Fine Homes

John C. Arkin asked:


nt to invest your money on real estate, you must set your sight in Europe.

Europe is the old world but the real estate market in Europe is exciting now.

After implementation of Euro as the standard currency among all the EU’s members, many economic developments pursued by the European Union. The excitement in Europe’s real estate market is a direct result of these developments. The Euro has broken many existing trade barriers and led to avenues of development that are more open.

Regarding these developments in Europe, we can say that the changes are just beginning to be felt in the real estate market.  Rural areas that are yet to be touched by progress are just starting to wake up. Investors must investigate rural areas seriously. Right now, market valuations of properties in these areas are about 50% to 75% of what they should be. However, it would not be for long.

There are some other factors of this exciting real estate market in Europe. One of them is the fact that most Europeans have English as a second language, the fact that a large part of the European work force is highly educated and that the old cities of Europe are undergoing phases of urban regeneration and redevelopment.

There are four cities in Europe in particular have proven to be the cities to watch out for and to invest on in real estate this year. All these four cities are very old cities that are undergoing urban regeneration and redevelopment.  These cities are Paris, London, Stockholm and Germany.  

There is one city which is expected to outshine all the other cities that have tried to claim the top spot as the most exciting city to invest on real estate in Europe.  That city is none other than Istanbul. Investors see the positive signs of  Istanbul steadily becoming a maturing global market. It is also poised to enter the European Union.

As a result, the real estate market in Istanbul is ripe and attractive to investors right now, and everybody is sure that it would continue to be so in the coming years.

In Europe, some other places has most demand in real estate, remains to be in the areas embracing the Mediterranean Sea – Portugal, the southern parts of Spain and France as well as Italy.  The important factor of this demand is the warm weather in the Mediterranean region which is still a big magnet for real estate investors not just in Europe but in the whole world.

Bob Schwartz asked:


When one loses 30% or more home equity in one year, don’t buy the old cop-out line of “in the long run the housing prices will return to their old highs.” For San Diego residential real estate, this is the worst market since the great depression. Unlike a ‘normal’ correction or pull-back, this once in a lifetime evaporation of real estate values will not soon be forgotten. Partially because of the trauma inflicted on the public’s perception of ever-escalating real estate values, will the San Diego real estate market ‘snap back’ anytime soon.

First the decline has to bottom and then it will most probably take a few years of base building prior to any return of meaningful appreciation.

Naturally, at this New Year period, the glowing forecasts for a real estate recovery have already started. Will these pundits be right this time around? You’ll have to draw your own conclusions. Why not see how some of the prior forecasts really paned out:

On July 14, 2008 Barron’s magazine said: “Home prices are about to bottom.” Well, since than, the decline has only accelerated. In 2005 a local radio/TV commentator said: “If the media would just shut up, housing prices wouldn’t fall.”

“People think the market is down and the market will still go down. That’s not the truth. The market is down, but it’s not going down anymore,” said John Tuccillo, former chief economist for the National Association of Realtors. “I think it’s because consumers focus on national news and not enough on local news.”

Bob Schwartz, San Diego, Certified Residential Specialist on November 17, 2005 in a published article said: “Yes, we have started on the down leg of the typical ‘Bell Curve’ and the probability of surpassing our approximate 20 percent drop in San Diego home values experienced from 1990 through 1996, seems assured. Plus, as real estate trends seem to start in the West and then move east, any U.S. real estate market that experienced huge price appreciation the past five years, will experience the same depreciation in real estate residential values”.

Often when real estate values go south, it’s typical to hear the industry blame the media for making the situation seem worse than the reality. The truth is, for our current home equity bust, the reality, in many cases, is far worse than the local reporting.

It seems that finally the preponderance of evidence has caused the die-hard San Diego real estate bulls to admit the folly of their over optimism. Now a number of these same misguided forecasters are forecasting a 2009 turnaround. Perhaps that would have a faint possibility if this was a ‘regular’ correction. However, this huge erosion of San Diego home equity was is far from typical.

Realistically, I feel the best 2009 can bring to the San Diego housing market is some easing in the rate of depreciation with a possible beginning of a bottoming process starting late in the year or early 2010.

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Dr Green asked:


If you know what you are doing then real estate investing can be the most effective, and profitable, way to invest your money long term. But what about real estate investments for the short-term, quick return investor? In today’s real estate market many people are shying away from real estate investing because it seems like everyone is getting foreclosed on and making a profit in real estate is impossible. You have to remember that real estate investing, just like the stock market or any other investment, is cyclical. Yes the market is down right now but that is only after many years of a boom in the real estate market that created many new millionaires and added to the portfolio of already established real estate investing experts. So you can rest assured that the U.S. economy, and the real estate market, will make a comeback. If you really look at it, logic would suggest that it will make a huge comeback and if you want to be part of that initial windfall then the time to get involved is now.

Just like any other investment real estate investing is risky so always know that there is a risk to investing in real estate. But the chances that your real estate will appreciate in value are very good over time. It is just a matter of how long you can afford to wait. What you should be doing is scouting out properties to invest in because right now many prime pieces of real estate are available for prices that they may never be available for again. Homes that you never thought you could afford could be bought off the foreclosure market for a fraction of their original cost and held by you to be sold for a profit later. But what can you do in the interim to quickly increase the value of that home and maximize your profits even more? It is called house flipping.

Flipping Is The Fast Money Maker

Flipping a house means that you purchase a property at a price that is significantly below its assessed value, fix it up, then sell it for a profit. In a normal real estate market this is the best way to make fast money in real estate investing. But in a market like this you have to be a little smarter with your real estate investing and realize that flipping is still the way to go but the cycle will take a little longer than it does in a good market. A house flip that would normally take weeks you may have to hold on to for months in this market, but with the rate of foreclosures so high, and the possibility that the government may give large tax breaks to people that buy foreclosed properties, the return in nine months or so could be very large.

Normally in a house flip you would buy a house in need of repair because those are the ones that have depreciated in cost but not necessarily in value. You would do the repairs and then put the house on the market for a large profit. If you take the time to become a little savvier with real estate investing then you can use this current mortgage crisis to become a house flipper that invests in foreclosed properties, fixes them up and then waits for the upturn in the market to sell them at a huge profit. The only variables you need to contend with is how long before the upturn and can you afford to hold the properties while you wait for the market to recover? If you can come to grips with months of holding costs then this may be the perfect time to make your money in real estate investing and you can add value to your real estate with the quick house flipping technique of fixing up the property to add even more value.

The Global Property Guide asked:


Asian residential property buyers beware!

Asia’s real estate markets seem, on the surface, to have recovered from the Asian crisis and to be back on their feet. In fact the entire world has enjoyed a residential property boom over the past decade – Europe, the US, Australia and New Zealand have seen property prices soar.

But in Asia the reality is quite different. Asia’s residential markets have performed poorly, according to a report by the Global Property Guide. Once the price rise figures are adjusted for inflation, Asia’s record looks poor.

HOW ASIA’S RESIDENTIAL PROPERTY MARKETS HAVE PERFORMED SINCE THE PEAK (inflation-adjusted):

Hong Kong: still 61% below peak

Indonesia: still 50% below peak

Malaysia: still 10% below peak

Philippines: still 55% below peak

Singapore: still 37% below peak

South Korea: still 38% below peak

Thailand: still 10% below 1992 peak

“There have been few less profitable investments than Asian residential property over the past decade,” says Matthew Montagu-Pollock, publisher of the Global Property Guide.

“And if the present construction boom continues across Asia, the next decade isn’t going to be much fun for property investors either.”

Rental yields are quite high in Indonesia, Thailand and the Philippines, while Asian countries benefit from strong economies. But their real estate markets’ rise has been limited, primarily by government mis-steps.

“Asian real estate markets would have been stronger had it not been for government mistakes,” says Prince Cruz, chief economist for the Global Property Guide. “If it is not a coup, a protest rally or runaway inflation, then it is government meddling in the housing markets that has killed performance”. Cruz’s study points to the housing markets of Singapore, Hong Kong and South Korea as victims of government subsidies and intervention, while the housing markets of the Philippines, Indonesia and Thailand have suffered from political instability.

Asian prices still far below peak levels

Despite gleaming reports of recovery, Asian house prices are still below their pre-Asian Crisis levels. In a report released, Global Property Guide suggests that a combination of inflation, widespread subsidies of housing markets, political troubles, and overbuilding, have made the outcome in Asia quite different from other ‘boom’ markets. Asia’s present apparent property boom is a ‘construction boom – not a property boom’, it says, warning investors against following the tempting siren song of the real estate professionals.

When adjusted for inflation, the happy picture changes remarkably from the good news about property price rises.

Indonesia, for instance, is having a difficult time battling inflation. Corrected for inflation, Indonesia’s house prices actually fell 8.4% in 2005 and 7% y-o-y during 2Q 2006.

This year’s mild nominal price fall in Hong Kong (3.7%) is amplified by considering inflation. Hong Kong dwelling prices have actually fallen by 6% in real terms.

The (modest) apparent price rises in South Korea, Singapore and the Philippines actually become price falls, or are greatly moderated, once inflation is factored in.

Real Estate Advisor asked:


Despite a recent slowdown, the U.S. real estate market continues to be a popular investment destination for foreign investors. Attracted by a desirable return on investment, many foreign nations continue to invest heavily in the U.S. residential and commercial real estate markets. In fact, in 2005, foreign investment in U.S. real estate reached 1.83 trillion.

To evaluate the impact of foreign investment on the U.S. real estate market, the National Association of Realtors (NAR) produced a 2006 report entitled ‘Foreign Investment in U.S. Real Estate: Current Trends and Historical Perspective.’ The report provides insights into the trends in foreign real estate investment, its impact on the U.S. economy, and the major countries that participate in U.S. real estate investment. Below are some highlights from the NAR report.

According to the U.S. Department of Commerce, the top seven countries that had significant holdings in U.S. real estate as of 2005 were:

Germany – 13 %

Latin America – 13 %

Australia – 11 %

Japan -10 %

United Kingdom – 10 %

Canada – 6 %

Netherlands – 6 %

The U.S. economy is wide open to foreign investors. Both investors and Americans significantly benefit from all this foreign investment. The NAR study estimates that without foreign investments in the securities market, the long-term lending rates would be four percentage points higher than the current rate, which would adversely impact the U.S. real estate market.

Foreign direct investment into the U.S. not only creates more jobs but also contributes to the demand for U.S. real estate. In fact, foreign investment may be responsible for creating two million U.S. jobs by the end of 2006, which further bolsters the demand for U.S. real estate.

Permanent and temporary immigration of foreign-born workers into the U.S. further bolsters the demand for real estate. According to the Joint Center for Housing Studies at Harvard University, 1.2 million net immigrants are expected to arrive in the United States annually. This immigration pattern is expected to offset the decrease in housing demand by post baby-boomer generations.

In summary, the impact of foreign investment and immigration into the U.S. will continue to play a major role in the U.S. real estate market.