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February 2016

Should You Buy a Ready Possession Flat or Get a Home Constructed

possession flatLiving in your own flat or house provides you with the great feeling of security, independence and happiness. The ultimate dream of everyone is to own a place to live. When a person starts to earn, the first thing that comes into his mind is to own a house and starts to save a lot towards this purpose. When it comes to own a house, you have got two options, buy a ready possession flat for sale or buy your own land and build a house in it. Both these ideas have their own advantages and disadvantages. Let’s analyse some of them to decide between these two great options to own a living space for ourselves.

Building Your Own House

Every person has a dream to construct a house that suits to the needs and requirements of the family members. It gets fulfilled when you plan and construct a house for you. Here, your liking and preferences of interior decoration, a color of paint, types of tiles and marbles and a lot of other features of the house give preference. You can choose between costly and cheap materials of construction. You can supervise the laborers and technicians who work to construct your house. Meanwhile, you can save a lot of money. Again, you can construct your house part by part. It is not necessary for you to construct it at a stretch. You can complete the work as and when you have money. Hence, your house becomes a fulfillment of your wishes and dreams. At the same time, there are a lot of disadvantages too. Constructing a house by you takes away a lot of your time and energy. If your knowledge in the construction field is limited, you may make mistakes in choosing the right materials and laborers for the construction. These days labour is not easily available. In the case of a sudden financial crunch, your dream to construct your dream house may not get fulfilled.

Buy a Flat

When you buy ready possession flats for sale, you have a lot of advantages. The most appealing benefit of buying a flat is that you can move as soon as you complete the buying formalities. There are no worries and hurries of construction. You become the owner of a beautiful home overnight. Your confidence and self-esteem will shoot up and you will achieve the status of being the proud owner of a flat. When you choose a ready to possession flat for sale, you choose to live in a highly developed are in your society. The disadvantage of buying a flat is that you have to find a large amount of money to buy it. There are also options to meet these financial requirements. The quality of construction also may worry you a lot.

The Chill in US Real Estate

The Chill in US Real EstateYou know things are starting to get dicey out there when even a multimillion-dollar penthouse in Manhattan can’t sell.

It seems a developer in SoHo, having just recently finished primary construction for his high-rise condo tower, realized the project’s focal point – a $45 million, 8,400-square-foot penthouse – was just a bit too much.

“The air is very thin up there in that buyer pool,” was the way the builder, Kevin Maloney, put it to Bloomberg.

You’ll love the Solomon-esque solution Maloney came up with.

The penthouse has a wonderfully grandiose name: the Summit of SoHo.

Sure, it has its own indoor pool. And yes, it has 23-foot living room ceilings. Plus, it has not one but two private elevators. One goes to the lobby; the other is so you don’t have to take the stairs to the penthouse’s upper levels (for entertaining, a spa and a rooftop kitchen and grill).

But the stock market cracked hard at the start of the year, with the S&P 500 down 11% at its lowest point in 2016, while Hong Kong’s Hang Seng dropped roughly 17%. In recent months, Chinese real estate buyers pulled a disappearing act from realtor offices all around the U.S. And after years of ultra low interest rates and easy lending policies, there’s now an excess of iconic luxury living quarters on the island of Manhattan.

The developer’s solution? Chop his project’s expansive space into two smaller penthouses – an $11 million, 3,000-square-foot unit (though at that size, it hardly seems big enough for one’s collection of bespoke suits), and a second, 5,400-square-foot unit for a comparatively cheap $29.5 million.

I’ll keep an eye on it and let you know if either gets a sale or not.

Red Hot Real Estate No More

These days, even the bond rating agencies, ever late to calling the turns in any market, are jumping on board…

Fitch Ratings noted last month that home prices in San Francisco have “risen to a level unsupportable by area income.” According to Fitch, that makes the local market overvalued by around 16% – which probably means that you’d need to double that figure to estimate a true “fair value” for this once white-hot luxury market.

Just in the last few days, the National Association of Realtors noted weakening demand among foreign buyers, blaming a strong dollar and rising U.S. home prices for pushing U.S. real estate beyond the bounds of affordability even for rich foreigners.

The crash of China’s Shanghai Composite stock index (down nearly 22% just since the start of 2016 with nary a bounce) forced many of the country’s wealthy elites to pull back on their property purchases. You can see the impact in regional news headlines around the country:

In San Francisco: “At High End, SF’s Housing Market Finally Cooling Off.”

From The Boston Globe: “High-end housing market cooling off.”

In Fort Lauderdale: “South Florida condo market cooling off.”

Will it get worse for premium real estate? I think we’re still in the early innings.

Uncle Sam’s War on Cash (Property Buyers)

The story didn’t get much media play back in January, but that’s when the U.S. Treasury Department and its Financial Crimes Enforcement Network (FinCEN) announced the issuance of “Geographic Targeting Orders” for New York City and Miami.

The “GTOs,” according to FinCEN’s press release, require “certain U.S. title insurance companies to identify the natural persons behind companies used to pay ‘all cash’ for high-end residential real estate.”

Basically, the folks at the Treasury are worried whether corrupt foreign officials or “transnational criminals” might be laundering piles of dirty money through these multimillion-dollar property purchases.

Or is Uncle Sam just worried about the flood of Chinese cash into the American real estate market? “All cash” is practically a synonym for rich Chinese property buyers.

At least, that used to be the case. As we’ve seen in the “cooling off” headlines around the country, the absence of this class of real estate purchaser is starting to be felt in markets around the country.

An article in The New York Times late last year really brings the impact of Chinese property buyers into focus. When it comes to purchasing a home in America, they pay an average price of $831,000 – nearly double what international buyers from India ($460,000), Britain ($455,000) and Canada ($380,000) pay for their homes in the U.S.

In coming quarters, I believe the FinCEN “targeting orders” will likely spell the end of the property-speculation craze among Chinese buyers. The government action may only be limited to New York City and Miami, but it will have a deep chilling effect everywhere. After all, it only takes another press release from FinCEN to announce an expansion into other American cities of its inquiry into the identities of those big-money, anonymous all-cash property buyers.

The trend will take time, with the data trickling onto economists’ spreadsheets. But as Chinese elites continue to pull back from American real estate, well, get ready for a “Wile E. Coyote” moment in high-end luxury home prices – and more pressure on the Federal Reserve to reverse its stance on interest rates.

Pressures That Dominate Real Estate Value

Pressures That Dominate Real Estate ValueWhen people usually think of real estate value they think of two forces; supply and demand. Yes, this is correct; however supply and demand only fall under the one of the four main categories that drive/depress real estate value. Supply and demand fall under the economic category of influences in real estate value. The other three include; social impact, government subjection and environmental forces.

When looking at social impact, there are a few things one would want to consider determining the effect it will have on real estate value. Most of all the value would fluctuate accordingly with population characteristics. This tie into the potential for demand in the economic section of value; the more demand, the more value a property can derive. Population however should be looked at in more depth by breaking down the sample by age and gender, rate of household formation and partition, as well as analysis of the social values such as education, law and order, and lifestyle preferences. Careful consideration of these factors will help establish trends in what would be reflected in real estate values.

Next is the government subjection, accounting for a large aspect of real estate value. This includes political and legal activities on several levels of government. These government influences have the power to overwhelm natural market forces such that you would find in the economic category. Government has their hand in providing facilities and services that affect values as well as a one of the main contributors to patterns of land use (zoning, by-laws, etc). The following are some things to look out for when assessing the government subjection of a market; fire and police services, garbage collection, transportation arrangement, utilities, zoning, building codes, health codes, and fiscal policies. Also the legislation that is set forth by the governmental factor must be accounted for, this would include; rent control laws, rights to farm, rights for managing forest, rights to agricultural land, restriction on ownership, new development laws, control of hazardous and toxic materials, and laws affecting investment power, loan terms, and mortgage lending institutions. All in all this is quite the category and its understanding will provide for a great idea of where values are currently and where they are headed.

In addition to the social impact, as well as government subjection, the environmental forces also play a part in real estate values. These can be natural or man-made and are analyzed by observing several aspects. Climatic conditions (snowfall, rainfall, temperature, humidity) would be an obvious one that would affect the values of building somewhere as well as maintenance and carrying costs, as well as the quality and type of build. Topography, soil and consideration of any toxic contaminants would also be of great importance as well as natural barriers, such as rivers, mountains, lakes, etc.

Just to get out of the 4 factors of real estate value; it is important to mention that there are some overlying factors that would be part of 2 or more of the categories. Once such factor is location, this is the link of a property in time/distance to any given origin or destination of a resident/user of the property. Location could fall under for environmental and economic, if not all categories. Due to the area and property type, properties access to public transport, schools, hospitals, stores, employment, suppliers, recreational and cultural facilities, parks, and places of worship would of importance.

This would also lead us back to the economic factor of influence on real estate value. The fundamental aspects to look for here include: employment, price levels, wage levels, industrial and commercial expansion, mortgage credit availability and cost, stock of vacant property, stock of improved property, occupancy rates, construction costs and rental/price trajectories of existing properties.

And there you have it, the 4 major pillars of real estate value; social, governmental, environmental, and economic. Taking a deep look at each of these sections one would assemble the entire spectrum of current real estate values and more importantly future real estate values.

British Home Owners Are Waiting Longer to Move Up the Property Ladder

British Home Owners Are Waiting Longer to Move Up the Property LadderResearch carried out last year revealed that British home owners are waiting longer than expected to move up the housing ladder.

The survey which was carried out by Lloyds Bank found that a whopping 33% of Brits should be further along the property ladder than they currently are. Thanks to the never-ending rise in house prices, the research also found that an incredible 83% of home owners have to wait longer than ever to reach their goal of owning a long-term family home compared to just a decade ago.

40% of people surveyed said that they feel the highly competitive housing market has an impact on their aspirations as it’s so difficult to become a home owner in the first place, let alone move to a bigger property. This figure has fallen since 2013 however when 47% of people felt this way and 2012 when this number was at 53%.

Naturally, first-time buyers are being hit hard with nearly half (48%) saying that the housing market has an impact on how long it takes them to become a home owner.

Despite the difficulties that Brits are facing to get onto or move up the property ladder, it seems as if they still have high hopes for their future. 44% say that even though it’s harder than ever, they still won’t make any compromises when choosing a home and they believe that this is something that’s still a realistic achievement.

63% believe that this is a goal they will reach within the next five years and 64% think they will only have to make one more move before they will be able to achieve their long-term housing aspirations.

If you live in London or the South East then chances are that you will have to wait longer then the rest of the country to own your dream three bedroom property. The average age of applicants for this type of house is 35 which is a year older than the national average. Many are all too aware that these areas remain the least affordable in the country.

This is a stark contrast to the North and Wales however where properties are much more affordable. The average three-bedroom house in these areas will set you back between £129,000 and £135,000. In London, the average price of a three-bedroom property will set you back a staggering £1.3 million.

Lloyd’s survey also revealed that the majority of home owners (43%) aspire to own a three-bedroom property. 24% want four bedrooms and many dream of having a nice garden, high quality kitchens and bathrooms and conservatories.