Home Sales and Bank Regulations
Investors and Colleagues,
The economic news just keeps getting better for opportunistic real estate buyers.
This week, the National Association of Realtors released their report on pending home sales for the month of May. The results showed that last month had the strongest improvement since last November!
The pending home sales index was 13.4% above its level from last year. And on top of the stellar May data, the Association also revised the April reading higher.
The NAR’s chief economist was quoted in the Wall Street Journal as saying:
“This solid gain in contract signings implies that home values in many localities are or will soon be stabilizing as inventories get absorbed at a faster pace.”
The key point is that “many localities” (namely, attractive neighborhoods in communities with strong economic growth) are seeing price improvements.
The data is encouraging because obviously the overall housing situation is getting better. But as an investor, you still have to be very careful where you make your investments. Attractive housing areas are getting more attention and prices are moving up. But if you invest in the wrong neighborhood, your capital could still be tied up for years, waiting for the local market to improve.
At Ashford, we’re pretty pleased with the quality of real estate that we have been able to pick up – and we’re already beginning to see a dramatic turnaround in demand. For many of our properties, we now have to make the decision of whether to sell for good gains today – or wait for tremendous returns a few months down the road.
… not such a bad spot for our investors to be in…
Banking Regulations Still Lead to Opportunities
At the same time that housing statistics have been improving, large blue-chip banks have had to deal with some bad news.
Last week, the Bank for International Settlements (BIS) announced an agreement on capital requirements for large “Globally Systemically Important Banks.” These are the banks that are “too big to fail” and the BIS is an international regulatory agency that helps set the rules for the largest global banks.
The new agreement required huge banks to increase their capital ratios over the next few years. Considering the leverage that these banks currently have, the new regulations are a pretty big deal.
What this means for real estate investors, is that the large banks are going to have even more incentive to get rid of foreclosed developments sitting on their balance sheets. The new regulations require much more “Tier I” capital – and residential property doesn’t qualify. So once again, buyers like Ashford Capital have the upper hand when negotiating to purchase residential developments.
Isn’t it time you took a look at the opportunities we are pursuing at Ashford Capital? Regardless of whether you’re an institutional investor (with several million to allocate) or an individual with retirement assets to put to work, we can find a good investment for you.
The current economic season offers more opportunity than I have seen in years, and I am truly excited about the returns we are generating for our investors.
Ashford Capital typically structures each deal so that our investors are paid a preferred rate of return along with the ability to participate in the profit once we liquidate a particular holding. This setup aligns our interest with our investors, so that we make money when our clients are successful.
I would welcome the opportunity to show you exactly how we can help you generate excellent investment returns. Please call me so that we can set up a time to chat.
Wishing you every success,
Matt