B2R Investor Intel: Smooth Sailing on the Home Front
With the dog days of summer here and Congress on its annual August recess, all is relatively quiet on the home front (literally). The housing sector continues to fuel the American economy, making up for the manufacturing sector’s lagging growth, with home prices nationwide (including distressed sales) increasing 6.5 percent in June 2015 compared with June 2014, according to CoreLogic’s Home Price Index report. This change represents 40 months of consecutive year-over-year increases in home prices nationally. The five states with the highest home price appreciation (including distressed sales) were: Colorado (+9.8 percent), Washington (+8.9 percent), New York (+8.3 percent), South Carolina (+8 percent) and Nevada (+8 percent). Texas is on fire, with home sales increasing 46.3 percent from first quarter 2015, and average price jumping 9 percent year-over-year to $258,786. This marks an all-time high for Texas home prices (yee-haw!). July is looking good too; the first three months showed the national median list price increasing to $234,000, up 7 percent year-over-year and 1 percent over June.
U.S. personal income went up 0.4 percent in June, beating the 0.3 percent expected, and consumer spending is expanding at a 2.9 percent annual rate. The overall economy is growing at a 2.3 percent pace, according to the Commerce Department’s second-quarter gross domestic product report.
Meanwhile, builders are hot on single-family rental properties as demand rises, meaning resales will no longer be the predominant investment option for rental investors. While flips are still lucrative, they are down in average gross ROI, according to a recent report from RealtyTrac. Completed flips commanded 35.9 percent in the second quarter, up slightly from 35.6 percent in the first quarter and up from 23.4 percent a year ago. The average gross ROI on flips reached a 10-year peak of 44.9 percent in Q2 2013. Stay tuned for more on this report in our August newsletter, to be released September 2nd.
What was expected to be a total flop was July’s employment report, heralded to be the weakest July since 2013. Turns out it wasn’t so ugly, with U.S. companies only falling slightly short of expectations and adding 215,000 jobs for the month, while the unemployment rate remained at 5.3 percent. This makes a good case for Fed officials to raise interest rates as early as September, but who knows, the question of if and when is still in contention. No lazy dog days ahead for the markets.
B2R Finance offers rental investors innovative lending products to help unlock equity from existing portfolios and provide the cash needed to build rental portfolios nationwide. For more information about how B2R can help you obtain rental property financing, just call 800-227-8107 or visit www.b2rfinance.com/borrowers and follow us on Twitter @B2RFinance.
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