Market Update with Anton

January 19 Update with President of Elite Pacific Properties Anton Steenman

A recent Wall Street Journal article reported on an interesting new trend. A group of real estate startups is making it possible for regular small scale investors to assemble a portfolio of rental homes throughout the country without ever visiting the properties. Roofstock offers an online marketplace where buyers and sellers trade about 500 rental homes a month in cities such as Atlanta, Indianapolis, and Houston. REI Nation LLC and JWB Real Estate Capital are getting into what is known as the turnkey business in regional markets. They buy, upgrade and lease houses, then sell them to investors. Compound, a startup based in New York, is launching an app this month that will enable investors to buy small stakes in condominiums in cities such as New York, Miami, Nashville and Austin for as little as $50! Firms like REI and JWB say that investors are getting annual returns after fees and expenses of 7% to 9%. This trend hasn’t made it to Hawaii yet, but it’s an interesting one to watch!

New Construction

The housing shortage is starting to stimulate the construction industry. Construction of new homes rose to the highest level since 2006. Homebuilding increased by 17% in December from November. Other housing market indicators show continued momentum as well. The National Association of Homebuilders said Thursday its housing market index hovered near a 20-year high in January. Starts were up 40.8% from December 2018, and building permits rose 5.8% from the same month of the prior year.

Stock Markets

As traders often say, the trend is your friend. The S&P 500 hasn’t moved 1% or more in either direction since mid-October, its sixth-longest streak since the end of 1969! The trend is highlighting how the latest leg of the stock-market rally has been a gradual climb. The U.S.-China trade deal and lower interest rates around the globe seem to have eased fears of an economic slowdown. The S&P 500 has risen nearly 10% in the past three months and 26% in the past year, supported by bets on a more stable economic outlook. Analysts are indicating that right now it’s pretty unwise to try and fight this trend. Investors are pretty confident we will see better growth ahead. Technology stocks were among the biggest gainers of the week, rising almost 3% in the S&P 500. Data on consumer sentiment released Friday suggested that spending should remain robust in the near term.

The holiday season ended on solid footing with the measure of consumer purchases at stores, restaurants and online coming in at an increase of 0.3% in December from a month earlier. Excluding the volatile categories of autos and gas, retail sales rose 0.5% in December, the strongest pace of growth in five months.

What really sells homes

1000Watt writes an interesting real estate marketing blog every week. Every so often the insights are really spot on and insightful. Last week one of the writers wrote about his experience selling his home, and all the emotional and transactional issues he went through. He wrote about the growth of iBuyer and how the “certainty” this platform provides consumers will change the market structure and dynamics. But, we all know that iBuyer is really a different market-focused platform. Not the type of market we operate in 90% of the time in Hawaii. Among all this, there was an all-important observation he had about what actually got his house sold. All the technology, 3D photography, social postings, and what not else might have been useful. But, you know what really made it happen? It was the open houses, the reverse prospecting, the dogged follow-up and persistence his agent showed in chasing down every lead that requested a showing. It’s the hardcore, essential, real estate work that made it happen.

It’s what we do every day, and it’s what we are exceptionally good at. So, let’s not be confused about what really sells homes.

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