New Customers for US Real Estate

Hey Everyone, hope the weekend was good to all of you!


     As we are all aware of this, our housing market in the United States has taken quite a big hit these past years; led by the burst of the housing bubble, as I have explained previously in my posts. Overall, the US economy has not been fairing too well either creating a loss of jobs and less money to be spent. This has opened up a huge opportunity for foreign buyers in US real estate. “Foreigners purchase for a variety of reasons: trophy homes, desire to put money in the U.S. for safety, desire to have a place to visit for vacation, desire for a rental unit,” Jed Smith, an NAR economist, told NBC News. “These
factors … tend to dampen the effects of changes in total overall cost." Opportunity coupled with financial ability and desire is creating an influx of foreign buyers. 

     Now that I have explained the "why" it is time to find out the "who" question. There are two main countries pursuing US real estate right now, both holding their own amidst the worldwide economic problems, and both dealing with the US frequently; these countries are China and Canada. Canada for obvious geographic reasons and China because they own most of the US debt due to the fact that their economy is currently being supported a lot by the US economy; that is until they become economically independent (but that's another story all in itself). These countries currently have strong economies and have found "gold" in US real estate.  Canada and China are the main foreign powers that are capitalizing on the low real estate prices in the US, while mexico and the UK are also in the mix. Foreign purchases in the US have increased 24 percent since 2011. From March 2011 to March 2012 the Canadians captured the largest US real estate market share in terms of foreign purchasers, being responsible for 24 percent of all foreign purchases in the US. According to realtor.com the Canadians are focusing on Miami, Fort Lauderdale, and Orlando (all vacation spots). On the other hand, the Chinese account for 11 percent of foreign purchases, but they are targeting the opposite side of the US; mainly Los Angeles and San Francisco. The targeted homes for UK consumers have a median size of 2,342 sqft (American median home size 1,854 sqft) so they may perhaps be coming to the US real estate market because of their interest in McMansions and larger homes, which the US has plenty of. “The rest of the world might make fun of Americans for our big portions, big homes, but it turns out that most foreigners look at bigger homes than what most Americans look at,” Jed Kolko, Trulia chief economist, wrote in a blog last week.

source: nbcnews

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Stay Real ~ Fact Time

It was the accepted practice in Babylon 4,000 years ago that for a month after the wedding, the bride’s father would supply his son-in-law with all the mead he could drink. Mead is a honey beer and because their calendar was lunar based, this period was called the honey month, which we know today as the honeymoon.

Rural Areas: Need For Concern?

Alright, so here's the scoop for the future of Rural Areas. To begin let me explain some things that have a lot to do with this matter:

• USDA (U.S. Department of Agriculture): One of their responsibilities is to foster rural communities
• MSA (Metropolitan Statistical Area): geographical region with a relatively high population density at its core and close economic ties throughout the area. These areas are not legally incorporated as a city or town would be and they are not administrative divisions such as counties or sovereign entities like states. Simply put they are areas in which there is a single large city that wields substantial influence over the region (ex. NYC, Chicago)

Approximately 900+ rural communities are possibly in danger of losing their status and benefits of being in such communities. Many housing groups have been pleading with congress for years to grandfather eligibility for these communities into federal rural housing programs. Congress needs to step in on the matter because the definition of a "rural" area has been the same since 1974 and many current rural areas are at risk of losing their designation regardless of the fact that they technically remain rural. The housing groups that are pleading for an intervention wrote a letter to Congress stating, “these communities are, by any measure, rural, and most will lose eligibility because they are located within Metropolitan Statistical Areas (MSA).” According to the defninition set forth in 1974 communities have to be no larger than 20,000 residents and cannot be a part of a larger MSA. The groups pleading the rural areas' case are asking the cap be raised to a 35,000 resident limit and that the areas of under 10,000 residents that have had MSA areas encroach upon then not be penalized.

     In the past Congress has issued temporary measures to grandfather these communities into the rural housing programs, the last of which was issued in 2000 and expires October 1, 2012. The legislation to extend it passed the senate a few weeks ago, but it will not reach congress until well after the given expiration date. The federal rural housing service which is in charge of federal rural housing programs has stated that they will keep the current methods in place until March 27, 2013. This will give them time to develop a new method of tracking population and income changes. The US Census Bureau used what they referred to as the long firm questionnaire in 2000 which is what we are basing our tracking off of now and until March 2013. However, for the 2010 Census information a different method was used to gain information and the new method will be the basis for determining eligibility after March 27, 2013.

     In conclusion, these 900+ areas will remain rural in consideration for the next 6 months to come. However, after these next 6 months, the eligibility may change and, in the sense of the rural housing programs, the fate of these communities will then be determined.

Some information acquired from: Realtormag