How to Play the Real Estate Recovery

First there is the anecdotal evidence. I know of a Sacramento couple that has put offers on eight homes in the last three months, all above the asking price, and getting outbid on all of them, mostly by all cash buyers according to their real estate agent. I have a friend who recently sold his house in Pleasanton, California, who received several all-cash offers way above the asking price, and closed escrow in thirty days. A house in my neighborhood sold within six hours of listing.

Now the statistical evidence. According to the Standard & Poor's/Case-Shiller Home Price Index, which is the leading measure of U.S. home prices, home prices rose 4.3% in the 12 months ending in October. The fact that home prices is good, though you may think that 4.3% isn't that much. However, what many analysts fail to take into account is that most people (although recently that seems to be changing) do not pay all cash for a house. They generally put 10% to 20% down.

What that means is that if you had purchased a home last year with a 20% down payment, and the home price rose by 20%, the return on the down payment would actually be 21.5%, in simple terms. This of course assumes all other things being equal, i.e. the mortgage, taxes, insurance, etc. being covered by rental income or an alternative to paying rent if living in the house.

If the down payment is only 10% with the same assumptions, the return would be double that. And if you have owned your house for a few years and lost all your equity, your gain during the last year would be infinite.

The reasons for these real estate gains are several. First, the Federal government has kept mortgages artificially low, making it easier for home buyers to qualify. Second, there have been an influx of foreign buyers willing and able to pay all cash for homes. Third, because of the cutback in the building of new houses, the inventory of available homes for sale has been constricted. Fourth, real estate has been extremely depressed for a few years, with a bounceback being inevitable.

So what is an investor to do who wants to play the single family home real estate market without having to buy a rental house? Most of the residential real estate investment trusts, such as Aimco (AIV), AvalonBay Communities (AVB), and Home Properties (HME), invest in apartment houses. To invest in single family homes, you have to dig further.

Silver Bay Realty Trust (SBY) owns a portfolio of over 3,100 single-family residential properties through entities associated with Two Harbors Investment Corp. (TWO), and Provident Real Estate Advisors LLC. The company just went public in mid-December with 13.25 million shares in the IPO at $18.50 per share. Several officers and directors purchased the stock. Although falling about 2% after the IPO, the stock is now up 14 cents from its new offering price.

Then there are the homebuilder stocks, but most of those have already had a substantial move this year. PulteGroup (PHM) is already up 179% this year, KB Home (KBH) is up 128%, and Lennar (LEN) is up 89%.

Last but not least, the real estate brokers are doing quite well. The biggest pure play in this arena is Realogy Holdings Corp. (RLGY), which franchises the Century 21, Coldwell Banker, ERA, Sotheby’s International Realty, Coldwell Banker Commercial, and Better Homes and Gardens Real Estate brand names. The stock trades at 33 times forward earnings, and posted a quarterly revenue increase of 10.9% year-over-year with negative earnings.

If you think that real estate is on the move in all areas (apartments, commercial, industrial, etc.), you can access the free lists of REITs with High Yields and Residential REITs with High Yields at WallStreetNewsNetwork.com.

Disclosure: Author owns SBY and has a long option position in RLGY.

By Stockerblog.com

Silicon Valley Real Estate is Skyrocketing

In case you are wondering if the real estate market has really bottomed, you need not wonder any more. It is taking off, and not due to low mortgage rates. According to a report by NBC Bay Area, prices of homes in Palo Also are up 21% and up 22% in San Jose.

The average price of a home in Palo Alto is now $1,684,000. What is amazing is that San Francisco Bay Area homes are receiving multiple offers way above list price. What is even more amazing is that most bids are all cash offers!

According to NBC, this demand is being fueled by Chinese investors, both foreign nationals and immigrants. One example that was given was a house near Stanford listed for $1,695,000 that ended up selling for $2,230,000, an increase of 32 percent over the original asking price. Escrow closed within seven days

It's not just the Silicon Valley area that is benefiting from this real estate boom; it is the entire San Francisco Bay Area.

Seniors Losing their Homes with Reverse Mortgages

Reverse mortgages are supposed to provide senior citizens with the security that they can keep their houses for the rest of their lives. However, according to a recent article in the New York Times, this is turning out not to be true. Many of these loans carry pitfalls.

According to the US Government, there are currently 775,000 reverse mortgages in force. Now 9.4 percent of these loans are in default, up from 2% ten years ago. Only four years ago, only 3% of borrowers were taking reverse mortgages as lump sums; now, 70% of reverse mortgages are taken in lump sums.

Buy a Plot of Land for Only $10

Now you can be a land baron for the price of less than a bag of groceries; only ten dollars. The town of Reston, Manitoba, Canada, located close to North Dakota, is offering 13 undeveloped buildable lots for only $10 each.

The one catch is that you have to begin construction within 90 days of purchase. However, the good news is that the town will pay a $6,000 grant to people who have built a new house.

Want more info? Click here.

Building a 30 Story Hotel in 15 Days in China

Amazing video about how a 30 story hotel was built in only 15 days in Hunan Provance, China. The building is five times more earthquake resistant than other buildings and five times more energy efficient, four-pane windows, external solar shading, internal window insullation, three stage air filtration, with the air twenty times cleaner than outdoor air, and more. By the way, the 15 days include interiors of the rooms.

Free Real Estate Investing Books

Yes, it is possible to get free real estate investing books from Amazon (AMZN) if you have a Kindle. Some require that you join Amazon Prime, but many don't have that requirement and are completely free.

No BS Real Estate Investing - How I Quit My Job, Got Rich, & Found Freedom Flipping Houses ... And How You Can Too

Creative Real Estate Investing Strategies And Tips free for Prime members

How To Buy A Home With Bad Credit (Real Estate Buying And Selling) free for Prime members

The Ultimate Real Estate Investing Blueprint: How to Quit Your Job in 19 Weeks or Less

10 Commandments for Real Estate Investors

Make Millions and Make Change!

A New Unique Way of Getting Pre-IPO Facebook Shares

Interested in getting shares of the ever popular Facebook stock before the company goes public? Here is a unique way of getting some pre-IPO shares of Facebook: trade your house.

A couple has already done this, or at least tried. A couple in Los Gatos, California has offered to trade their 10,000 square foot house with six bedrooms for $29 million worth of Facebook shares. The house has five-an-a-half baths and Italian marble throughout the mansion. Plus, an eight car garage.

The buzz for Facebook appears to be greater than the Apple IPO or many of the dot com company IPOs. What sort of trades will we see next for this stock?