Zillow.com, the giant real estate online portal, just released their second quarter Real Estate Market Report. It covers home values, rents, foreclosures, inventory levels, and hazards an outlook for the near future. Let’s take a look at an overview of this report.
In general, national home values rose 6.3% year-over-year from June 2013 to $174,200. The article doesn’t mention it, but this is likely the median, not average price. The last time prices were at this level was back in March of 2005. Rents were up 2.5 percent year-over-year. The largest segment of the report addresses home values.
Home Values

Fannie Says More Recovery
Fannie Mae’s Economic & Strategic Research Group predicts that the economy and the housing market will continue to strengthen modestly in 2014. This is balanced by the statement that improvement will not be as good in 2014 as it was in 2013 however.

6.5 Million Homes at Risk for Flooding
An analysis of storm surges found that 6.5 million homes along the costs of the Gulf of Mexico and the Atlantic Ocean are at risk from flooding this year’s hurricane season. This represents approximately $1.5 trillion in reconstruction costs.

Renters Trading Size for Amenities

We could just use the approach that charging really high rent will maximize profits. Of course, that only works if we have a half dozen tenants for every available unit. That doesn’t happen often; in fact rarely. Tenants have this annoying habit of moving on when they think they’re paying too much in rent. Sometimes they also drag their feet on meeting payment deadlines when the rent is a burden. Those pesky ‘vacancy and credit loss’ calculations are where we see the impact.
The quest for the highest ROI involves a lot of market research and some commons sense marketing strategy.

Successful real estate investors don’t work in a bubble. Some have whole teams of professionals involved in their businesses. Real estate agents are on these teams, as we use them to help us to locate deals and to present our offers on listed properties. Working with real estate professionals is part of our job, but we shouldn’t count on them understanding our unique property and financial requirements.
We don’t always have a choice of Realtors, as sometimes we’re making offers through listing agents or an agent we don’t know brings a deal to our attention. When we do have a choice, there are some things we need to keep in mind that all real estate agents aren’t created equal, and they’re working under strict rules and restrictions.

Rental property owners enjoy some unique advantages when it comes to profitability and return on investment. Between tax breaks, lower homeownership rates, lower inventories and higher rents, it’s been a pretty good 3 to 5 year period. There are still some foreclosure bargains out there, and it’s still possible to cash flow well with appreciation potential.

Let’s take a look at the data and conclusions of a couple of newly-released reports about the housing market and the current status many refer to as a “recovery.” They draw some of the same conclusions, but they’re not necessarily together on the current strength of this recovery.
The State of the Nation’s Housing from the Joint Center for Housing Studies of Harvard University
The overall conclusion of this report stated in one sentence is that “Homebuilding strengthened in 2013, but remains below historical averages. There’s no startling revelation there, but there is some informative data in the report:
• Housing starts in 2013 were up more than 18 percent from 2012, but were down to 925,000 units from the historical average of 1.46 million.