09 Nov Strong Signs of the Returning Housing Market
In recent months there have been increasing signs from many areas that the economy is improving. Months of better jobs numbers, consumer spending and confidence was up and more stories of increasing strength in housing markets around the country. All great signs, but an article last week from ‘BusinessInsider.com’ may be the surest signal yet. The article (see below) tells of Warren Buffett, the billionaire businessman/investor who runs Bershire Hathaway, and his increasing investments into real estate brokerages. An investor with that much clout in the business world investing in real estate in that manner is surely a great sign! BUT, if that’s not enough for you, CNNMoney has also posted an article regarding the 5th straight month of rising house prices (see below)!
Encouraged? Ready to venture once again into the housing market to either sell or buy? You need a great agent and The Anderson Group provides just that. Mary Ann and Tom can answer all your questions and are waiting to hear from you!
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404.277.9581 404.281.2118 tom@TAGAtlanta.com maarealtor@bellsouth.netWarren Buffett Just Made A Huge Bet On The US Housing Market
Perhaps the most bullish indicator for U.S. housing is Warren Buffett.
The legendary investor has been buying up real-estate brokerages around the country as he bets on a housing turnaround. Now, he is partnering with Brookfield Asset Management, a Canadian real-estate investor, to more than double the size of his brokerage business.
Bloomberg Businessweek’s Noah Buhayar has the details:
Berkshire’s HomeServices of America Inc. unit will be the majority owner of the venture to manage a U.S. residential real-estate affiliate network, according to a statement on the new company’s website. The firms plan to offer a new franchise brand, Berkshire Hathaway Home Services, starting next year. Brookfield’s network has operated under the Prudential Real Estate and Real Living Real Estate brands.
Berkshire’s managers have been positioning the firm to benefit as the U.S. home market recovers from its worst slump in seven decades. The Omaha, Nebraska-based company has bought a brickmaker, won the loan portfolio of bankrupt mortgage lender Residential Capital LLC at auction and built its HomeServices unit by agreeing to acquire real-estate brokerages in states including Oregon and Connecticut.
The press release says the brokerages that will make up the new company did a combined $72 billion in sales in 2011. That’s more than twice the $32 billion in sales that Berkshire did in 2011 without the new brokerages.
More from the release:
The combined networks of more than 53,000 Prudential Real Estate and Real Living Real Estate agents generated in excess of $72 billion in residential real estate sales volume in 2011, and operate across more than 1,700 U.S. locations.
“Berkshire Hathaway HomeServices is a new franchise brand built upon the financial strength and leadership of Brookfield and HomeServices,” said Warren Buffett, chairman and CEO of Berkshire Hathaway Inc. “I am confident that these partners will deliver value to the residential real estate industry, and I am pleased to have Berkshire Hathaway be a part of the new brand.”
…
“The strength of the Berkshire Hathaway name, coupled with the operational excellence of HomeServices and the franchising experience of Brookfield, positions Berkshire Hathaway HomeServices® as a leading real estate franchise in the U.S., building on our traditions of exceptional client service and innovation. Brookfield is excited to be a partner in creating a home for the best real estate brokers and agents in the country,” said Bruce Flatt, Brookfield Asset Management CEO.
Buffett has been public about his bullish housing call for a while as he’s built his residential real-estate brokerage business, but this is a big addition. (businessinsider.com)
Home prices rise for fifth month in a row
NEW YORK (CNNMoney) — The housing market picked up more momentum in August, as the average home price for 20 major cities jumped 0.9%, according to the S&P/Case-Shiller home price indexThe increase marked the fifth consecutive month of gains for the index with all but one city, Seattle, recording month-over-month price increases.
The Case-Shiller report is one of many gauges of housing market health that has turned upbeat in recent months. New and existing home sales have been stronger, inventory of homes for sale has fallen and developers have stepped up building activity.
Slow improvement in the national economy has also boosted the housing market, as have record low mortgage rates. The rates for a 30-year loan have stayed below 3.7% since May. Combined with home prices that are still about a third less than they were when they hit their peak, these record-low rates have made homebuying very affordable.
Of the cities S&P’s index covers, Phoenix has roared back the fastest, with a whopping 18.8% year-over-year gain in August. That marks the fourth month in a row of double-digit price hikes. Detroit prices rose 7.6% over the past 12 months and Miami’s grew 6.7%.
Mike Larson, a financial analyst with Weiss Research, remains cautious about the outsized gains in Phoenix and some Florida markets. Much of the return represents “a resurgence in investor demand,” he said. Investors now represent about 27% of the home purchases in the market, according to data from the National Association of Realtors.
Most of these buyers are looking to take advantage of beaten down prices so they can rent out the properties at a healthy profit, he said.
“The fly in the ointment is that these buyers lack emotional attachment,” said Larson. So unlike regular homeowners, they will likely not stick with the homes should the market head South again.
Among the three cities to have year-over-year losses, Atlanta recorded the biggest decrease in home values, with prices down 6.1%. New York was down 2.3% and Chicago fell 1.6%.
Rising prices are expected to continue, leading some economists to predict the housing market has finally turned a corner.
“Looking forward, price increases will continue,” said Jed Kolko, chief economist for Trulia. His company has more recent data, for September and October, that shows asking prices on homes have risen.
“Prices on Election Day will be almost the same as when Obama took office, probably just 1.7% below where they were in January 2009,” he said.