Category Archives: Real Estate

China Investing Heavily in US Real Estate

A recent study outlines the extent to which Chinese investors have been flooding money into the United States real estate market. According to the study a recent surge of Chinese buying of residential and commercial property as brought the five-year total investment to over $110 billion.

Conducted by the Asia Society and Rosen Consulting Group, the study shows that the huge size of the total investment helped the US real estate market recover from the real estate crash that began in 2006. The Chinese investment in real estate has also influenced other countries, inflating prices in developed markets such as Australia and the UK.

The study predicts that, despite the tightening restrictions of capital outflows by Beijing, the amount of investment will double to $218 billion.

“What makes China different and noteworthy is the combination of the high volume of investment (and) the breadth of its participation across all real estate categories,” including a “somewhat unique entry into residential purchases,” the study said.

Commercial Real Estate Market On the Rise

The commercial real estate market has been doing exceptionally well in the Eastern U.S. since the start of this year. Companies with a focus on the region, such as Northland Investment Corporation with CEO Steven P. Rosenthal, are being swept into a pace that, according to local brokers, hasn’t been matched in years. During the first two months of 2014, Erie County saw almost $120 million worth of commercial property deals despite the frigid weather. Robert Strell, a broker and owner of MBA Consulting and president of the Western New York Commercial Association of Realtors, said: “It’s almost staggering, I’ve got to tell you. We knew there was action and activity, but the total is a big number and there’s a lot more coming down the pike.” Experts have said that given the current rate, the market may surpass the half-billion-dollar mark and post more than $720 million in deals throughout the rest of the year. The activity recorded in January and February is high-priced, with deals exceeding $5 million in value and some reaching as high as $15 million. Amy Nagy of Hastings Cohn Real Estate confirmed this positive outlook, stating: “It’s highly busy in this first quarter. There’s a lot of momentum in the market that’s generating things moving along.”

Home Sales Boding Well for Economy

In what many economists believe may be the highest numbers in at least three years, home sales are going up as demand for residential real estate continues to give added home sales are upstrength to the economic recovery.

Taken together, the number of new and existing homes which were bought reached the annualized pace of 5.64 million as of last month. This is the quickest pace since November of 2009.

Builder confidence is rising in response to improved sales even while the cost to borrow is going up. The limited supply of homes, lots and materials are also adding to builder confidence.

Federal spending cuts combined with improvements in the housing and auto markets will most likely boost economic growth in the last half of this year.

“The economy is slowly improving,” said Washington-based Roberto Perli, a partner at Cornerstone Macro LP. “I look for the housing recovery to continue. The fundamentals of the market are strong enough to overcome higher mortgage rates.”

Real Estate Taxes: Israel Tax Authority with Gidi Bar Zakay

To fight the soaring real estate prices, the Israel Tax Authority with Gidi Bar Zakay has taken many measures. In December of 2010, the Israeli finance and housing ministers made two new tax amendments. For those purchasing a second or third residential property, the taxes rose from 3.5% to 5% for properties that were up to IS 1 million. The tax went from 5% to 6% for those properties that were between IS1 and up to IS3 million.

However, non-primary residential properties have been taxed at 20% up until now; if sold within four years, they would now be tax exempt. These amendments were planned to be good for two years, and the end of this period is approaching soon. It will be interesting to see how the Israeli finance and housing ministers deal with it now, and how the Israel Tax Authority with Gidi Bar Zakay reacts.

Controversial Ads on Homes Helping Pay Mortgage

Billboard Homes Pay the Mortgage

On an otherwise quiet, ordinary street in a suburb of Los Angeles one house seems to have gone crazy. Painted in neon bright colors with several ads is the house of Scott and Beth Hostetler, a couple who are otherwise good neighbors, say their neighbors.

Tacky Look in Exchange for Bucks

Some neighbors were so shocked at the Hostetler’s home’s new look that they even considered calling the police; others were merely angry and confused, but the explanation, given the state of the country’s economy is really quite simple. In exchange for turning their house into a giant billboard the Hostetlers will receive $2,000 per month from the marketing company behind the scheme, Brainiacs From Mars.

Romeo Mendoza, the CEO and founder of Brainiacs explained that his goal is to turn at least 1,000 homes across America into gigantic ads for his marketing firm. For every one of his endeavors he will pay the mortgage, for up to one year.

"If we roll it out to scale and impact the foreclosure crisis, that would be amazing," Mendoza, 42, said.

Overwhelming Repsonse

In April 2011 Mendoza floated his idea on his website. Since that date ten months ago he has gotten 38,000 applications to participate, from even places as far away as Japan and Russia.

Mendoza says he picked the Hostetlers because they are nice people, and he decided to choose the most deserving families, even if their homes are not on the busiest streets. Mendoza checks all relevant zoning laws to be sure advertisements and brightly painted homes do not violate any local codes of law before he puts up his ads.

The majority of applicants are from Nevada, California and Florida, the three states in the US hardest hit by the housing crisis. Mendoza says his idea can help people who are struggling to keep their homes.

"The response has been overwhelming," Mendoza says. "People are hurting, and struggling to stay in their homes. If we can help some of them, that would be great."

Attracting Attention

Mendoza says his plan is to advertise his company’s name and social media marketing tools in front of people’s homes in the hopes of getting the attention of some big companies, who he hopes will hire him based on the originality and quirkiness of his scheme. Brainiacs, says Mendoza is indeed already negotiating with some large companies to run their ad campaigns.

The neighbors however are not happy. One neighbor is willing to put up with the new look of the house for one month, even though the Holstetlers want to keep the ads there for six. Another neighbor, 80-year-old Bob Pancoast, said: "All the neighbors were a little upset at first. We thought they had gone off their rocker. But I guess it's a good idea for them."

"I don't think the program will be a success. It will be akin to graffiti – that's how people are going to look at it. They are going to run into zoning problems everywhere," said housing industry finance expert Charles Mclaughlin.

Mendoza answers:

"There are definitely zoning issues in some cities, and we realize that. But we have really hit a nerve, and we can't let that stop us. Once people start seeing how it works, once they get it, the moment they realize it is paying people's mortgages, they are always on our side, because of this economy."