Real Estate Trends for 2014
Recovering from a bruising recessionary market, commercial investors in Real Estate have largely been playing it safe, choosing to park their cash in the safety of the major markets like New York, Boston and San Francisco.
However things seem to have turned a corner and new trends appear on the horizon pointing to a much more robust and positive investment climate.
Capital inflows have shown a marked increase, both from foreign and institutional investors.
With Private Equity and REITs too having shown considerable interest in investing and banks more amenable to lending, things sure seem to be looking good for the Real Estate sector going forward.
The surest indicator of things to come is the increased activity at the Commercial Mortgage Banks Security Market Exchange.
A noticeable trend emerging in Real Estate is the interest in warehouse sector on account of the growth in E Commerce.
This growth has ensured that the industrial sector leads the apartment sector in growth.
However emerging data and experts' views do point out to the fact that the prospects for all sectors of the Real Estate industry are more optimistic for 2014 than they were for 2013.
That being as it is, the ability to invest in the emerging market will be predicated on excellent credit ratings or the ability to pay in cash.
Recent data show that the average FICO credit score on conventional loans used to purchase a home was 756, while the average score for denied applications was 729.
That is higher than the average historical score of 720 for acceptance.
These stringent credit standards are not expected to go away anytime soon, and with the home prices continuing to rise investment in Real Estate is gravitating towards higher value deal struck by those with deep pockets.
A case in point is the heightened interest in luxury ski resort property in destinations like Park City in Utah.
There are several reasons for this.
Firstly the economic recovery has benefited the high income households far more than it has the low income ones, giving them more discretionary income.
Secondly large mortgages valued at $417, 000 to $625,500 and above have much friendlier credit terms as compared to conforming loans.
Thirdly there is quite a bit of investment interest from overseas buyers who are attracted by the expected long term appreciation.
There is in fact growing realization in wealthy investors around the world that ski resort property is a handy asset to own.
The lifestyle advantage aside, the returns being obtained by investing in this sector is what attracts them the most.
With an average price increase of 4.
6 % for the year ended June, 2013 this sector as a matter of fact outperformed luxury homes.
In Park City particularly the median price rose to $1.
3 million an increase of 26%.
This was on the back of healthy sales of homes at Canyons Resort and Empire Pass.
Going forward in 2014 the region retains good potential in light of the fact that high value properties like the $44 million Huntsman Estate and the $21.
9 million Ski Dream Home are still in the market.
However it is not a given that investment in any ski-town will necessarily witness decent returns.
For that the choice of location to make an investment is the prominent determinant.
Park City (one of National Geographic magazine's World's 25 best towns) has everything going for it.
It has three ski resorts, Utah's powder snow, houses the US ski team, has an excellent winter sports infrastructure, a vibrant cultural and entertainment scene plus great connectivity by road and air.
It is not surprising to witness strong investor interest in the region.
Developers have been quick to sense the opportunity and have certainly done their bit to make the town of Park City even more attractive than it already is to potential visitors and buyers.
Canyons, which has the distinction of being the largest ski resort in Utah, has now come under management control of the famed Vail Resorts with all the super advantages that accrue from such a business relationship.
Similarly Deer Valley underwent an $8 million dollar facelift including the Mountain Express, a brand new super express detachable quad.
Park City has the added advantage of being in Utah -- an investor friendly, high growth state.
However things seem to have turned a corner and new trends appear on the horizon pointing to a much more robust and positive investment climate.
Capital inflows have shown a marked increase, both from foreign and institutional investors.
With Private Equity and REITs too having shown considerable interest in investing and banks more amenable to lending, things sure seem to be looking good for the Real Estate sector going forward.
The surest indicator of things to come is the increased activity at the Commercial Mortgage Banks Security Market Exchange.
A noticeable trend emerging in Real Estate is the interest in warehouse sector on account of the growth in E Commerce.
This growth has ensured that the industrial sector leads the apartment sector in growth.
However emerging data and experts' views do point out to the fact that the prospects for all sectors of the Real Estate industry are more optimistic for 2014 than they were for 2013.
That being as it is, the ability to invest in the emerging market will be predicated on excellent credit ratings or the ability to pay in cash.
Recent data show that the average FICO credit score on conventional loans used to purchase a home was 756, while the average score for denied applications was 729.
That is higher than the average historical score of 720 for acceptance.
These stringent credit standards are not expected to go away anytime soon, and with the home prices continuing to rise investment in Real Estate is gravitating towards higher value deal struck by those with deep pockets.
A case in point is the heightened interest in luxury ski resort property in destinations like Park City in Utah.
There are several reasons for this.
Firstly the economic recovery has benefited the high income households far more than it has the low income ones, giving them more discretionary income.
Secondly large mortgages valued at $417, 000 to $625,500 and above have much friendlier credit terms as compared to conforming loans.
Thirdly there is quite a bit of investment interest from overseas buyers who are attracted by the expected long term appreciation.
There is in fact growing realization in wealthy investors around the world that ski resort property is a handy asset to own.
The lifestyle advantage aside, the returns being obtained by investing in this sector is what attracts them the most.
With an average price increase of 4.
6 % for the year ended June, 2013 this sector as a matter of fact outperformed luxury homes.
In Park City particularly the median price rose to $1.
3 million an increase of 26%.
This was on the back of healthy sales of homes at Canyons Resort and Empire Pass.
Going forward in 2014 the region retains good potential in light of the fact that high value properties like the $44 million Huntsman Estate and the $21.
9 million Ski Dream Home are still in the market.
However it is not a given that investment in any ski-town will necessarily witness decent returns.
For that the choice of location to make an investment is the prominent determinant.
Park City (one of National Geographic magazine's World's 25 best towns) has everything going for it.
It has three ski resorts, Utah's powder snow, houses the US ski team, has an excellent winter sports infrastructure, a vibrant cultural and entertainment scene plus great connectivity by road and air.
It is not surprising to witness strong investor interest in the region.
Developers have been quick to sense the opportunity and have certainly done their bit to make the town of Park City even more attractive than it already is to potential visitors and buyers.
Canyons, which has the distinction of being the largest ski resort in Utah, has now come under management control of the famed Vail Resorts with all the super advantages that accrue from such a business relationship.
Similarly Deer Valley underwent an $8 million dollar facelift including the Mountain Express, a brand new super express detachable quad.
Park City has the added advantage of being in Utah -- an investor friendly, high growth state.
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