacation
home buyers were at a median distance of 49 miles.
The typical vacation home purchased during the
period was a single-family detached home, accounting
for 83 percent, with a median size of 1,290 square
feet. Half of all buyers said their vacation home
was smaller than their primary residence, 13 percent
said about the same and 37 percent reported it was
larger.
The typical investment property also was a
single-family home, 79 percent, with a median size
of 1,700 square feet. Sixty-two percent of recently
purchased investment homes were smaller than the
owner’s primary residence.
In searching for a second home, 83 percent of buyers
used real estate agents. When asked where they first
learned about the home purchased, 31 percent said a
real estate agent; 24 percent a yard sign; 15
percent from a friend, neighbor or relative; 8
percent knew the seller; 7 percent from a builder; 6
percent on the Internet; and 2 percent from a
newspaper or TV ad.
Typical buyers searched seven weeks to find their
second home and looked at six properties.
Eighty-three percent financed with a mortgage and
made a median downpayment of 22 percent. Although 45
percent use savings for a downpayment, 29 percent
used equity from a previous home.
Methodology
The second-home study was based on two surveys. To
determine demographics, price data and the process
for buying, NAR mailed an eight-page questionnaire
to a national sample of 100,000 recent homebuyers
who purchased their homes between mid-2003 and
mid-2004 based on county records. The survey
generated 8,205 usable responses; the response rate
was 8.2 percent. Data in this report includes only
survey data from respondents who indicated that they
purchased a vacation home or investment property;
this data was underrepresented in the overall sample
due to smaller return rates.
A second survey to determine market share and to
extrapolate sales data was conducted in January 2005
by e-mail. That survey captured data for 3,371 home
purchases in 2003 and 2004, with roughly equal
samples for each year; data were weighted to
correspond with demographic findings in the mailed
survey. Because the findings showed a much higher
volume of second-home sales than earlier believed,
NAR examined Census Bureau data from the Housing
Vacancy Survey and the Residential Finance Survey
and found a strong correlation in comparing the
differences between owner-occupied and
renter-occupied housing, as well as data for
occasional use and vacant housing.
The 2005
National Association of Realtors® Profile of
Second-Home Buyers can be ordered by calling
800/874-6500. The cost is $35 for NAR members and
$50 for non-members.
For more information
contact:
Walter Molony, 202/383-1177
wmolony@realtors.org
Lucien Salvant, 202/383-1176
lsalvant@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.
Home
Sales to Benefit From Slower Mortgage-Interest Rate
Rise
WASHINGTON (May 9,
2005) – Mortgage interest rates have been
trending-up less than expected, a pattern that
should continue through next year and support strong
levels of home sales. The forecast was released at
the start of the National Association of Realtors®
Midyear Legislative Meetings & Trade Expo; a record
of more than 8,500 Realtors® and guests are expected
to attend the May 9-14 meetings here.
David Lereah, NAR’s chief economist, said higher oil
prices are having a dampening effect on economic
growth. “A side benefit is that mortgage interest
rates will be rising less than expected,” he said.
“The essentially sideways movement in mortgage
interest rates recently has defied the consensus of
earlier forecasts, with only a modest uptrend
detectable over time. The simple effect, in an
economy with an improved labor market, is a higher
demand for homes.”
Lereah projects the 30-year fixed-rate mortgage to
rise gradually to 6.4 percent in the fourth quarter,
then average about 6.8 percent in 2006. “In other
words, mortgage costs should remain historically low
for the foreseeable future,” he said.
Sales of existing-homes, including single-family and
condo, will be close to last year’s record, slipping
only 1.2 percent to a total of 6.70 million in 2005.
A similar pattern is expected for new-home sales – a
decline of 2.5 percent to 1.17 million this year,
which also would be the second highest on record.
Housing starts are seen to increase 0.7 percent to
1.97 million units in 2005, the best performance
since 1978.
The national median existing-home price for all
housing types is forecast to rise 7.1 percent this
year to $198,400. The median new-home price is
expected to increase 5.1 percent in 2005 to
$232,300.
The U.S. gross domestic product is projected to grow
3.3 percent in 2005, while the unemployment rate is
expected to average 5.3 percent. Inflation should be
tame with the Consumer Price Index rising 2.9
percent in 2005.
Inflation-adjusted disposable personal income is
forecast to rise 3.5 percent this year, while the
consumer confidence index is expected to rise to 101
in the fourth quarter.
More detailed
information about NAR’s economic outlook, as well as
other analysis of real estate industry statistics,
can be found in the May issue of NAR’s Real Estate
Outlook: Market Trends and Insights. The publication
may be purchased by calling 800/874-6500.
For more information contact:
Walter Molony,
202/383-1177
wmolony@realtors.org
Lucien Salvant, 202/383-1176
lsalvant@realtors.org
Copyright National Association of REALTORS®,
Reprinted from REALTOR.org with permission.
Remember: You may be my student, you may be my best
friend and I MAY love you…but, I am not a lawyer. I
am not YOUR real estate broker. You are not my
client. This e-mail is not intended as legal, real
estate or accounting advice. |
