U.S. home sales down but prices up

Existing home sales in all major regions of the U.S. declined in January to their lowest in nine months, according to new figures, but experts say Canadian investors should continue to look for opportunities south of the border.

“U.S. real estate is made up of regional or local markets and investors should determine their short term and longer term objectives and seek out the local markets that will best meet these objectives,” said Arnold Porter, co-owner of Turnkey Real Estate Investment Group and Arizona for Canadians.

“Markets in areas such as Texas, Georgia, Ohio and Missouri still have a large amount of distressed inventory and strong rental demand, providing investors with high income and steady growth opportunities.”

The figures, which were published this week by the National Association of Realtors, showed that total existing home sales, fell 4.9 per cent to a seasonally adjusted annual rate of 4.82 million in January, from an upwardly-revised 5.07 million in December.

However, the existing median price for all housing types in January was $199,600, which is 6.2 per cent above January 2014. This marks the 35th consecutive month of year-over-year price gains, proving the U.S. market is still a hot option for Canadian investors.

The report also found that distressed sales, which include foreclosures and short sales, were 11 per cent of total sales in January, unchanged from the previous month but down from 15 per cent a year ago.

“I believe some of the decline in sales is partly due to the diminishing supply of distressed properties coming onto the market,” said Chad Urbshott, an investor and founder of EquiGrowth.  

“As well, many banks try to unload as many REOs from their balance sheets by year end, thereby propping up the latest quarter in the year prior which leads to a slower January. 

“Having said that, the competition for properties is still very fierce, making it extremely difficult to find deals in most parts of the U.S., especially those listed via the MLS.”

One trend that Porter has seen in Arizona is that the corporate or group buyers, such as Blackstone Group, have reduced their buying activity as prices have rebounded.

“Since 2009 when the U.S. real estate market imploded, Blackstone has invested $40.9 billion dollars in real estate assets,” he added.

“The effect on markets such as Phoenix from these large buyers was multiple offers on most income properties and homes were often selling over asking price. The result was a run up in prices from 2011 to 2014.

“Since then we have returned to a more normal market where large investors play a smaller role and buyers have more choices and leverage in negotiating deals.”

Pick up a copy of the latest issue of CREW magazine to learn more about investing in the U.S.

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