Latest News

Is the USA housing market overheating ?

A few months back we did an Article on the predictions of the US housing market for 2021, we stated that inventory levels are running at an all time low and prices were beginning to rise. Fast forward six weeks and now we see a housing market staring to really heat up, some have stated the market is on fire at the moment. In nearly every US city right now, homes hitting the market are sold within hours not days, we have started to see bidding wars and the Buyer with the most cash wins. After large gains over the past five years, the nationwide nominal house price index is now 40% above its 2012 low-point and 4% above the peak reached in 2006. The circumstances contributing to today’s booming housing market are very different from what precipitated the last boom and bust cycle, there are few places where real debt per capita has increased over the past few years So why is this happening now ? surely this boom can not all be accountable to a resurgence after a global pandemic ? It is a combination of unique factors that are coming into play at the same time. First of all you have the issue of new built property, these have not kept pace with the growth of population since the 1920’s, it is in constant catch up mode. Then you have a change in Buying patterns, professionals and individuals who can work from home are buying homes to work at home and are therefore changing housing preferences. Another recent trend over the last 12 months is the shifting geography of housing demand to lower-density markets and historically low interest rates. Many people moved from city dwellings to suburbia as we all learned to adapt to the online business world. You also have the Millennials, tens of millions of Millennials have simultaneously entered the market looking for their first property, this has happened right across the US and is one one main factors leading to bidding wars, they are creating a nationwide generational housing supply shortage. On the Buyers side you are also seeing low mortgage rates which means the market is healthy for buying. Paul Lueken the chief executive of Draper and Kramer Mortgage Corp stated “As the Covid-19 vaccine is distributed, the economy will begin to open up and recover. Economic activity will most likely return to pre-pandemic levels by late 2021 or early 2022. The Federal Reserve will continue to support a low interest rate environment for much of 2021, and mortgage rates can be expected to remain low for most of the year. Home sales will therefore stay strong due to the low interest rates and the recovering economy” You also have a change in buying behaviour been fuelled by technology, you can apply for mortgage online, purchase you property online, order your inspection online and close your property online, buying a property is becoming more virtual and easily accessible. So what does all of this mean for investors ? Is this a temporary bubble that could burst or are we facing long term shortages and increasing prices ? To answer the unknown is obviously very difficult but we can look what other property experts are saying. Cision Newswire ran an article recently named “Redfin Reports Home Prices Surge 17% Amid Historic Housing Shortage” in the article it made reference to how Redfin worked on a metric system to show how the market in increasing so quickly, they compared metrics to 2020. Metrics to compare to 2020: *Asking prices reached an all-time high of $353,750. *Homes that sold during the period were on the market for a median of 23 days, the shortest time on market since 2012. This was 15 days fewer than the same period in 2020. *43% of homes sold for more than their list price, an all-time high. This was 17 percentage points higher than the same period a year earlier. *The average sale-to-list price ratio—which measures how close homes are selling to their asking prices—increased 2.1 percentage points year over year to an all-time high of 100.7%, meaning the average home sold for 0.7% more than its asking price. *59% of homes that went under contract had an accepted offer within the first two weeks on the market. This is a new all-time high (Redfin’s data for this measure goes back to 2012). *46% of homes that went under contract had an accepted offer within one week of hitting the market, an all-time high. They also stated “Demand for Second Homes Is More Than Double Pre-Pandemic Levels” “The combination of the wealthy becoming wealthier, remote work turning into the new normal and low mortgage rates is creating an ideal environment for affluent Americans to buy vacation homes,” said Redfin Chief Economist Daryl Fairweather. “As long as the economy continues to grow, I don’t foresee demand for second homes slowing down anytime soon. All of which means that even if America’s housing market keeps breaking its own records in the short term, says Redfin’s Marr, it’s also fueled this time around by factors far different than the bubble that preceded the mortgage backed securities crash of 2008. So therefore if it will not be another crash what will cause a slow down in the future, what will it be ? prices can not keep going up for forever. There is no certainty to this answer but looking at other over heating housing markets we have seen that mortgage rates will tend to increase which will slow down home appreciation, this normally brings prices back in line with current salaries. Overall we are in a better position than before the Crash of 2008 which is great news if you are thinking of buying a property now, you just need to battle through getting the right property at the right price and not enter a bidding

USA INSURANCE – F&Q’s

If you purchase an investment property in the US you will need to have buildings cover just in case your home is damaged and needs repair. If you’re a landlord it is your responsibility ( although it’s not compulsory ) to have at least public liability insurance.Of course there are many insurance policies available to cover any eventuality worldwide. For a buy to let property the two most important aspects of cover which are imperative are buildings insurance and Liability insurance.Whichever state you purchase in, Global Investments will help you obtain the correct policy that has you covered, with different programs to suit all investors. You can protect your investment from as little as $1 per day or less! For maximum convenience you can chose to pay monthly or pay for a whole year up front.The coverage we recommend is what’s called ‘Special Form’ or ‘All Risks’, which means if it’s not specifically excluded, it’s covered. This ;policy covers Fire, Theft, Vandalism, sometimes called malicious mischief (VMM). You can Insure for the amount you want without the penalty of co-insurance, on most plans.Most common FAQ’sI’m looking for the best price as possible, what’s the lowest amount I can insure for?The minimum amount is $45 per square foot, but that’s not the recommended amount, you must decide that yourself.I’ve paid $50,000 for my property, I’ve got a real bargain, can I insure it for more?Yes you can, but there are a few thing to bear in mind. It doesn’t matter what you insure for, the insurance company won’t pay you more than it’s worth/what you paid for it. Insurance is there to “make you whole again” not to make you a profit. If you’ve bought a property for $50,000 that needs a $50,000 rehab and you insure it for $100,000, if it burned down before you did the rehab, you’d probably only the $50,000 you paid for it.What is ACV?ACV is Actual Cash Value and is different from the Replacement Cost. It’s basically what the property is worth after taking into account wear and tear and ignoring market conditions. A bit like a car goes down in value as it gets older. This is typically used in lower markets in the US where property has reduced is value due to economic circumstances. In some cities you can buy a house for $50,000 but that same house would cost $150,000 to build. You’d insure it for the ACV of $50,000 because in the event of a total loss, you’d simply clear the site and buy a replacement home for $50,000 not spend $150,000 rebuilding a new one. The Programs that can be offered include options to insure for either ACV or RC.What is RC?RC is Replacement cost, it is the amount it would cost to replace the property in the event of a total or partial loss. The cost of insuring for RC is typically much higher than insuring for ACV. If you look at the above examples insuring for RC of $150,000 would cost 3 times as much as insuring for $50,000 ACVI don’t have to worry about maintenance, that’s why I’ve got insurance, right?Wrong! This insurance is not a maintenance program and the property must be properly maintained as part of the policy conditions. If you don’t maintain your property, the insurance company is likely to deny your claim.My property manager want’s to board-up my vacant property. That’s expensive and I want to save the money. Insurance will cover me for a break in, right?No. Your property manager is acting in your interests. Not only are they trying to protect your investment, but the policy conditions state that you must secure your vacant property appropriately. Which may require boarding it up. Failing to do this may result in a reduced or denied claim. This can also apply to freezing pipes bursting in the winter. A good property management company will “ winterise “ the property. Should you claim for burst pipes in a property that has not been winterised then the insurance company is likely to deny your claim.I’ve got 2 properties, can I have a discount for bulk?No. it doesn’t matter whether you’ve 1 or 100 properties. Insurance brokers treat everyone the same. The price you pay is what the underwriters quote for each case.I want a different deductible, can you find me a different policy?Unfortunately not. Insurance agents simply run several master insurance programs that allow our clients to add their properties to, you can chose the most appropriate one for your needs, but cannot source a different one or amend the ones they offer for you.I want to pay once a year, can I do that?Yes you can. There’s no difference in cost at all. If the payment option is monthly the insurance company simply multiplies the cost by 12. Your payment sit’s in their client escrow account and they draw it down each month. If you no longer need the cover the insurance company simply refunds the unused portion. If you wish to learn more or you have any specific technical questions relating to insuring your overseas investment property Please feel free to contact us on : invest@globalinvestmentsincorporated

The Cleveland Real Estate Market 2021

Cleveland Ohio has been the best selling product for Global Investments for the past 3 years and is still going strong with a huge demand by both overseas and domestic investors. More than 50% of the households in Cleveland are occupied by renters, making the market perfect for rental property investors. Many recent reports have Cleveland as no.5 on the list of top housing markets to watch in 2021. The real estate market in Cleveland is competitive, with some homes going under contract the same day they are listed. One reason homes are selling quickly in Cleveland is that prices here are still very affordable, with the median listing price for a home in Cleveland only $100,000. Global Investments work with some of the top turn key suppliers and have available renovated and tenanted houses from as little as $55,000. The diversified economy helps keep the rental market strong in Cleveland. For a city that once relied on the manufacturing industry for growth, Cleveland has done a remarkable job of transforming its economy into a well-balanced blend of service, high tech, blue and white collar employment. Located along the southern shore of Lake Erie, Cleveland is just across from the Canadian border. The metro area is home to the Rock and Roll Hall of Fame, one of the worlds finest orchestra and major professional baseball, football, and basketball teams. Here’s just a few reasons why Cleveland could be one of the best places to invest in rental property in 2021. POPULATION GROWTH In its in-depth study, “The Fifth Migration: A Study of Cleveland Millennials”, the Cleveland Foundation reports Cleveland ranks among the top 10 U.S. cities for population growth of college-educated millennials. That’s great news for rental property investors, because as CNBC recently noted, rental demand across the country is soaring as more millennials say it’s cheaper to rent than to own. Key Population Stats: Cleveland has a city population of nearly 400,000 and a metropolitan population of more than 2 million, ranking Greater Cleveland as the 33rd-largest metro area in the U.S. Population of Cleveland has declined 0.09% year-over-year. Net migration in Cleveland has remained steady, decreasing by only 870 residents since 2018. The median age of people in Greater Cleveland is 41, with about 37% of the population between the ages of 20 and 49. In the City of Cleveland, the median resident age becomes more youthful, dropping down to about 36 years. JOB MARKET The unemployment rate in Cleveland is down to just 5.8% (as of Nov. 2020), according to the U.S. Bureau of Labor Statistics (BLS). As the economy in Cleveland continues to recover, job sectors showing the fastest signs of recovery include construction, manufacturing, and financial activities. While job growth in Cleveland has historically lagged behind some of the city’s peers, a recent report in Crain’s Cleveland Business notes that economic growth in Cleveland surpassed Tulsa, Albuquerque, and Memphis. The renewed focus on space exploration is good news for the fuel cell industry and the NASA Glenn Research Center in Cleveland. Companies with corporate headquarters in Cleveland include Applied Industrial Technologies, Cliffs Natural Resources, and Sherwin-Williams Company. The Federal Reserve Bank of Cleveland, one of only 12 Reserve Banks in the U.S., is in downtown Cleveland. Key Employment Stats: GDP of Cleveland is more than $118 billion, an increase of more than 12% over the past 10 years. Employment growth in Cleveland is 1.43% year-over-year, while median household incomes have increased by 7.08% over the same period.e metro area. The healthcare sector is one of the major employers in Cleveland, including the Cleveland Clinic, University Hospitals of Cleveland, MetroHealth, and Medical Mutual of Ohio. Biotechnology, fuel cell research, and technology are three of the growing employment sectors in Cleveland. In fact, Forbes recently speculated that Cleveland might become the country’s next technology hub. Despite the shift to professional service and high tech business, construction and manufacturing in Cleveland still account for a significant amount of employment growth. Nearly 3,000 new manufacturing jobs were created over the last couple of years, while the construction industry added more than 1,700 new jobs during the same period. Since 2009, per capita income in Cleveland has steadily grown and is now at $34,200 while median household income is $57,228. Nearly 32% of the adults in Cleveland hold an undergraduate degree or higher, about 10% higher than the rate in Ohio. Cleveland is served by five Interstate Highways and several freight railroads. The Port of Cleveland is a major bulk freight terminal on Lake Erie. More than 5.8 million domestic and international passengers traveled through the Cleveland Hopkins International Airport (CLE) through the first half of 2019, while shipping facilities at CLE have handled more than 51,000 tons of cargo over the same time period. Playhouse Square in Cleveland is the 2nd-largest performing arts center in the country, right behind New York’s Lincoln Center, and the Cleveland Museum of Arts is home to more than 40,000 works. Real estate investors who are pro sports fans will find Cleveland offers a winning combination: Major League Baseball’s Cleveland Indians, the NFL’s Cleveland Browns, and the NBA’s Cleveland Cavaliers. REAL ESTATE MARKET Cleveland is ranked as one of the top housing markets to watch in 2021 by Forbes. The affordability of single-family homes in Cleveland is especially appealing to remote real estate investors and to people working from home. Successful real estate investors know how to make money in any market cycle, which is one reason people are investing in Cleveland rental property. Cleveland is one of the most recession-resistant markets in the U.S., according to Crain’s Cleveland Business. When measured by the investment variables of home price volatility, home sales flips, average loan-to-value, and home price-to-income ratio, Cleveland ranks as one of the top four markets with the lowest risk of a real estate dip. Key Market Stats: Zillow Home Value Index (ZHVI) for Cleveland is $79,166 through November 2020. Home values in Cleveland have increased by 18.8% year-over-year and are forecast to grow by another 13.1% in the next 12 months. Over the past five years home values in Cleveland have increased by nearly 76%.