What’s the forecast for Calgary’s housing market for 2018 and beyond? Right now, it’s cautiously optimistic for buyers who are in a good position to benefit from a growing pool of housing stock in Calgary in summer 2018 and into 2019.
I lived in Calgary for 10 years so I know the city intimately. And I have my favorite areas and neighbourhoods for sure. It’s looking like an investor’s paradise right now.
The real estate market in Calgary has been in the dumps for several years, however with the price of oil hitting $71 now , it’s getting interesting for buying homes and rental property investment.
Expert’s forecasts of oil prices and Calgary home prices are proving to be understated. Oil prices have far exceeded what most experts said would happen. The vacillating factors they say cause price change don’t seem to affect trends. Tough to take them seriously anymore.
OPEC is driving prices. And there’s no reason why US shale oil producers would want to plummet the price anymore than Alberta tarsand producers would. It’s all political folly to talk prices down.
Does oil have a future in the overhyped world of green energy and high tech? Let’s take a look at how has fared during the last 11 months against the NASDAQ.
The Turnaround in Calgary Canada is Coming
The growth in the US oil wealth is obvious with Texas post hurricane development. And western shale oil producers are ramping up production
In Canada, benefits are slower. Taking a quick look at the Calgary Real Estate Board’s own housing stats, we see sales in April, 2018 dropped 20% year over year yet price fell only 3%. Should investors take that resilience as further evidence that buying in Calgary isn’t such a bad option? Active listings are up 32% YoY.
What are the hot properties in Calgary? It has to be semi-detached homes in the east, northeast and east districts (+6% to 10% YoY).
The uncertainty of Calgary’s housing market is agonizing. Definitely a gamble as doubt lingers in Calgary, but buying in this vibrant young city is more preferable than rolling the dice in overregulated Vancouver or Toronto.
Recent improvements: Unemployment has dropped in the last 2 years and many believe the recovery is well underway — powered up by rising oil prices in US dollars x rising production numbers. Calgary’s economic growth lead Canada at 6.9% and that’s when oil prices were lower.
The Conference Board of Canada predicts Calgary will lead the nation at 2.4% growth in 2019. And if oil prices rise as predicted, the loonie will rise, thus raising ROI in $CAD. Oil producers are lean and ready to generate big profits.
Share this post on Facebook and spread the word about Calgary’s (and Edmonton) comeback. It’s nice to see!
OPEC Willing to Throttle Output to Raise Oil Prices
Yes, Calgary is more than oil, but oil money is hard to ignore. Alberta needs the investment funds that flow in when Oil prices rise.
With OPEC cutting oil production output, and oil prices jumping past $71 a barrel (WTI) it’s awakening the oil patch. Alberta’s oil production rose to record levels in the last two months. Multiply that by rising prices and the economic outcome should be obvious. Mortgage red tape, rising interest rates, and pessimism won’t be enough to stop this train.
Twice now, during the early winter, prices rebounded. The price is showing peristence. If it does this for 3 more months, investors will being loading money back into the Alberta economy.
The political situation in the US is calming down, US economic health is improving rapidly, and by shutting out China, the US will be keeping billions and attracting more investment money. Big picture looks really good. Prospect of a US housing collapse are low, even though Americans are very wary. That’s just smart.
If you’re considering moving to Calgary to work this year, be forewarned that Calgary is rated worst for affordability for lower income earners. Be prepared!
As of February 2018, average rent for an apartment in Calgary wass $1129 which is a 12% decrease from last year when the average rent was $1264 , and a 3.72% increase from last month when the average rent was $1087. — from RentJungle Report
Calgary Housing Market Stats
As you’ll note sales are down from 18 months ago, and those were recession numbers. Most of the buying and selling were in the first half of the year, and there was a burst of buying due to the Fed mortgage rule changes.
It’s worse than it looks. However with the economy on the upswing and oil prices pushing through $55 to now $71 a barrel, and with gasoline prices rocketing further, there is some optimism about getting Alberta rolling again.
CREB suggests a steady path to recover and a market very similar to 2017. They suggested rising interest rates, tougher mortgage rules, and stagnating wages should calm the market this year. Financial people are always citing microeconomic factors and mortgage rates as housing market factors, however people buy when the economy is good and is promising.
The Stampede chuck wagon advertising auction created $3.2 million in bids. The oil patch seems to be optimistic!
Calgary Housing Report for February 2018
Calgary Monthly Housing Stats
Total Homes Sales
Days on Market
Above stats courtesy of CREB
South Calgary ws the hot spot with 249 homes sold in February. The south has 799 homes listed for sale. 275 apartments were sold in downtown Calgary in February and there are 730 units available. CREB expects sales of apartments to fall slightly in 2018, so buyers might have the upper hand this spring.
The Globe and Mail reports that 30% of Alberta’s new inventory remains unsold. This has to be one of the best buyers markets ever for investors, as long as you don’t mind waiting for the payoff.
And with housing prices predominantly in the $300k to $500k range, Calgary is still considered affordable, especially compared to Toronto and Vancouver where life is painful for renters, mortgage holders, and buyers in waiting.
Even the experts are voicing caution, probably because they’re not sure themselves who has control of oil prices, and whether the BC pipeline issue will be solved. And BC doesn’t seem to be batting an eye, as gas prices there rose above $1.50 a litre.
Rachel Notley pointed out the BC premier’s ironic and hypcritical stance on Alberta oil with his new subsidies for LNG projects in BC. BC gasoline prices look like they’ll go sky high by May and June (passed $1.50) and the resistance might begin to wane at that point.
And besides the BC carbon tax, and the investment killing removal of the corporate tax rate cut, there’s also the matter of how much Vancouver’s housing market and economy can take as interest rates rise too.
This is a text book test of the merit and wisdom of government regulation. BC’s government run auto insurance sector is already in deep trouble, rumoured to be on the verge of bankruptcy.
Not only does Alberta ease the prices BC drivers pay for gasoline, the Federal taxes on oil production are steep and distributed to the other provinces. Everyone benefits when Alberta’s energy sector thrives. It’s vital for Canada.
The WTI WCS price differential is a painful loss for Alberta Oil producers and of late it’s gotten worse due to pipeline bottlenecks. Will it get worse this year?
Alberta’s production capacity is impressive and has recovered by 7,000 m3 from 2 years ago. The issue is getting it to world markets.
With the US and global economies looking good (the recent tariff issue with China should be resolved), demand for energy and oil is forecast to be strong. BP forecasts a strong demand from developing countries.
International investors with a long term investment strategy should compare what you can buy in Calgary for $400,000 vs what you’ll get in the Vancouver market or Toronto market areas and you can see the long term investment advantages. Calgary is a much easier place to do buiness and buy real estate.
Which are The Best Neighbourhoods to Buy a Home in Calgary?
As a long time resident, I can tell you there are many excellent neighbourhoods, with great schools, shopping, and recreation. All of it is accessible.
If you enjoy exercise, you may find the communities along the Bow River best. There is a cycling/walking trail on both sides and the mountain biking park at Canada Olympic Park is on it too.
If you like beautiful views, Calgary has plenty. The northwest area of Calgary including those communities near Spy Hill, Coach Hill, and Nose Hill Park offer amazing views, some of the Rockies and foothills. Be ready for matching prices. The neighbourhoods on the northwest outskirts of the city offer unbelievable panoramic views of the Rocky Mountains to the west. Expect million dollar prices here. Homes on Spy Hill and Coach Hill offer incredible views of almost all of Calgary and the spectacular downtown skyline.
If water sports like sailing and windsurfing are important to you, Calgary has a number of man made lakes in the south end. The South has the largest selection of homes, with the Northwest next in number.
If you like cosmopolitan, the neighborhoods near downtown Calgary will appeal to you with the shops and walkability. And downtown’s plus 15 walkway system is close by too. Downtown city centre is where the condos are and virtually everything you need is here on 7th, 8th and 9th Avenue . The Bow River pathway is adjacent and Calgary’s convenient light rail transit can wisk you away to shopping in the south end of the city.
With the recession now largely in the rear view mirror, and with the price of oil rising steadily, homebuyers and property investors will be looking at Calgary homes differently.
Inmigration to Calgary is rising and mortgage rates remain low. Although “made to depress” Canada housing policies will constrain the market, the outlook for Calgary real estate is for growth. The extent of that growth of course depends on the price of oil, incoming energy sector investment, and the value of the Canadian dollar vs the US dollar.
The Price of Oil – Already Above Expectations
(This section written in winter 2018) Oil Prices were never expected to rise near $50 yet are above $55 now. The Saudis have proven they control the price of oil, not markets. Tough to predict what they’ll do however their recent actions show some resolve and purpose. The fact prices have reached $55, well above the limits predicted by all the experts has to indicate something.
The World Bank may have posted the best forecast for oil prices through to 2020.
Price to list ratio revels that those putting up their houses for sale are receving 95.7% of their list price.
Total sales volume of apartment dropped slightly, however total sales in dollars dropped by $5 million compared to September.
Screenshot courtesy of CREB.com
Economic Predictions for Calgary
If oil continues to rise steadily in price, Alberta stands to recover economically. Businesses have pared down their costs and are better able to profit from growth. Although not officially a big component of the rosy Canadian economic forecast, Alberta and Calgary are keys to the future.
Alberta’s economy is much more diversified than it used to be however it is impossible to replace the revenue generation of the Canadian oil sands, the world’s largest pool of untapped oil reserves.
The price of WTI oil just reached $56, well above $30 a barrel last year, and there are indications the Saudis intend to cut production. The wise course of action is for governments to support the oil sands and other more costly production methods to grow oil supply. This would prevent OPEC from harming the growing US economy and the global economic upswing.
CREB’s 2017 Economic Outlook and Regional Housing Market Update
In the Calgary Real Estate Board’s most recent 2017 Calgary Economic Outlook and Regional Housing Market update, CREB believes the pace of economic recovery will be slow but stable. Stagnant employment, wages, slow immigration, tighter mortgage lending restrictions, and made for Vancouver/Toronto economic policies will weigh on the Calgary housing market.
The latest report does forecast for 2018. However, Alberta’s economic performance is expected to be well up at 4.3% for all of 2017. New construction housing starts will be well down this year at around 3500 units. Multifamily housing starts are down just slightly from 2016 levels.
Screen capture courtesy of CREB.com. Stats courtesy of CMHC.
Total house sales were precisely forecasted to be 600 higher in 2017 than 2016 with a price similar. Dead on accurate. New listings will total 32,731, 400 for the full year. Sales of apartment will rise slightly over last years numbers at about 2800 units.
If new construction starts are constrained, then the resale market may grow in the neighbourhood of 1% in 2018, 2% in 2019 and perhaps 3% in 2019. Of course, all predictions rest on the price of oil which as mentioned, the Saudis and OPEC control. And US shale production and drilling rig counts seem to moderate upward increases in oil prices.
The last word on the Calgary Real Estate Forecast is positive. Oil price is rising, the US dollar is climbing with President Trump’s new tax cut to raise the US dollar value. With Alberta’s growth currently reported at 6%, a solid Canadian economic forecast at 3.7% growth in 2018, we’re running out of reasons why Calgary isn’t going to boom in 2019.
Note: the preceding post is not meant as specific investment advice, but rather as a comparison of real estate investment or home buying opportunities. Please ensure you discuss all investments with a licensed professional.
More commodities experts and other oil industry people are warning of potential skyrocketing oil prices. Higher oil prices translate to higher gas prices and other products — inflation.
And the shocking prediction of $100 to $300 per barrel might be overshadowed by what gasoline prices could reach. This post looks at the inexorable rise of gasoline prices and how you can hedge against that problem. If you don’t work in the oil and gas sector, this is a problem.
Crude oil is the commodity that influences the health of economies and housing markets more than any other. It isn’t lumber, steel, lithium, aluminum, or gold.
And while oil prices get featured in business media, it’s gasoline price increases that generate real emotion. For commuting consumers who drive everywhere, saddled with big mortgages and rising interest rates, the high price of gas could cripple their lifestyle. How would $10 a gallon for gas feel to feed your SUV or truck?
But Where There’s Smoke, There’s Opportunity
If oil and gasoline prices jump worldwide and OPEC is able to extend the high price period, oil companies are looking at a winfall. Below, we’ll take a look at where you might want to invest to take advantage of this situation and where the biggest potential for profit is.
Oil companies are moving into a period of high profitability.
Gas Prices Rising
Some are predicting high rising oil prices and so far, they’re back up over US$70. That number seemed plain crazy one year ago.
And gasoline prices are very high (1.60 per litre in Vancouver, Canada) and about $2.70 a gallon in the US. and in the UK prices are 121.4 p/litre ($1.64 US per litre).
If oil prices hit $100 a barrel, gas prices could conceivably double. Since gasoline refineries are maxed out, there won’t be growing supply to fulfill demand. Even modest increases in demand would jump prices (such as this summer’s vacation demand).
And for the past 2 years, the price of gas is not tied to the price of oil.
In fact, gas prices have big taxes and other fees added to make it even more expensive. And when gasoline production is constrained, it sets the stage for lofty gas price predicions.
Canadian gasoline prices are 40% higher than in the US, making it an expensive summer for debt burdened Canadians looking to travel.
Trading Economics forecasted $1.10 gas prices in Canada yet they’re nearing $1.40 in Toronto and $1.60 per litre in Vancouver. This smooth price growth forecast is already unrealistic.
OPEC is the world’s major oil producer and they have agreed to limit production. When supply falls, prices rise. And many sources of oil are drying up (e.g. United Arab Emirates, Venezuela).
The Long Term Future:
IEA said that once US tight oil plateaus in the late 2020s and non-OPEC production falls back, the market becomes increasingly reliant on the Middle East to balance the market. There is a continued large-scale need for investment to develop a total of 670 billion bbl of new resources to 2040, mostly to make up for declines at existing fields rather than to meet the increase in demand. — from report in OGJ.com
For non-oil producing countries, relying on the middle east for oil, and a $100 barrel of oil price is worrisome. Over time, it drains significant wealth out of their countries and jumps inflation. That’s especially so for the US, Germany, France, UK, Japan, Australia, and Canada.
The last time oil prices spiked at $150, they soon crashed along with the US economy and the US housing market. And with real estate prices so high, could we see another housing crash?
Pierre Andurand, an oil-focused hedge fund manager made headlines when he said oil companies won’t invest in new production, thus suggesting a $300 a barrel oil price was “not impossible” within a few years.
Since investors believe green energy is ready for prime time, investment in oil exploration is way down, and oil refineries aren’t being built. As a result, the price of gas is likely to skyrocket in the next 5 years.
So the real story is not crude oil predictions, but rather rising gasoline prices in the US, Europe and Asia.
Adding to potential demand comes from the failure of the Kyoto Accord and the Carbon Tax regime. Once it fully fails, demand for oil will surge.
Never Say Never to Higher Prices
Could Los Angeles home prices double? Since 2012, they have doubled in price. In Toronto, home prices skyrocketed even more, and the local government had to kill the economy to suppress home prices. Canada lost jobs last month against expert predictions of +180,000 more. Constraints on US home building also could cause house price inflation too.
Housing experts: home prices won’t rise that much. They did.
Supply and demand in homes is steady, but demand for oil is much more intense during upward economic growth. With the US, Chinese, and European economies doing well, optimism high, and interest rates low, demand for oil will stay high.
What Drives Oil Prices?
Oil prices are driven by demand from industry for plastics, fuels, and also by supply constraints by producing countries. The oil embargo of the 1970’s showed us supply and high prices can wreak havoc on economies. Political turmoil, sabotage, war, embargos and more could take a lot of supply out of global markets at a time when global GDP is growing.
Andurand believes high oil prices won’t affect economies, but how can it not? Even though the US is going to be the world’s top producer of oil, Japan, UK, France, Germany, and other nations won’t be able to maintain their economies with growing US protectionism.
Andurand says oil prices need to rise fast to discourage consumption, otherwise a huge price shock will happen in a few years. Everyone is buying huge SUVs and trucks now. Ford stopped making cars. Consumption will rise from vehicles and from commercial products (plastics).
For President Trump and the US economy, high oil prices and gas prices may actually stimulate US GDP growth boosting US gas consumption. The US can grow its exports significantly with oil based products. That’s a big incentive once everyone realizes what an oil rich US is all about. The US is becoming one of the top oil producers and US industry will like what they can do with this new opportunity for lucrative export products.
With Trump putting sanctions on Iran, it could set off trouble. Further, if the Trump government was to come to an end, the US democrats could decide to close down shale oil production and off shore oil production, thus pushing dependence back on the middle east.
Eric Lee of Citibank forecasted $60 for oil and still clings to lower oil price forecasts.
Goldman Sachs predicted this back on Feb 5th: The decline in excess inventories was fast-forwarded in late 2017 by stellar demand growth, high OPEC compliance, heavy maintenance as well as collapsing Venezuela production. Goldman revised their estimate from $62 to $75 and then onto $80.
Here, Jeffery Curry, head of commodity research at Goldman Sachs discusses oil and business. Expert opinions are that mideast turmoil, greed, and high demand will not raise prices of gas and oil.
Do High Oil Price Rises Predict a Recession
According to a Wall Street Journal report, there is a correlation between price rises and recessions (seen in graphic below). It could be that oil price rises typically happen toward the end of a strong business cycle, which of course always ends. Did the business cycle end because of high oil prices or because all economic booms must die a natural death?
It’s at these times, especially this record length positive groth business cycle, when global economic pressure boosts demand well ahead of supply. And as we just discovered, no one wants to invest in old technology and fossil fuels. Yet, the green revolution is still a long way away.
Perhaps more people will realize how far away electrical energy is and we’ll begin to appreciate the ongoing role of fossil fuels in global economies.
Where to Invest in Oil Stocks
If this is a meteoric rise supported by US producer strength and big global demand for gasoline, it makes sense that the biggest producers will make huge profits. However, smaller oil companies might see their growth rocket even faster.
Take a good look at Canadian oil companies. Right now, pipeline problems are trapping Canadian oil from Alberta and Saskatchewan. Their stock prices may be suppressed as sellers are thinking it is a long term issue. As prices rise, the issues will be forced to resolution and the pipelines will begin to get oil flowing. This is not advice to invest in these firms but rather an opportunity to headge against the coming recession with a quick win with oil, if you have the funds to play with.
Here’s some oil stocks you may want to investigate. Most are listed on the TSX and have their headquarters in Calgary:
Touchstone Exploration Inc. (TSX:TXP) – $0.255 Oil & Gas Exploration and Production
BlackPearl Resources Inc. (TSX:PXX) – $1.46 Oil & Gas Exploration and Production
Zargon Oil & Gas Ltd. (TSX:ZAR) – $0.54 Oil & Gas Exploration and Production
Pengrowth Energy Corp. (TSX:PGF) – $1.05 Oil & Gas Exploration and Production
Journey Energy Inc. (TSX:JOY) – $1.99 Oil & Gas Exploration and Production
Bonavista Energy Corp. (TSX:BNP) – $1.61 Oil & Gas Exploration and Production
BNK Petroleum Inc. (TSX:BKX) – $0.65 Oil & Gas Exploration and Production
Crew Energy Inc. (TSX:CR) – $2.75 Oil & Gas Exploration and Production
Obsidian Energy (TSX OBE) $1.45
Baytex Energy (TSX BTE) $5.89
Tourmaline Oil (TSX TOU) $23.41
Whitecap Resources (TSX: WCP) $9.16
Suncor Energy Inc. (TSX:SU) $50.92
Cenovus Energy Inc. (TSX:CVE) $13.99
Encana Corp. (TSX:ECA) $16.90
If you’re firmly opposed to fossil fuels, then investing in residential solar power might be a good play. Rising electricity rates and growing demand from electric vehicles are powering up this tech sector. With big storage batteries arriving, electricity is launching a lot of entrpreneurialism. In fact, solar power is creating more jobs than any other industry.
Solar panels prices are jumping due to tariffs on China, however that’s spawning US solar panel producers. Check them all out at energysage.com. Their stocks prices are up 6% to 9% on the news that California is now manadating them on new homes being built.
It will be fascinating to watch the rising momentum of oil prcies and gas prices and how accurate experts predictions are.
Don’t forget to bookmark this page as I’ll be continuously updating this very important topic. Oil is where it’s at in 2018.
May 18, 2018. Your Epic report and forecast of the 2018/2019 US housing market offers facts, data, perspective, predictions, price factors, expert opinion and forecasted trends from sources such as NAR, Trulia, Freddie Mac, Zillow, Case Shiller, Trading Economics, and more.
NAR reports that existing home sales grew in April, 1.1% which is well up from the 1.2% loss 12 months ago. See the NAR charts below for others stats and which are the hottest markets for April.
Spring Market is Starting Strong
It’s an unusual spring market given the growing purchasing power of home buyers in low to mid market prices. That makes it a great market for those looking to sell their current home to trade up to a better one.
Resale home transactions rose 1.1% in March showing clealy that buyers are hungry to buy. However, listings have declined 7.2% and prices have risen 5.8% versus last March.
It’s a sellers market and it will be for some time. If you’re hunting for houses for sale, you’d better have an advanced search strategy.
The dwindling numbers of homes for sale should push prices upward in Los Angeles, San Diego, Boston, Denver, Las Vegas, Dallas, Miami, Seattle, New York, and Houston . It’s all driven by a wildly successful economy and a resistance by local and state governments to support home development in their jurisdictions.
Please feel free to use this material on Linkedin and Facebook. It’s an important topic for buyers and sellers who face a big decision about buying a home or condo in 2018 as home prices and mortgage rates rise.
NAR’s March Update
Homes sales have risen for 2 months straight, however they’re down 1.1% from same time last year. Although prices haven’t hit the 2007 records, they are too high for most to afford even though wages have grown. Home prices are now running at double the average wage increase.
The median existing-home price for all housing types in March was $250,400, up 5.8 percent from March 2017 ($236,600). March’s price increase marks the 73rd straight month of year-over-year gains — from NAR
Boston, New York, New Jersey
March existing-home sales in the Northeast jumped 6.3 percent to an annual rate of 680,000, but are still 9.3 percent below a year ago. The median price in the Northeast was $270,600, which is 3.3 percent above March 2017 – from NAR update.
Housing inventory is the most influential and persistent factor affecting home prices. Despite this, the media and some politicians blame speculation, building costs, interest and mortgage rates, cost of living, and mortgage rules. When the economy is good people want homes. Construction is strong but can’t keep up. Simple rule of supply vs demand is driving home prices.
Looking for housing market predictions? Take a good look at prices, GDP, wages, jobs, and other key data below on the US Economy for the next 6 years and you may see a surprisingly positive picture, far from the dread of the recent stock market corrections.
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Should you Buy or Rent?
We all want to own a home, but does it make more sense to rent? If you can’t afford a home in New York, Boston, Los Angeles, San Francisco, or Dallas, renting may be the only option. Here’s a few blog posts I’ve written on the US rental housing market, apartment prices, and on buying vs renting.
What’s Driving the California Housing Market?
Strong demand from an eager demographic and economy is clashing with local resident NIMBYism to create a volatile market. See the California housing report.
This completely updated EPIC United States Housing Report has market updates and predictions for 2018 to 2020, and other data to 2026.
NAR’s VP of research Paul Bishop, predicts sales will be flat for 2018.
One of the biggest challenges is going to be in certain high-cost parts of the country where they have high home prices, relatively high property taxes or high state income taxes, then that’s ultimately going to make the cost of owning a home more expensive.
In addition, renters may lose the incentive to buy a home in high-cost areas if they can’t use the mortgage interest deduction or the ability to deduct some of those other housing-related costs from their taxes. It’s focused mostly on the higher cost areas. It’s certainly something that everyone will be monitoring and how the housing market reacts in 2018 and 2019 — from a news release on DSnews.com.
In this post, you’ll discover the hottest city markets, zip codes, get economic, employment, finance, and housing projections to understand the key fundamentals driving home buying, rental investment, home construction, and the real estate markets in 2018/2019 to 2026. Read thoroughly if you’re considering buying a house this year.
What’s the story for summer of 2018? It has to be Texas and Michigan, however the overall picture is of a very good spring and summer for the housing market nationwide and going forward to 2026. Population growth in San Francisco, Seattle, Los Angeles, Denver, Miami, Houston, Sacramento, Las Vegas and Phoenix continues strong.
The Complete Picture for 2018
Ready to choose your realtor and buy a house or condo this year? The outlook is really rosy! And how about investing in a rental income property for sustained passive income? This current lull might make the next 3 months the best time to buy. The outlook is as positive as could be for buyers. Lock in your mortgage rate.
Overall, predictions and outlook for the US housing marketare positive. That’s because the US economy is on its strongest roll ever, bolstered by lower taxes, improved trading agreements, growing American confidence, happiness, comfort, freedom and the American dream has been kindled again.
Are you considering buying homes for sale as an income investment? With Apartment rent prices holding strong in 2018, it’s a solid investment strategy.
This graphic below courtesy of Trading Economics shows how the real estate market will be healthy for some time, and that buying a home is a wise investment (Tradingeconomics is a very informative site, have a visit afterward).
Increased government spending, low but slowly rising interest rates, and the repatriation of business and corporate funds back to the US means it’s a healthy, safe market for everyone.
Foreign investment has been strong because the world knows, the US is the place to be. American’s have always had a great attitude toward risk and business growth. Now the economy and business markets are allowing that spirit an opportunity to pay off.
NAR/Realtor Outlook on the Housing Market
Realtor.com® 2018 Forecast
Home price appreciation
Average 4.6% mortage rates in 2018 to 5.0% (30 year fixed) by year end
Existing home sales
2.5% growth, low inventory problem easing
3% growth in home building 7% growth in houses
New home sales
Growth of 7%
Home ownership rate
Stabilizing at 63.9% nationally
Despite the market correction, experts feel this bull market could continue as long as business keeps coming back to the US. That’s a long process of repatriation. In the meantime, the jobs picture, wage growth, investment, and profit growth are giving real estate participants a lot of optimism.
The resistance to housing development is slowing. Conservatives are giving up amidst intense pressure by those facing outrageous housing shortages and skyrocketing rental prices.
Housing Shortages Won’t Ease
Although January’s sales were disappointing, it’s due to the severe shortage of housing. Demand is there and you’ll be competing against a hoard of buyers in 2018. Corelogic expects 2018’s home prices will grow 4.3% by next December. NAR and Realtors® expect only a 3% growth in prices this year. Nevada, Texas, Washington, and Florida are the states with the best outlook, and perhaps the best places to buy homes or rental properties.
The Bay Area, Portland, and Seattle areas saw the highest growth in prices last year while LA’s tumbled. Listings fell dramatically in cental California, Oregon, Washington, and New York.
Consumer mood was not so good in July of last year, mostly due to government problems. Yet the market came flying back. These challenges overcome mean more Americans will have more confidence in their personal situation.
The tax cuts should help although the Fed is counteracting that growth with a questionable raising of interest rates which seems to have sparked the sudden stock market volatility. Although some disincentives are present for home buying in certain price ranges, that will help keep the market balanced for 2018.
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A brief overview of January 2018 from NAR.
Housing Demand 2018: More Buyers Joining the Party
Housing market demand predictions: Demand 2018 will see stronger demand as young buyers have more savings to invest in a home and are getting closeer to being able to purchase a home.
Housing demand is also being supplemented by bankruptcy survivors who waited out their 7 year exile joining first time buyer millennials, babyboomers, immigrants, foreign investors (Canadian and Chinese), and even gen Xers, all of whom are looking for houses for sale.
New Home Construction Starts: Still Strong in 2018
New home building shows continued strengths, and should pick up by late spring when builders see a return of demand. Last February’s demand was also subdued.
The cost of living is rising and it means workers and businesses in cities such as New York, Los Angeles, San Francisco, Seattle, San Jose, Miami, San Diego, and Boston may migrate to cheaper cities such as Houston, Austin, and San Antonio. This is where job growth is best and housing is cheapest.
The price of apartment rental in cities such as Seattle, San Francisco, and San Jose Rents are extreme examples of the migration out of high priced areas. With limited housing and a strong economy, prices in San Francisco and the Bay Area cannot fall.
Inflation, Labor Shortages, and Building Supplies
Labor shortages, rising mortgage rates, and higher lumber costs are looming which could mean house prices will rise. With nowhere to go, homeowners are resisting selling. The hope that the resale market will come to the rescue might be unrealistic and and perhaps even fewer resale houses will be for sale. This fall, new home sales have been brisk as reported by the Commerce Department.
Mortgage Rates on the Rise
15 year fixed rate mortgages are still a bargain compared to historical averages. A home at these interest rates has to be considered a big savings, compared to the added price.
Let’s start off with the newly released 2018 Forecast from Freddie Mac. The predict a good year ahead with a solid 5% growth in price. They note that the aging population could keep demand subdued although limited housing for sale should create upward price pressure.
The need to refinance is low, homeowners aren’t too stressed out, and they’re using home equity to buy things which is good for the economy. Overall, Freddie Mac’s report is positive for 2018.
Home Sales Expect to Rise Nationally
Freddie Mac Predicts strong sales driven by moderating prices nationally.
And as this graphic from Freddie Mac’s report shows, price appreciation is much less than before the last recession.
Hottest Real Estate Markets This Past Summer
According to NAR’s latest report, San Francisco is again the hottest city, taking back the number one spot from San Jose. The hottest small city is Vallejo California, enjoying a spillover from the Bay Area market. Investors and buyers will be hard pressed to find buying opportunities are.
Silicon Valley prices will pressure businesses to look to cheaper cities such as San Antonio, Las Vegas, Houston, Austin, etc in 2018/2019.
Hottest Real Estate Markets in April 2018
Where are the hottest cities in the US? They’re all over this month and only 3 from California made the new top 20 list.
Hottest Cities for Investment Value
This chart from NAR shows where employment growth is strongest and the ratio of recent employment growth to homes being built. That’s a great stat for rental property investors looking for investment income in the best cities.
Compare that to wage growth and actual price appreciation. Again the Bay Area shows the best outlook for employment which has to be your top signal. However, rising oil prices and predictions for more, Texas may be your hottest state going through the summer.
Salt Lake City, Denver, Tampa, Dallas, Cape Coral/Naples, Charlotte, Las Vegas, Houston, San Diego, and Grand Rapids have great employment outlooks.
20 Hottest Housing Markets, January 2018 (Realtor.com)
Current Home Prices
San Francisco, CA
San Jose, CA
Colorado Springs, CO
San Diego, CA
Santa Rosa, CA
Los Angeles, CA
Santa Cruz, CA
Boise City, ID
Best cities for finding houses for sale and get a great return. For property investors or buyers with minimal cash, the cities of Kennewick, Detroit, Fort Wayne, Modesto, Fresno, and Waco look to offer the lowest prices on houses for sale. As usual, California and Texas lead the way, however Michigan is looking good with the President’s intention to bring the auto industry and related jobs back to the US.
In some markets such as California, home prices have leveled off a little from their relentless climb. There is a slight risk of a burst housing bubble. Outside of major city markets, the price growth potential in the next 5 years is highest. Some cities are hurting so invest carefully. Take a look at the best cities to invest in real estate and share your stories of which cities we should know about.
Here Panelists from the Urban Land Institution discusses 2017 and the next two year outlook:
Here’s 8 Reasons Why People Are Still Eager to Buy Real Estate:
home prices are appreciating and it’s a safe investment over the long term
millennials need a home to raise their families
rents are high giving property owners excellent ROI on rental properties
flips of older properties continue to create amazing returns
real property is less risky (unless you get over leveraged)
the economy is steady or improving (although Trump’s letting his enemies cause too much friction)
foreigners including Canadians are eager to own US property
bankrupt buyers are over their 7 year prohibition from the last recession and they can buy again.
Housing experts are predicting existing home sales of 6 to 6.5 million units in 2018 and then above 1.3 million new homes being built per month to 2024. The building is resuming now that the hurricanes and forest fires are over.
Will it be enough to support the economy? When American builders are feeling optimistic, it’s a good omen, however 1.5 million units per month is needed to fill forecasted demand for housing.
What’s also a good omen is what you’re going to read in this post. It may help you do many things in 2018, from finding employment (see the US Jobs forecast), to understanding politics, discovering high performing best investments 2017 to researching the best cities to live or buy houses or property in.
From Los Angeles to New York to Miami – Rental Property Equity/Income is King
These stats below are collected from top research and reporting companies including NAR, Forisk, Trading Economics, and other real estate market researchers.
Sharing is Good for your Social Health!
Pass this blog post onto your friends and neighbors because they should know as much about the forecast factors as possible before they buy or sell. It’s good to be helpful. Mistakes are painful!
Expert Predictions – US Housing
1. Expert Prediction from Eric Fox, vice president of statistical and economic modeling (VeroForecast) — The top forecast markets shows price appreciation in the 10% to 11% range. The top forecast market is Seattle, Washington at 11.2%, followed by Portland, Oregon at 11.1% and Denver, Colorado at 9.9%.
These economies have robust economies, growing populations and no more than two month’s supply of homes. In fact, the forecast of the Boston market increase sharply to 7.4% is due to reductions in inventory and unemployment. On the other hand, the worst performing market is Kington, New York with 2.5% depreciation, followed by Ocean City, New Jersey at -2.1%, Kingsport, Tennessee at -1.9% and Atlantic City, New Jersey and San Angelo, Texas tied at -1.4%. — BusinessWire
2. Pantheon Macro Chief Economist Ian Shepherdson explains that “Homebuilders behavior likely is a continuing echo of their experience during the crash. No one wants to be caught with excess inventory during a sudden downshift in demand. In this cycle, the pursuit of market share and volumes is less important than profitability and balance sheet resilience.” — Marketwatch.
US Mortgage rates are forecast to stay low. Yet recently, mortgage rates have risen above the 4% mark and homeowners are locking in their home loans at the 30 year period. Some are calling this the Trump Effect. With Trump in power, lending requirements are expected to be eased, land opened up for development, and this should stimulate home purchases. With employment growing and wages moderating upward, the market is set for growth. Yet, some housing forecasters still cling to the idea that housing starts will moderate after strong growth to 2020.
US Employment Outlook 2018 to 2024
According to BLS the job outlook is positive. Construction added 36,000 jobs in January, with 226,000 more than last year, with most of the increase occurring among specialty trade contractors (+26,000). Residential building construction trended up by 5,000 jobs. Total employment should grow by another 4,000,000 to 2024.
National Employment Growth
Growth Predictions, 2014–24
Median annual wage, 2014
Total, all occupations
Job Growth by Occupation to 2026
2016 National Employment Matrix title and code (Chart data courtesy of BLS
Median annual wage 2016
Total, all occupations
Personal care aides
Combined food preparation and serving workers, including fast food
Home health aides
Software developers, applications
Janitors and cleaners, except maids and housekeeping cleaners
General and operations managers
Laborers and freight, stock, and material movers, hand
Waiters and waitresses
Accountants and auditors
Market research analysts and marketing specialists
Customer service representatives
Landscaping and groundskeeping workers
Maintenance and repair workers, general
Heavy and tractor-trailer truck drivers
Elementary school teachers, except special education
Stock clerks and order fillers
Teachers and instructors, all other
Receptionists and information clerks
Sales representatives, services, all other
Business operations specialists, all other
Licensed practical and licensed vocational nurses
US Housing Starts to 2024
This enlightening stat in the graphic below shows the US economy hasn’t recovered from the great recession and housing crash of 2007. Single family spending is rising rapidly, yet no one believes conditions for high inflation exist. It points to years of solid, healthy growth ahead with an unfulfilled demand for single detached homes.
Graphic courtesy of paper-money.blogspot.ca
Graphic courtesy of paper-money.blogspot.ca
Housing and Interest Rate Forecast to 2019
Housing Activity (000)
Total Housing Starts
New Single Family Sales
Existing Single-Family Home Sales
Federal Funds Rate
90 day T Bill Rate
One Year Maturity
Ten Year Maturity
Freddie Mac Commitment Rates:
Fixed Rate Mortgages
Data are averages of seasonally adjusted quarterly data and may not match annual
Employment Outlook: Let’s not forget jobs. Total employed persons in the US will grow 800,000 over the next 2 years.
Graphic courtesy of tradingeconomics.com/united-states/forecast
Existing homes or resale home sales, may slow slightly but US construction spending will increase. Prices will rise to 2020 and construction spending will grow through 2020.
Graphic courtesy of tradingeconomics.com/united-states/forecast
Apartment Rental Forecast
Demand for apartment rentals is on the rise and construction starts of multi-unit dwellings is rising to match demand. That creates more opportunity for rental property investors to grow their portfolios in 2018. Yardi says YOY rent growth was 3.0% and they expect rent growth to remain in the 2.5% range.
Bookmark this page and return for further housing market forecasts, predictions, expert opinions and market data for most major US cities including New York, Los Angeles, Palm Beach, Miami, For Lauderdale, Orlando, Boca Raton, Wellington, Delray Beach, Boyton Beach, Phoenix, Denver, Seattle, Chicago, Boston, New York, Dallas, Houston, San Antonio, Austin, St Louis, Minneapolis, Green Bay, Charlotte, Tampa, Toronto, Vancouver, Montreal, Ottawa, Oshawa, Hamilton, Newmarket/Aurora, Richmond Hill, Oakville, Calgary, Kelowna, Mississauga, Anaheim, Beverly Hills, Malibu, San Diego, San Francisco, San Jose, Fresno, and other cities in the states of Florida, Texas, California, Massachusetts, Oregon, Washington, New York, New Jersey, North Carolina, Georgia, Illinois, Michigan, Ohio, Arizona, Nevada, Minnesota, Alaska, Hawaii, Utah, New Mexico, Lousiana, Alabama, Maryland and Pennsylvania.
The real estate/housing market in Los Angeles enjoyed good growth during 2017. And predictions are for higher prices and good conditions for sellers.
However, the stats for January 2018 were a little sobering. According to curbed LA, only 4,847 homes were sold in LA County. That’s an alarming drop from 6,613 in December and much less at 5,188 sales in January of 2017.
Prices grew $41k this spring of 2018. Predictions are for continuing high prices due to ongoing shortages.
The wild fires had an effect, in LA County and hitting regions such as Sonoma and Napa valley regions hardest. The insurance driven recovery should revive the housing market in LA.
The losses were estimated at nearly $10 billion with a $500 billion hit to the economy. The numbers are similar to the floods experienced in Houston TX or Miami FL . Some homeowners are discovering they weren’t covered sufficiently with their home insurance.
The California Association of Realtors Outlook
CAR reported that:
single-family home sales fell 7.6% in January down to 388,800 and down 2.9% from January 2017.
January’s statewide median home price was $527,800, down 4.0% yet still 7.3% higher than January 2017.
entry level homes in California rose to $220,000 in California, up more than 10 percent from 2017 when entry-level home averaged $200,000.
the DOM for a single-family home remained low at 27 days in January, compared with 36 days in January 2017.
The California Department of Insurance said the fires cost $9.0 billion in insurance claims so far, which was 3 times the $3 billion claimed previously. For the next few months however, California housing will be in extra short supply.
Fires might actually be an unfortunate distraction from the housing crisis that’s existed for many years now in Los Angeles and across the whole state of California. The state just can’t seem to get a handle on the need for more homes.
The OC Register reports that CEQA lawsuits against developments are a serious issue for housing, especially in the LA area. As Los Angeles residents suffer financially, and while housing crash rumors float around, prices are rising. You’ll need an income of $120,000 to buy a home in LA in 2018.
Prices of condos in downtown LA are reportedly $90,000 higher than last year.
Insurance Companies Fielding Claims from Homeowners
Is it instinct or just common sense that California will continue as the most desired place to live on the planet? Does the climate in San Diego, Sacramento , Bay Area, and Los Angeles along with the high paying jobs, interesting geography, lifestyle and recreation, California is a magnet for people around the world.
The short answer is Yes. Houses for sale in Los Angeles County and Orange County are in short supply and new residential development is not keeping pace. It would take a market crash to stop the price rise and even then it would only be for a few years. For wealthy investors, a few years is well worth the wait. The question is where to get a realistic price? The hunt continues.
Average House for Sale Still Sells
CAR reports the average house price in LA rose about 10% in late summer of 2017. San Bernardino, Riverside, and Orange County had strong price growth of 8% to 10%. Contrast that with the drop in the Bay Area of more of about 3% or $14k to $33k for detached homes and you realize LA is a more attractive housing market for property investors.
The effect of the fires will be to reduce availability and raise prices. So not much relief in site for the LA market. As in most housing markets across the US, millennials have been shut out of the markets. They’re in their child bearing years and have saved up small fortunes to ready them to finally purchase. They’ll be buying in LA or Orange County somewhere.
Sales volume actually increased 11.5% in the last month, so homeowners appear to be loosening up finally. Realtors are wondering how they can get people to sell their homes. Inventory is the big story for the fall of 2017.
This graphic from CAR.org’s latest report shows inventory in California is sharply down from last year. Sales above $500k were up up. Active listings in the lower price ranges are down considerably ( -10% to -28%).
Screen capture courtesy of CAR.org
And buyers real estate investors are hopeful they can find the right property in the right city or zip code. Zillow has forecast house prices in Los Angeles to rise throughout 2018 while CAR shows it moderating. A lot depends on the political climate and interest rates.
Screen Capture courtesy of Trulia
We should keep in mind that only 30% of Californians own a home so the door is wide open foropportunity and new sales, particularly with first time buyers. The problem is that homeowners don’t want to sell and buyers can’t afford the prices.
Why are Buyers Buying in California?
CAR’s 2016 survey showed only a small portion of buyers buy property as an investment. Only 13% are real estate investors.
Buyer Survey – Screen Capture courtesy of CAR.org
The US economy will pick up steam and Californians will be buying a home again even if they have 1 hour+ commutes, higher interest rates, and out migration to remote towns.
If buyer’s are hoping for bargains in the next 4 years, they’re unlikely to find them. Despite a dip in September, prices for homes and condos are up $24k to $30k from one year ago. Are the Asian and Persian buyers pulling out of LA? The Trump instability and trade issue might be a pause before even more money pours into the reviving American economy. Make American Great Again, also creates excellent investment opportunities in California, paying out in $US.
jobs being repatriated back to the US from Mexico and China
employment already good and rising
the end of Obamacare?
the end of Dodd-Frank restrictions on lending
general Federal easing of real estate development expected
it will take some time for mortgage rates to rise
still isn’t enough housing to house LA’s growing population (recession)
It’s the Los Angeles housing forecast that is perhaps one of the most interesting forecasts for the US for the next few years. California’s housing developers are hard pressed to build homes to house the population. We can speculate that homes will rise in price for the next 4 years. It’s not easy to predict though when people are talking real estate bubbles, NAFTA cancellations, Brexit, skyrocketing prices, vacillating oil prices, reduced immigration, and presidential elections.
Overall, the Los Angeles forecast was very good for sellers with plenty of demand and with the average price of a home hitting $690,000 last summer. Affordability is dropping though and only 30% of LA county residents own a home.
Given the nasty commutes Los Angeles workers are enduring, this housing crisis should be a top priority for the California state governor.
A few pundits are suggesting homeowners need to build granny flats in everyone’s back yard. Political battles are forming over the effect of regulations on LA’s and California’s home construction. Who will win? Will they battle Trump head to head to stop new development?
The situation may become worse than what San Francisco, Vancouver, and Toronto have been through, and what Miami, New York, and Boston may be into now.
Save your Money on Auto Insurance Quotes in LA
Are you paying too much for car insurance in Los Angeles? Some zip codes and neighborhoods are subject to higher premiums. Are you okay with that? How about finding lower car insurance rates and making it a habit of shopping for auto insurance every year? 2017 is a good year to save:)
Here’s the Hottest Zip Codes in Los Angeles
LA Curbed’s list of hot zip codes: Los Angeles’s 90012 zip code is shaping up to be the 2nd fastest growing area in the nation at 8.8% growth, 2nd behind only Gilbert AZ. The 90012 zip code includes Chinatown, the Civic Center, Elysian Park, Victor Heights, parts of the Arts District and Bunker Hill, and most of Little Tokyo.
Here’s the LA Times hot zip code list:
Santa Monica 90402 – Average home price: $3,237,500
Hermosa Beach 9025 – Average home price: $1,693,500
Lincoln Heights/Montecito 90031 – Average home price $458,500 +14.6%
City Terrace 90063 – Average home price: $320,000 +18.5%
Marina Del Rey 90292 – Average home price: $2,157,500 +23%
Manhattan Beach 90266 – Average home price: $2,100,000 +10%
Compton – 90220 – Average home price: $285,000 +9.8%
Playa Del Rey 90293 – Average home price: $1,517,500 +26.5%
Toluca Lake Studio City 91602 – Average home price: $1,022,500
The Los Angeles home price graph below courtesy of Zillow shows how prices have almost returned to pre-recession values and are beginning to level off. To forecast prices and demand for the LA region, we’d have to examine the cause of the moderation and if it’s a fact. Here’s LA’s hottest zip codes.
Last year, home prices in LA rose 7.8%. That’s a fairly strong ascent to just snap out of, so we’re left wondering what really is the outlook is for the 2017 to 2020 period? With prices high and rising, it makes sense that the number of buyers will dwindle (preferring to rent) and a leveling off would occur. It seems however, this is more of a guess by forecasters not really backed up by a solid consideration of all the factors that will be in play during the next 4 years – defeated regulations, growing economy, and reduced immigration.
Homes for Sale in Los Angeles: Prices, Trends from Zillow
Try the Zillow Home Search Widget to learn more about LA Homes for Sale. Realtors, click here to hear more about the Zillow leads program:
Here’s the thing. According to a Harvard real estate guru, bubbles don’t burst until demand dries up — an increase in unsold inventory.
Do you honestly think there will be no demand for coastal California property, especially Los Angeles county or Orange county? As you’ll see from the data in this post below, there is huge demand for property. Supply is the problem.
Factors Affecting House prices and Availability in LA
Housing Demand – High overall demand – “all cash bidding wars” in some cases
Housing Supply – Throttled, supply is far from what’s needed
Mortgage Rates – Continuing Low, especially in light of global economic slackening
Down Payment and mortgage rules – Banks are withdrawing FHA loans however some are offering downpayments as low as 3%
Regional Employment – Very low and remaining low
Buyer Income – low and not rising much
Home Prices – High and rising – out of reach for many buyers – many consider LA homes grossly over-priced
Demographics – Millennials coming into family and home buying years and LA millennials have had the lowest rate of home buying (pent up demand)
Number of Renters – increasing fast
New Home Construction: slow (100k to 140k per year)
Economic-Foreign Trade – Trump expected to reduce US deficit
Election Year – Voters uncertain of what Trump will create
Taxes on Sale of Home – Tax situation is great for sellers
This intriguing graphic courtesy of https://journal.firsttuesday.us/ reveals that home sales in Los Angeles is actually well down from historical levels. The likely reason for that is lower income buyers simply have even less income to buy and of course the high prices. Home ownership is lowest in California.
A complete recovery of around 110,000 annual home sales will likely occur in 2019-2020, as end user demand in Los Angeles County is buttressed by a Great Confluence of Baby Boomers (Boomers) and first-time buyers who are lured by further employment (needed to accommodate population growth of roughly 1% annually since the beginning of the Great Recession).
That’s a forecast growth of about 20,000 homes per year over current current 2016 levels.
Another interesting stat provided by firsttuesday is the very low rate of home ownership and how much it’s plummeted. It’s on the uprise now, and you’re left wondering whether Trump’s renewed emphasis of America First will encourage the growth of home ownership?
This Stat from CAR shows homes have been on a rollercoaster ride of sorts yet, 2016’s expected resale volume is still well down from 2011 and 2012’s highs. If incomes should rise in the LA area, it could have the effect of stimulating new housing construction and increase sales of homes. With the number renters skyrocketing, there’s a huge pool of potential buyers.
Home reSales Forecasts 2016f
This graphic reveals the exceptionally high cost of renting in Los Angeles compared with other major centers. The housing availability problem isn’t isolated to California or LA, it’s a US wide issue. The high housing costs in the coastal California areas however may prevent many skilled workers from migrating to LA to work. Startups for instance may be forced to leave San Francisco, Bay Area and LA because of the cost. San Diego County may be a better option for the short term.
This is a short term forecast from LA realtor James Campbell, who believes prices will drop?!
Gord Collins — I generate leads for realtors in Los Angeles, Phoenix, Denver, Seattle, Chicago, Boston, New York, Dallas, Houston, San Antonio, Austin, St Louis, Minneapolis, Green Bay, Charlotte, Tampa, Miami, Orlando, Toronto, Sausalito, Santa Clara, Mountainview, Fresno, NAPA, Tiburon, Oakland, Palo Alto, Anaheim, Beverly Hills,, San Diego, San Francisco, San Jose, Sacramento, Encinitas, Orange County, LA County, Riverside, Malibu, Santa Barbara, San Bernardino, Portland, Washington, Atlanta, Irvine, Nashville, Sunnyvale, Salt Lake City, Riverside, Rancho Cucamonga, Costa Mesa, Thousand Oaks, Simi Valley, Glendale, Oceanside, Long Beach, Huntington Beach, Carlsbad, Santa Clarita, Henderson, Mesa, Temecula, Kirkland, Redmond, Kansas City, St Louis, Stockton, Scottsdale, Palm Springs, Chula Vista, Escondido, and Santa Monica, Venice Beach, and La Jolla. See additional housing market reports on New York NYC, San Diego CA, and San Francisco CA.
Will house prices in Toronto fall? How about condos? We could read the forecasts of any number of Canadian experts to get a good idea. Most seem to be suggesting that home prices will level off for the entire year of 2018.
Can forecasters predict government policy changes, trade conflicts, OPEC price jumps, and other factors that might play on house prices? Probably not. So why would artificial intelligence software systems be any better at it?
Turns out TREB has a huge volume of data that could be fed into an artificial intelligence system and reveal some very interesting patterns and housing market predictions. (and wait till Blockchain technology leverages housing data)
A Lot of Experts and Scientists Believe in AI
Just recently Better Dwellings fed Toronto housing market data into IBM’s artificial intelligence product called Watson. After processing that data and looking for factors that most accurately foretold of price changes, Watson apparently concluded that only a few factors only showed relevance.
1. total listings / DOM
2. DOM / new listings
3. DOM / sales
According to IBM’s Watson, each of thse 3 scored a 94% relevance in affecting or predicting average price changes.
So days on market is the factor not many would not have guessed. Have you ever heard housing experts speak of days on market?
It seems to point back to housing supply as the main factor in price increases.
So with more homes coming on the market, prices will probably fall in the Toronto housing market in 2018.
Of course, we don’t know the exact mathematics of it, but the AI system would likely know the price change if 10% more houses were introduced, and if the DOM fell by 10%. It’s likely that if all 3 factors had the same 94% relevance, that they might actually be measuring the same numbers.
In any case, prices show a consistent yearly rise, so even when we factor out last spring’s madness, it still suggests a price rise. So who do we believe, the experts or the AI system?
Is the market that liquid that if listings across the GTA rise 10% such that a guaranteed corresponding sales decrease would happen as well?
A bigger factor in forecasting housing prices would be the Toronto economy and the Canadian economic forecast. A rosy one might cause price increases. And the fed’s mortgage and lending policies, along with the age of home buyers might chime in too. But those factors could be fed into an AI software system to create some new revised estimates. Check out a more human forecast of Toronto’s housing market and the US housing market.
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It’s a rosy outlook for the housing markets in America and anyone buying real estate. Prices have moderated, new city markets are catching investor’s attention. However do you know which are the best cities to invest in real estate in 2018?
Do you have a strategy to buy in the best cities, use a property management company or use property management software to run your portfolio.
You’re just about set to make 2018 a great investment year. Have you looked at the forms of property investment should you choose — rental income suites, apartment buildings, or student housing reits? Open your mind the right type of property investment in the right city will outperform everything else.
But the Bay Area isn’t the only city with potential. Dallas, Houston, Austin, San Antonio and Fort Worth are getting special attention these days. Texas is growing. Michigan has huge potential. Even Boston has potential. Businesses are relocating to these cities for a lot of reasons.
In this era of investment, the best property investments may be in other cities. Even if you intend to stay close to home, knowing what’s going on in other states might provide a superior return on investment.
As you may have read in my very popular post on US Housing Predictions for 2018 to 2020, the US housing market is hot and some cities are hotter than others. No housing crash is forecasted. The list below of the top 80 cities to invest in real estate represent your best opportunities for high returns. Even normally depressed quiet markets are coming to life and beginning to catch investor’s eyes. It’s good news for Michigan, Florida, California, Texas, and New York and even better for real estate investors in 2018.
Record Demand for Home, Condo and Apartment Rentals
The difference in this latest real estate rebound is the number of Americans renting and still needing to rent a home or condo. That’s created the incredible income investment opportunity called rental income investment properties for passive income investments or self-managed property investments. 30% to 40% returns are not unheard of. It’s once in a lifetime wealth building. The kind of cap rates major investors can only dream of. Get some tips on how to do homes for sale searching better.
Scorching hot opportunity in the best cities! Will the hot markets of San Francisco, San Jose, Silicon Valley, Phoenix, and Los Angeles do as well as expected? Those cities with the highest home prices are not your only option. There’s plenty more towns and cities across the nation where you can buy rock bottom and sell high including this list of real estate by zip code. Cities you’ll read about below with lower home prices and rising employment rates may be your best bets for 2017 to 2020.
One high performing rental income related opportunity to investigate is student housing investment in Vancouver. The student housing market in Vancouver is like no other place. Foreign families like Vancouver BC in Canada for many reasons. And the Canadian government is raising the limits on foreign students and on post grad immigration. That means lots of demand coupled with high rents which translates to big profits. A company called CIBT has dominated this sector and is growing fast. You can invest with them like a REIT.
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Make sure others learn about the once in a lifetime opportunity in real estate investment with rental properties.
With strong economic growth as certainly continuing, rental income investment offers multiple ways to grow revenue. And your property may look even better to another investor when you sell. Lets see what the experts predict and what the stats say about the best cities and zip codes.
Growth in rental demand was largest for people with incomes lower than $25,000; a group that accounted for four million new renters over the past decade.
Growth for people with household incomes over $50,000 accounted for 3.3 million new renters.
There was an increase of 1.6 million renters for those with incomes over $100,000 a year.
The amount of rental stock also grew, and the single-family house share of the market increased from 34-40% of the total rental stock
Vacancy rate was less than 5% in 75% of the United States largest cities by 2015.
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Skyrocketing Home and Rental Prices in California are a Continuing Allure for Investors
In major urban areas such as San Francisco, Los Angeles, Oakland, Boston and New York, the demand for rental properties is skyrocketing. Investors might see ROI of 30% or more on rental income property and that beats any stock market these days.
Foreign buyers too, are purchasing lower priced homes now, likely because of high prices on luxury homes along with the fact they can rent them out — passive income which is a hot topic for babyboomers in particular. Realtors are seeing a much different type of buyer today and they need to keep up on how competitive properties are in other cities in the US and Canada. Investors just want a great return.
Home prices are rising everywhere, but what makes San Francisco so hot is its lack of housing stock and a booming job market. Where there is little growth in new housing development together with a healthy job market and a good demographic (millennials who can’t buy) the demand for rental housing has to explode.
Experts try to explain away this demand by blaming speculators and high housing prices, yet the driver of rental demand in San Fran is too many employed people with nowhere to live. And wages are rising. Silicon Valley’s rental market is so tight, there’s an overflow to Sacramento and other inland cities.
In-migration has been strong at a time when millennials are leaving home, contributing to rocketing apartment and home rental costs. This is fueling the tremendous demand for investment income properties. With no one building new homes and the government not acting to help, it’s up to private investors to take the helm.
With crazy high ROI, we’ll see rental income investors and developers race into these regions to build new properties. It’s a great investment situation for Americans, investors and realtors.
San Francisco is one area however that might not benefit. Its strong economy is driven by large tech corporations that add value to imported technology and products manufactured in China. Which is why Silicon Valley is hostile to Trump. California’s economic outlook is still very bright, but it’s low potential rental income outlook could send investors over to other US cities to invest in, such as those in green areas in the charts below.
Rental Income Property Investment Opportunities
With or without Trump, the US economic outlook is good. The outlook for rental income property is exceptional. Realtors and investment advisors should be looking hard at this market. Even babyboomer investors are looking at the potential of retirement income. Many babyboomers are a little nervous about how they’ll fund their “stay put” retirement plans.
They’ll need extra income to stay put and revamp their home over the next 30 years, and they may look to rental income to get that money. A percentage may just sell their home and leave it to a developer/investor to turn it into the multi-family unit. That investor might be you.
Here’s Realty Trac’s outlook on the best US cities to invest for rental property income
Complicating your investment decision is another set of statistics from Realty Trac that shows the west still has the highest returns currently but the green zones are predicted to perform better.
How about a 32% Yield on a Single Family Home?
(Screenshot above courtesy of RealtyTrac single family rental market reports)
Top 80 Cities and their Potential for Passive Rental Income ROI
These converted stats in this chart from Smart Assets are very insightful. They used U.S. Census data, to calculate the price-to-rent ratio in every U.S. city with a population over 250,000. This is their list of 80 US cities below with the worst potential for rental property income investment appearing at the top (The ones at bottom such as Detroit have better potential, unless employment fails to recover in Michigan).
US Cities with Population above 250k
(for a $1,000 Rental)
San Francisco, California
Los Angeles, California
New York, New York
San Jose, California
Long Beach, California
Washington, District of Columbia
San Diego, California
Jersey City, New Jersey
Chula Vista, California
Santa Ana, California
Colorado Springs, Colorado
Raleigh, North Carolina
Albuquerque, New Mexico
New Orleans, Louisiana
Virginia Beach, Virginia
Newark, New Jersey
St. Paul, Minnesota
Durham, North Carolina
Las Vegas, Nevada
Greensboro, North Carolina
Oklahoma City, Oklahoma
Charlotte, North Carolina
Kansas City, Missouri
St. Louis, Missouri
St. Petersburg, Florida
Fort Wayne, Indiana
El Paso, Texas
Fort Worth, Texas
San Antonio, Texas
Corpus Christi, Texas
Buffalo, New York
What About the Local Economies?
Last year’s report from Millken research reveals the cities with the best performing economies in 2015. This was put out in December 2016. Florida cities are showing a marked rise. Recent reports focus on the apartment rental prices in San Francisco, Sacramento, and San Jose as offering outstanding returns for investors.
And this is Millken’s list of worst performing cities, likely the ones you might avoid.
Screenshot courtesy of Millken Institute. Read the detailed Millken 2015 Best-Performing Cities report with rankings by economic component. Excellent insight to help you fine tune your rental income property investment choices.
Their interactive map of US cities with the best economies below is a very helpful tool to help you measure the investment prospects of one city versus another.
In this video below, Mike Hambright talks about apartment rental markets, and how to make money from cash flow and property value appreciation.
Are There any Warnings?
This graphic from Coreglogic warns about overheated city markets. Yet it also shows how markets like Silicon Valley, actually has lots of room for rent rate growth. And New York has the lowest rent rate to home price ratio.
Screenshot courtesy of Corelogic.com
There are so many real estate investment opportunities in the US and in Canada too. Hopefully, my amateur US housing forecasts, predictions and unguaranteed advice will help you find those opportunities for the best upside in cash flow, safety and equity appreciation. Be careful with any investment. Do your due diligence.
You’ve likely seen an unmanned drone helicopter somewhere in your city. I had one hovering above me, following me as I rode my mountain bike one day. These small helicopters are giving realtors a new more exciting way to showcase properties.
Realtors might not recognize that drones represent hypergrowth or a disruptive evolution in real estate marketing. Using video to provide more captivating perspectives. Realtors could buy a 4K TV and invite visitors to their homes to show properties in splendid detail. A great excuse to create an event with you as the host.
Right at the time realtors are courting European, Chinese, and Middle East buyers, they have a presentation format that gives these distant buyers the meaningful perspective they need. Photos just don’t have the same impact.
Bird’s Eye Views
Today’s drones are very stable in flight, and controllable. An onboard HD camera allows the operator to fly the drone far from where they’re standing and take video and still shots from angles that are impossible to get any other way.
This might be a point where you need to reflect on your career and how you’re doing marketing. If you haven’t yet adopted a high powered IDX, responsive website, with great content and social media engagement with video, then you’re not staying competitive.
Drones and video technology will disrupt traditional real estate marketing ushering in a new era of high definition home shopping.
Sky High Media serves the Toronto region with aerial photography. Explore their site to learn more about how it can help you sell more properties.Aerial photography for a residential property can start as low as $249 per property. This typically includes 5-15 high resolution aerial photos. The number of photos depends on how many unique angles the property presents. A 1-2 minute HD aerial video tour with music and 5-15 aerial photos can start as low as $399.
What are Drones?
They’re small electric powered helicopters weighing only a few pounds. They use 4 to 8 rotors that give them powerful speed and maneuverability. The stability of their flight is surprising to anyone seeing them for the first time.
For surveyors, farmers, property owners, civic engineers, and others, the drones give them valuable perspectives and information they need to monitor conditions and make decisions. For realtors, the drone technology lets them capture stunning aerial fly-over videos of the properties they have for sale.
Perspective is Everything
Real estate buyers and developers can view the property, condo building, house, or neighborhood in amazing high definition on a big screen TV or their computer or smartphone. A realtor can deliver a bird’s-eye view of hillsides, swimming pools, landscapes, streets, and the whole neighborhood. It’s easier for a realtor to find ways to ehance their presentation and increase interest in and leads for their properties.
The Advantages for Realtors
allows a realtor to give homebuyers a better shopping experience
increases salability of home for home sellers
gives home and condo buyers a different visual perspective of their property
views destroy buyers preconceptions and that reduces sales objections
high def views of property and neighbourhood on their HD tv at home
no helicopter/photographer cost required
reaches buyers in China, Middle East, and across the US and Canada who can’t travel to the location and whom would never trust some photographs to make a decision to visit
If you’re looking to seriously upgrade your digital marketing and need a pro with experience in real estate, including San Diego, Vancouver, and Toronto real estate, please contact Gord at email@example.com. Looking forward to speaking with you.