Real Estate Investing

Some of the housing markets hardest hit by the foreclosure epidemic are seeing small signs of new life, thanks to eager bargain hunters seeking to capitalize on a golden opportunity. Home buyers in Detroit, Las Vegas, and Chicago are saving 30% to 50% by buying foreclosures, according to USA Today.

The article tells the story of Ruth Ahlbrand, a Las Vegas realtor who capitalized on her city’s tremendous foreclosure rate. Ahlbrand trained her agents in foreclosure deals, transformed her marketing campaign and even purchased a 40-seat bus to escort deal seekers around the city. Not only will bus tour participants see actual foreclosures available on the market, they will have the added bonus of hearing an agent on a loudspeaker lecture them on the ins and outs of buying foreclosures.

“It’s like a seminar on wheels,” Ahlbrand told USA Today. “Buyers are saving up to 30% or 50%. People are really looking for a deal. I’d almost call it a frenzy. We’ve hit the bottom, and Las Vegas is growing.”

Leading the pack in terms of reduced housing costs are Las Vegas and Miami with more than 19% reduction, Phoenix with around 18% reduction, Los Angeles and San Diego with more than 16% reduction and Tampa and Detroit with over 15% reduction. If ever you’ve thought of owning a home, now’s the time. Just don’t be afraid to wait out the seller or even pitch a low-ball offer. Amber Gilmore, one home buyer mentioned in USA Today, played the waiting game and earned a reward of $100,000 off her foreclosure purchase. While many buyers are still tentative about dipping their foot in the real estate waters, content to wait out the deals, it’s good to see that the really hard-hit cities could start seeing a turnaround soon.

It is no secret that the housing market in Las Vegas, and Nevada as a whole, took a hit in the recent housing slump. But according to area realtor Ken Lowman, the city’s ultra-luxury market has remained quite strong.

“The ultra-luxury market remains the best performing part of the residential real estate market today,” Lowman said to the Las Vegas Review-Journal in late January. “We have had four closings in the past five months for over $3,000,000 and I have finished the year with more momentum than it began.”

The focus of the article is on a local dentist who downgraded from a $5.6 million home with 7,000 square feet of living space to one in the same subdivision with only 5,000 square feet.
The 2-year-old, custom-built home was on the market for 118 days.

“Unique features in the estate home include a circular bar, a water wall entry feature, great room with four televisions, infinity edge pool overlooking the valley and mountains, a wine cellar, four-car garage and second-story observation loft.”

The ultra-luxury homes market is so rife with competition, in fact, that developers are scrambling to up their game. Granite countertops, high ceilings and top-notch kitchen appliances are standard expectations, according to New Homes magazine. In fact, discerning buyers looking to customize their living spaces are choosing counter surfaces like onyx and imported marble tiling. To further entice buyers, many ultra-luxury condos and developers offer on-site design centers with various levels of customization available.

Las Vegas is not the only city seeing a relatively healthy ultra-luxury housing market. The ongoing construction of ultra-lux condo projects like the Chicago Spire (scheduled opening 2011) indicate that elite buyers are indeed shopping across the United States. San Francisco statistics from February indicate that multi-million dollar home sales are strong there as well. With 68 homes on the market in the $2 to $4 million range, 15 sold in January at an average price of $2.53 million after an average 117 days on the market. Indeed, the luxury and ultra-lux homes market seems to have weathered the real estate storm just fine, perhaps thanks in part to the tremendous influx of foreign investment?

Commercial real estate is where it’s at. Financial Week today referred to the “credit crunch” as a “speed bump” for the commercial market, even though it proved a major setback for the residential real estate market. Commercial space is primarily leased rather than owned, which only helps the market conditions. After all, even with residential real estate, the rental market has surged and it’s not a bad time to be a landlord.

Unlike the residential real estate market, commercial real estate is healthy across all sectors. Commercial real estate is enjoying its highest occupancy rates since late 2001, and lease rates are at a record high. Sales volume in the commercial real estate market cannot be denied, for it is also at a record high.

For the purposes of illustration, take a look at Las Vegas. The area’s residential market is seeing soaring foreclosure rates, tremendous inventory surplus and falling prices. Meanwhile, the commercial real estate market is robust, particularly in industrial and multi-tenant retail complexes. The Nevada Business Journal recently quoted David Goldwater, founder and president of private lender Goldwater Capital, LLC.

“You remember last year how everyone wanted to turn retail into single-family housing? Now they want to go the other way around,” Goldwater said.

Investors will want to avoid jumping the residential real estate ship completely, because most analysts say that ship will be righted within a year. At any rate, commercial is worth exploring in most markets, and it’s a relief to know that some property deals can still bring prosperity.