Wednesday, July 6, 2011
Naples, Florida real estate, hurry, hurry, hurry!
The Naples housing market does not mirror the US housing market. Naples is not like Peoria IL or Rochester MN. The Naples housing market and economy is driven by second home buyers. Not by agriculture, heavy industry, shipping or high finance. Ten thousand Baby Boomers reach 65 each day for the next 19 years. Those are the kind of dynamics that drive the Naples housing market. So when US media report on US housing forecasts, they are not specific to the Naples housing market. In 2008 they reported US home sales declined 13% (Naples was up 22%). In 2009 they reported US home sales increase 5% (Naples increased 50%). In 2010 they reported US home sales decreased 5% (Naples was up another 13%). Looking at the three year trends. US homes sales were 13% lower in 2010 vs 2007, while Naples was 103% higher. The number of home sales in Naples have been at historic highs. Once again, due to low pricing and demand at those price levels.
The surge in the Naples Florida real estate sales can be attributed to current low price levels. Some homes in Naples have recently been selling at price levels not seen in over a decade. And they have been selling quickly. Properties priced under $200,000 have been very hot sellers. More homes have sold in Naples under the $200k price range than any other year on record!
Buyers are paying cash. Naples has always had a high percentage of cash buyers vs. other real estate markets. But the number of cash buyers sky-rocketed because of the affordability.
So, maybe it's time...you think! soharworldhomes.com, sohar.ca, Re/Max 1-800-828-0531
Foreign Buyers Saving US Real Estate Market.
MIAMI – July 6, 2011 – Foreign buyers are helping to stoke home sales in U.S. vacation hot spots decimated by the real estate crash, especially in southern Florida. For the 12 months ending in March, 31 percent of Florida’s home sales were to foreign buyers, up from 10 percent in 2007, according to a survey by the National Association of Realtors.
In Arizona, 6 percent of sales in the same period were to foreigners. That was down from 11 percent last year but still up from 5 percent in 2007, the data show. Foreign buyers are being enticed by low U.S. home prices, down 30 percent nationwide since peaking in 2006, and the weakened dollar, which makes their money go further.
Since the start of 2006, the Canadian dollar has soared 18 percent against the U.S. dollar, while the euro has gained 22 percent, says data tracker Oanda. U.S. home prices, meanwhile, have fallen far more than the national average in some places, down 55 percent from their peaks in Miami-Fort Lauderdale and Phoenix, and 36 percent in Los Angeles.
Those are three of the most popular areas for foreigners searching for real estate, says Les Sohar or soharworldhomes.com. Sales are so brisk in the Miami region now that more houses and condominiums could sell this year than in 2005, the peak year, says Sohar of Re/Max. “International buyers have been the fuel for the Miami recovery,” Sohar says. About 40 percent of buyers are international vs. less than 35 percent before the bust, he estimates. Many buyers are South American investors snapping up condominiums to rent out, says Sohar, a realtor specializing in International Real Estate.
In the Phoenix region, there are at least 20 percent more foreigners in the market now than usual, says an associate of Sohar in Paradise Valley, Ariz. One of those shoppers is retired hedge fund manager Peter Duerr of Austria. He’s planning to buy a home in Scottsdale, having sold one there in 2005. “The U.S. is a great buy right now,” Duerr says.
The largest share of foreign buyers, 23 percent, come from Canada, the Realtors’ survey found. China followed at 9 percent. The survey includes foreigners living abroad, those in the U.S. with long-term visas and new immigrants.
In Arizona, 6 percent of sales in the same period were to foreigners. That was down from 11 percent last year but still up from 5 percent in 2007, the data show. Foreign buyers are being enticed by low U.S. home prices, down 30 percent nationwide since peaking in 2006, and the weakened dollar, which makes their money go further.
Since the start of 2006, the Canadian dollar has soared 18 percent against the U.S. dollar, while the euro has gained 22 percent, says data tracker Oanda. U.S. home prices, meanwhile, have fallen far more than the national average in some places, down 55 percent from their peaks in Miami-Fort Lauderdale and Phoenix, and 36 percent in Los Angeles.
Those are three of the most popular areas for foreigners searching for real estate, says Les Sohar or soharworldhomes.com. Sales are so brisk in the Miami region now that more houses and condominiums could sell this year than in 2005, the peak year, says Sohar of Re/Max. “International buyers have been the fuel for the Miami recovery,” Sohar says. About 40 percent of buyers are international vs. less than 35 percent before the bust, he estimates. Many buyers are South American investors snapping up condominiums to rent out, says Sohar, a realtor specializing in International Real Estate.
In the Phoenix region, there are at least 20 percent more foreigners in the market now than usual, says an associate of Sohar in Paradise Valley, Ariz. One of those shoppers is retired hedge fund manager Peter Duerr of Austria. He’s planning to buy a home in Scottsdale, having sold one there in 2005. “The U.S. is a great buy right now,” Duerr says.
Investing in the Americas
Fuelled by high digit economic growth over the past few years, a stable political climate and steadily decreasing risk indicators, European investors have set their eyes on the Latin America real estate market.
Within the region Mexico is the front runner with a real estate market that has grown to maturity through US investments. Brasil runs a strong second with significant international interest and high future potential as one of the four so-called BRIC countries.1 Argentina and Chile round out the top echelon. Other Latin American jurisdictions also attract investments but often these are sector-specific; for example, both Costa Rica and the Dominican Republic have been targeted by investors in the leisure industry and have seen some major hotel resort deals as a result.
As with all investments there are some general concepts that apply and that dictate the parameters the investors can play with: how the investors themselves are taxed, regulatory constraints, exchange controls, etc. Our main focus for this article is how to structure the investments in a tax-efficient way. In cross-border situations the impact of international double taxation is mitigated by tax treaties concluded between the relevant jurisdictions. Historically Spain and Portugal have strong ties with the region; hence it is not surprising that Spain has the most extensive treaty network with the Latin American region including the four jurisdictions in our top echelon. Portugal has treaties in place with Mexico and Brasil, has signed a treaty with Chile and is currently negotiating a treaty with Argentina. The Netherlands and Luxembourg, as typical locations for holding companies, also have extensive treaty networks. The Netherlands has tax treaties with Mexico, Brasil and Argentina. Luxembourg has tax treaties with both Mexico and Brasil.
Brasil Based on domestic tax law, Brasil does not levy a withholding tax on dividend distributions. As such, the investor does not require the benefits of a tax treaty to reduce such withholding tax. However, investors into Brasil should be mindful of the Brasilian capital gains taxation that arises upon repatriation of the investment out of Brasil. Unfortunately, none of the tax treaties that Brasil has concluded mitigates such tax, except for the tax treaty with Japan. Considering the Japanese tax system, with corporate income tax rates at 40% and higher, re-routing investments via Japan is unlikely to be a viable option for most European investors. On the other hand, Brasil does offer an attractive tax feature in the form of allowing interest payments on the equity of a Brasilian company to be tax deductible at 34%.3 Such interest payments are subject to a 15% interest withholding tax but are potentially tax exempt at the level of the recipient if such recipient jurisdiction qualifies the income as dividends and it is covered by their participation exemption regime.
Within the region Mexico is the front runner with a real estate market that has grown to maturity through US investments. Brasil runs a strong second with significant international interest and high future potential as one of the four so-called BRIC countries.1 Argentina and Chile round out the top echelon. Other Latin American jurisdictions also attract investments but often these are sector-specific; for example, both Costa Rica and the Dominican Republic have been targeted by investors in the leisure industry and have seen some major hotel resort deals as a result.
As with all investments there are some general concepts that apply and that dictate the parameters the investors can play with: how the investors themselves are taxed, regulatory constraints, exchange controls, etc. Our main focus for this article is how to structure the investments in a tax-efficient way. In cross-border situations the impact of international double taxation is mitigated by tax treaties concluded between the relevant jurisdictions. Historically Spain and Portugal have strong ties with the region; hence it is not surprising that Spain has the most extensive treaty network with the Latin American region including the four jurisdictions in our top echelon. Portugal has treaties in place with Mexico and Brasil, has signed a treaty with Chile and is currently negotiating a treaty with Argentina. The Netherlands and Luxembourg, as typical locations for holding companies, also have extensive treaty networks. The Netherlands has tax treaties with Mexico, Brasil and Argentina. Luxembourg has tax treaties with both Mexico and Brasil.
Tuesday, July 5, 2011
Ausi House prices in decline, at greater than 2008 levels.
MELBOURNE property values have continued their six-month downward slide, recording the fourth-largest drop across the country. The median Melbourne house price lost 0.6 per cent in May, contributing to an annual decline of 2.9 per cent, according the latest RP Data-Rismark figures. Across the country, capital-city home values fell by 0.3 per cent in the month.
The latest slide means the nation's homes have lost more value in the first five months of this year than in a similar period during the 2008 global financial crisis.
Sydney was the only capital to notch a gain - 1 per cent - in the past 12 months. But Perth home values have slumped by 7.5 per cent, Brisbane's by 5.9 per cent and Darwin's by 3.2 per cent. The median price of houses and units in Melbourne has fallen by $21,000 from its peak in November 2010, to about $500,000.
The sluggish property market was also reflected in a drop in the number of dwellings sold, he said. Transaction levels were 28 per cent below the five-year average. This has prompted Melbourne vendors to drop prices to achieve a sale. Discounting has increased to 6.5 per cent, up from 5.7 per cent this time last year.
While investors nationally have seen strong growth in rental yields, in Melbourne they declined to 3.8 per cent from a previous high in early 2009 of 4.5 per cent.
The latest slide means the nation's homes have lost more value in the first five months of this year than in a similar period during the 2008 global financial crisis.
Sydney was the only capital to notch a gain - 1 per cent - in the past 12 months. But Perth home values have slumped by 7.5 per cent, Brisbane's by 5.9 per cent and Darwin's by 3.2 per cent. The median price of houses and units in Melbourne has fallen by $21,000 from its peak in November 2010, to about $500,000.
The sluggish property market was also reflected in a drop in the number of dwellings sold, he said. Transaction levels were 28 per cent below the five-year average. This has prompted Melbourne vendors to drop prices to achieve a sale. Discounting has increased to 6.5 per cent, up from 5.7 per cent this time last year.
360 degree view from this Hawiian Estate.
Its Japanese gardens, meditative shrine and separate painting studio are likely to instill a deep sense of tranquility to visitors of this Hawaiian home that offers a full, 360-degree view of the ocean.
The four-bedroom, six-bathroom house on Hawaii's Big Island was built by a Texan developer in 2008. He purchased the land for $1.5 million and hired Honolulu architect Warren Sunnland to build a home fashioned after the Golden Door Spa, a popular spa founded in California that now has several U.S. locations.
The 9,000-square-foot house is within the gates of Kukio, a private oceanfront club and residential community that shelters CEOs and other wealthy and famous home owners.
It's been named the gold coast of Hawaii because when Christmas rolls around, or like the Fourth of July coming up, there are probably about 50 private jets at the airport.
The house has been on the market since October and is listed at just shy of 14 million.
The 9,000-square-foot house is within the gates of Kukio, a private oceanfront club and residential community that shelters CEOs and other wealthy and famous home owners.
It's been named the gold coast of Hawaii because when Christmas rolls around, or like the Fourth of July coming up, there are probably about 50 private jets at the airport.
The house has been on the market since October and is listed at just shy of 14 million.
Monday, July 4, 2011
Global Real Estate trends, Q1, 2011, some markets upside down.
After some encouraging signs of revival last year, residential real estate markets in much of the developed world are losing momentum — or in some cases, even reversing course. Increasing nervousness over global economic prospects alongside rising food and fuel prices and persistently high unemployment are keeping potential buyers on the sidelines despite highly accommodative monetary policy. A lingering oversupply of housing and/or still tight credit conditions are reinforcing the downward pressure on sales and prices in a number of markets globally.
A marked improvement in housing affordability, particularly in those regions suffering large valuation declines in recent years, will eventually put a firmer floor under prices and underpin a gradual turnaround for the sector. For the time being, however, the process of repairing bloated public and household balance sheets points to a protracted period of subpar economic growth among debt-heavy developed nations that will restrain household borrowing and spending. A generally more cautious lending environment also will hold back the pace of recovery.
Australia’s seemingly impermeable housing boom has languished in recent months. While benefitting from strong economic growth and low unemployment, record high home prices alongside a series of interest rate increases by the Reserve Bank of Australia (RBA) are eroding the nation’s already highly strained affordability. Average home prices in Q1 were unchanged from a year earlier, and down 3½% adjusted for inflation. While the RBA has put further rate hikes on hold for now, the eventual resumption of monetary tightening will reinforce the more muted housing outlook.
U.K. real estate markets also took a step back in early 2011 following a shortlived recovery last year. Average inflation-adjusted home prices were down 4% y/y in Q1. Notwithstanding ultra-low borrowing costs, recent tax breaks for home buyers and an easing in lending conditions, aggressive fiscal austerity measures and persistently high unemployment will continue to depress activity in the near-term.
Spain’s three-year and counting housing slump shows no sign of letting up. Following steep price declines from 2008-2010, average inflation-adjusted home prices were down more than 8% y/y in Q1 (and a cumulative 20% from their peak). Prices are likely to fall further in the coming year given a massive glut of unsold homes, soaring double-digit unemployment, the elimination of mortgage funding for low income families at the beginning of 2011 and a dearth of foreign vacation property buyers. Average home prices were also still declining in Italy as of the end of 2010.
U.S. real estate markets have softened again after some encouraging signs of bottoming last year. Average inflation-adjusted home prices were down 5% y/y in Q1. High unemployment and tight credit availability are restraining demand, while a large volume of distressed properties is adding to the downward pressure on prices. The modest pickup in sales over the past six months has been primarily of investor-driven foreclosed properties, with little evidence of broader homebuyer activity since the expiry of purchase incentives in early 2010. Despite gradually improving job markets and near-record housing affordability, the expected addition of at least another 1 million foreclosed properties to the market this year suggests more downside price risk in 2011 after already falling almost 35% (in real terms) from the peak.
Not all residential property markets are in negative territory, as the housing recovery continues in some of Europe’s better performing economies. In France, average real prices were up 7% y/y in Q1, though weakening global growth expectations may limit further price gains in the near-term. In Germany, for which only annual price data are available, real home prices increased in 2010 for first time in over a decade. Demand and pricing have firmed alongside a strong economy, rising exports and the lowest unemployment rate in three decades. Nonetheless, Germany’s declining population will limit the extent of sustainable price appreciation in coming years.
Switzerland reported steady real price increases averaging 4% y/y through Q1, while prices in Sweden were unchanged from a year earlier. Irish property prices rebounded sharply — and unexpectedly — in the latter half of 2010, albeit following double-digit declines in both 2008 and 2009. With the Irish economy still marred in recession, and facing an oversupply of housing, the recent upturn will likely prove temporary despite the best housing affordability in a decade.
Canada also reported positive real price appreciation in the first quarter of 2011, with average inflation adjusted home prices up 5% y/y in Q1. Housing sales in Canada, while below the record-setting pace seen in at the height of the boom in 2005-2007, are being supported by steady job creation and still attractive borrowing costs. Relatively tight supply is adding to price pressures in several cities. Nonetheless, high home prices, the further tightening in mortgage insurance rules effective mid-March, and the upward drift in fixed mortgage rates this year appear to have slowed demand somewhat, most notably among first-time buyers.
A marked improvement in housing affordability, particularly in those regions suffering large valuation declines in recent years, will eventually put a firmer floor under prices and underpin a gradual turnaround for the sector. For the time being, however, the process of repairing bloated public and household balance sheets points to a protracted period of subpar economic growth among debt-heavy developed nations that will restrain household borrowing and spending. A generally more cautious lending environment also will hold back the pace of recovery.
U.K. real estate markets also took a step back in early 2011 following a shortlived recovery last year. Average inflation-adjusted home prices were down 4% y/y in Q1. Notwithstanding ultra-low borrowing costs, recent tax breaks for home buyers and an easing in lending conditions, aggressive fiscal austerity measures and persistently high unemployment will continue to depress activity in the near-term.
Spain’s three-year and counting housing slump shows no sign of letting up. Following steep price declines from 2008-2010, average inflation-adjusted home prices were down more than 8% y/y in Q1 (and a cumulative 20% from their peak). Prices are likely to fall further in the coming year given a massive glut of unsold homes, soaring double-digit unemployment, the elimination of mortgage funding for low income families at the beginning of 2011 and a dearth of foreign vacation property buyers. Average home prices were also still declining in Italy as of the end of 2010.
U.S. real estate markets have softened again after some encouraging signs of bottoming last year. Average inflation-adjusted home prices were down 5% y/y in Q1. High unemployment and tight credit availability are restraining demand, while a large volume of distressed properties is adding to the downward pressure on prices. The modest pickup in sales over the past six months has been primarily of investor-driven foreclosed properties, with little evidence of broader homebuyer activity since the expiry of purchase incentives in early 2010. Despite gradually improving job markets and near-record housing affordability, the expected addition of at least another 1 million foreclosed properties to the market this year suggests more downside price risk in 2011 after already falling almost 35% (in real terms) from the peak.
Not all residential property markets are in negative territory, as the housing recovery continues in some of Europe’s better performing economies. In France, average real prices were up 7% y/y in Q1, though weakening global growth expectations may limit further price gains in the near-term. In Germany, for which only annual price data are available, real home prices increased in 2010 for first time in over a decade. Demand and pricing have firmed alongside a strong economy, rising exports and the lowest unemployment rate in three decades. Nonetheless, Germany’s declining population will limit the extent of sustainable price appreciation in coming years.
Switzerland reported steady real price increases averaging 4% y/y through Q1, while prices in Sweden were unchanged from a year earlier. Irish property prices rebounded sharply — and unexpectedly — in the latter half of 2010, albeit following double-digit declines in both 2008 and 2009. With the Irish economy still marred in recession, and facing an oversupply of housing, the recent upturn will likely prove temporary despite the best housing affordability in a decade.
Canada also reported positive real price appreciation in the first quarter of 2011, with average inflation adjusted home prices up 5% y/y in Q1. Housing sales in Canada, while below the record-setting pace seen in at the height of the boom in 2005-2007, are being supported by steady job creation and still attractive borrowing costs. Relatively tight supply is adding to price pressures in several cities. Nonetheless, high home prices, the further tightening in mortgage insurance rules effective mid-March, and the upward drift in fixed mortgage rates this year appear to have slowed demand somewhat, most notably among first-time buyers.
Saturday, July 2, 2011
One heck of a deal, or is it steal! Do the math...
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