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4/28/16
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HomeUnion, an online real estate investment management firm and data provider enabling value investing in residential properties, has released March 2016 data on the flattening U.S. housing market. According to HomeUnion’s research, the median price for owner-occupied homes declined 1.1% to $234,300. Meanwhile, the median price for non-owner-occupied homes, or investment homes, rose 8.5% to $192,600.
“We are seeing a degree of volatility in the traditional housing market, especially on a regional level,” says Steve Hovland, director of research for Irvine-based HomeUnion. “We expect price growth for owner-occupied homes to be tempered, even as we enter the typically frenzied spring home-buying season. Housing affordability has pushed beyond incomes in many areas of the country, limiting demand at today’s prices despite low interest rates.
“March home price figures highlight the attractiveness of single-family rental (SFR) investment homes in an uncertain environment,” Hovland notes. “Since last August when volatility set into the global stock markets, investors have been repositioning their portfolios to hedge against uncertainty and find stable yields. We’re seeing that demand translate into higher investment home prices.
“At this stage in the cycle, purchasing a fully managed investment home or portfolio of homes remotely could prove to be a better long-term investment than purchasing a home to occupy, depending on where that investment home is located,” he adds.
Here are more details on how investment home prices compare to traditional home prices:
Data -- Year-Over-Year Change
Median Sales Price for All Housing $223,400 -- 4.30%
Owner-Occupied Sales Price $234,300 -- -1.10%
Investment Median Sales Price $192,600 -- 8.50%
Investment Home Cap Rate 5.80% -- -80 basis points
Investment Home Cash Price $156,500 -- 5.50%
Home Cash Cap Rate 6.40% -- -120 basis points
Investment Home Leveraged Price $224,900 -- 0.20%
Leveraged Home Cap Rate 4.80% -- -50 basis points
Median sales price is based on transactions of single-family homes available through FHA financing (up to four units). Transactions above $30,000 were considered in the analysis.
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