Home Affordability vs. Cost of Living

Home Affordability vs. Cost of Living

By Alain Pinel
General Manager of Intero Prestigio international
Intero Real Estate Services, Inc.

Are the most expensive cities in the world in which to buy a home also the most expensive to live in?
The short answer is No. Not too surprising really. One factor depends mostly on qualified supply & demand; the other depends largely on what the town –or the country- can provide in terms of goods, resources & services (with a hefty dose of taxes). Believe it or not, only a handful of the priciest cities when it comes to real estate are also in the top 15 most expensive places to live. Double jeopardy, you might say. Usual suspects like Paris, Tokyo are on that short list.

As you might guess, if you have a lot of money, either or both of these high cost aspects are not likely to be a deal-killer. I mean, the wealthy homeowners -or soon to become homeowners-, in Paris for example, are not very likely to be overly concerned about the rising price of a gallon of milk. The shopping bill, however, can impact less fortunate “locals”. Many are progressively pushed out of the up-town districts and into more affordable suburbs (if not other regions, states or countries), while more fortunate buyers/consumers, predominantly foreigners, are taking a bigger share of the golden territory.

That’s the picture that we see, a little more clearly every year, in metropolis like New York, Los Angeles, Miami, San Francisco, London, Paris, etc. Nothing new, although the trend is accelerating, as plenty of new money from many emerging countries is looking for a better & safer refuge, often contributing in pushing prices up in the process.

Let’s look at the Forbes/Savills list of the “Most expensive cities for luxury real estate”, and compare the results with another list, published by the Telegraph in the UK, showing the ranking of the costliest world cities, as far as cost of living.
 

 

If you are looking to purchase a pad somewhere on the planet, be aware that, everything being equal, the highest price tag will be found in Hong Kong. The Chinese island territory is not getting any bigger and buildings compete for the little space they can find, even on vertical slopes. A year ago, high-end housing averaged about $11,000 per square foot. As prohibitive Hong Kong is on the real estate side, it does not make the list of the priciest cities to live in. How nice. You can always stay in a hotel and enjoy playing tourist rather than going for broke buying a condo!

Tokyo is number 2 in the world for real estate. Forbes mentions that an opulent mansion-sized home totes a market value of… $121.6 million. Life is far from cheap either in Tokyo. Japan’s capital city ranks at the sixth place, tied with other renowned towns like Geneva, Caracas and Melbourne.

Next is London. On the list established by Savills and published by Forbes, we can read that the average billionaire abode, around 7,900 square feet, costs $42 million. A terraced house recently traded for close to $120 million. Interestingly enough, the price of everyday goods is OK.

Paris is #4 on the real estate list. If you cannot afford Hong Kong, or Tokyo, or London, now you know where to go! Don’t look for a deal though, as thousands of foreign nationals from Russia, the Middle East… and everywhere else, are fighting for a piece of the City of Lights. When it comes to the cost of living, be ready for another hit on the wallet: Paris is the most expensive city in Europe, and the second most expensive in the world, behind Singapore.

According to the list of the most expensive cities for luxury real estate, Moscow comes next. A bit of a surprise, although Forbes is telling us that Moscow has the largest community of billionaires in the world. So much for buying a cheap vacation home on the Moskva River!

And then, there is New York! The Big Apple does not seem very affordable when you consider large ticket purchases close to $90M for a penthouse over Central Park, but you still can get great real estate and a good life for the money.

As for the top “cost of living cities” in the wide-world, the list goes like this:

• N.1 & N.2, as we mentioned already, we find respectively Singapore and Paris
• N.3 is… Oslo, a town of only 650,000 in booming Norway. Who would have thought?
• N.4 is Switzerland’s business mecca, Zurich, with a population half the size of that of Oslo
• To round up the top 5, we go Down-Under to Sydney, where the dollar does not go very far.

Your turn to test the real estate market around the globe, and enjoy your stay, however expensive it may be, in all those fascinating cities!

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10 Markets Where Housing Equity is Going Strong

By Gino Blefari
President & CEO
Intero Real Estate Services, Inc.
 
For quite a few years during and after the economic downturn, negative equity – when more is owed on a mortgage than a home is worth - was a real problem for homeowners. And while some markets in the U.S. haven't quite crawled completely out of the situation, others certainly have.
 
In fact, the National Association of Realtors this week released datashowing the 10 markets in the U.S. where equity has improved the greatest since the fourth quarter of 2010. They are:

1. San Jose, Calif.
2. San Francisco
3. Anaheim, Calif.
4. Los Angeles
5. San Diego
6. Boulder, Colo.
7. Honolulu
8. Riverside, Calif.
9. Cape Coral-Fort Myers, Fla.
10. Sacramento, Calif.

 It's true that in Silicon Valley and San Francisco, we've seen some of the largest increases in home prices in the last year alone, boosted by a soaring tech economy and an overall lack of inventory.
 
This is great news for homeowners and the local economies that inevitably benefit from a strong housing market. But what many watch with caution is the long-term impact on housing affordability – especially for first-time home buyers and other classes of workers that are at risk for being priced out.
 

 
 The interesting thing about these markets is that many of them are concentrated in the hardest hit areas from the housing downturn. For instance, Los Angeles, Riverside and Sacramento were all hit hard by the market decline, but have since seen sharp improvements in the last four years.
 
On the other end of the spectrum, NAR says in a blog post about the report, a number of markets that were in the bottom 10 for equity appreciation in 2006 did not see the same strong appreciation. These included Reno, Nev., Las Vegas and several Florida markets.
 
This is sort of telling about some of the ultimate truths about real estate – location and jobs are and always will be inextricably tied to the long-term health of local markets.
 
It will be interesting to see where these numbers lie at this time next year.
 

The 5 Worst Things You Can Do Before Buying a Home

Cynics may scoff, but getting under contract on the right home can turn even the most stoic shopper into a bit of a dreamer. From paint colors to planting a garden, picturing yourself in that property is critical for many buyers.

But leave a little room for pragmatism. Remember that getting pre-approved for a mortgage and even under contract isn’t a guarantee. That prefix is there for a reason. Loan pre-approval is not loan approval.

You’ll have more hurdles to clear before a lender legally commits to funding your home loan. Buyers who don’t know any better can inadvertently add obstacles to that path ? or even kill the entire deal ?between contract and closing day.

Some missteps can be costlier than others. Here’s a look at five of the worst things you can do before buying a home.

1. Go Credit-Crazy

It’s almost become cliché in the mortgage industry, but the warning still bears repeating: Don’t buy a truckload of furniture until after your loan closes. The prohibition goes beyond sofas and settees ? avoid obtaining credit for any major expense, such as a car, a boat or, yes, a new bedroom set.

Be careful with even minor expenses. If you absolutely need to obtain new credit or accrue debt before closing, talk with your loan officer as soon as possible.

New payments are going to affect your monthly debt-to-income ratio (and residual income on a VA loan), and not in a good way. Hard inquiries on your credit report could also lower your credit score. That might hurt your interest rate if you haven’t locked or even knock you out of qualifying range all together.

2. Shuffle Dollars and Cents

Lenders will scour your most recent bank statement as part of the pre-approval process. It’s not like they forget about it after that. They’ll take another look at your assets and bank records again during the underwriting process.

You’ll need to explain any unusual deposits or withdrawals. Lenders will require clear documentation and a paper trail if you’re putting gift funds toward a down payment or closing costs. Stuffing a wad of undocumented cash into your account is going to raise some red flags.

3. Get Behind on Bills

Having a late payment hit your credit report before closing can devastate your deal. Payment history comprises about a third of your credit score.

One solitary 30-day late payment can clip 60 to 110 points from your credit score. Maybe not a huge deal if you had an 800 score, right?

Possibly. But if that 30-day late blemish is a mortgage or rent payment, some lenders will boot your application altogether. Many will require at least 12 consecutive months of on-time payments to qualify for a home loan.

4. Co-Sign on a Loan

Co-signing a loan is arguably a bad financial move whenever you make it. But it’s especially risky during the mortgage lending process. It means you’re financially liable for someone else’s debt.

Yes, that someone else might be the most responsible person on the planet. Lenders will still need to factor that new monthly obligation into your overall affordability profile. Adding one more debt to the list could stretch too thin your debt-to-income ratio and assets.

5. Changes in Employment

Probably goes without saying, but losing your job is going to be a big problem. Even job-hopping can present some major hurdles. Lenders crave stable, reliable income that’s likely to continue.

Lenders are likely to slam on the brakes if you take a new job in a different field. Or if you decide to start your own business. Or even if you get a promotion but see some or all of your income shift to a commission basis.

The bottom line: Any change to your employment is significant. Keep your loan officer in the loop, and ask questions when in doubt. The last thing you want is to waste time and money on a home loan you’re never going to get.

Throughout the mortgage process, it can also be helpful to monitor your credit scores for changes so you can know whether you need to address any problems. To do that, you can use a free tool like Credit.com’s Credit Report Card, which updates your credit scores and an overview of your credit report every month.

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Have You Mastered the Art of Listening?

Have You Mastered the Art of Listening?By Margaret Heffernan

Many people in the business world take classes in the art of verbal communication: how to give a speech, make a presentation, chair a meeting. But the other half of the equation -- listening -- gets scant attention. At least until now. Sheryl Connelly, a futurist who works for Ford Motor Co., spends a lot of time talking and giving presentations. She's also a regular visitor to the TED conferences, where it is no surprise she likes to listen. And it was at TEDGlobal in Edinburgh this week where she talked about listening well.

1. Focus closely on the person speaking. Don't half-listen while you check your messages and schedule conferences. At any meeting -- a conference or a departmental review -- be there in full. Otherwise, you are likely to miss something.

2. Listen carefully for things you don't know. Our brains home in on what's familiar because it's easy and comfortable, and it reassures us of our intelligence. But that's no way to learn anything. Listen for new information, discontinuities, things you didn't know but could learn from. If there's nothing to be gained from this strategy, you may be in the wrong meeting.

3. Challenge yourself and what you hear. Don't just nod and accept it as a given. Ask yourself: What do I know that confirms this? What do I know that contradicts it? Let your head play an active role.

4. Be prepared to change your mind. Sherry Turkle used to think everything about computers was wonderful; now she isn't so sure. If we listen hard and ask ourselves good questions, we may travel to places we didn't expect.

5. If you find sitting still difficult, then either take notes or doodle or both. Connelly is a fantastic artist and illustrates her notes beautifully. She has volumes illustrating all her past TED attendances. Some of us aren't so gifted -- but we can doodle. All the evidence shows that both help you focus. And if you aren't focused -- why are you there?

The skills of listening, Connelly argues, are really life skills: treasuring the precious and always limited time that you have. Why waste it?

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http://www.cbsnews.com/8301-505125_162-57588909/have-you-mastered-the-art-of-listening/

5 Things Successful People Do After 5p.m.

5 Things Successful People Do After 5p.m.By Amy Levin-Epstein

(MoneyWatch) You may have read the popular post by Forbes writer Jennifer Cohen about five things incredibly successful people do before 8 a.m., which highlighted smart suggestions like visualizing their day and making their schedule top heavy. But that's not the only outside of work window in which you can pump up your productivity. Recently, I spoke to some career experts about things you can do after 5 o'clock that can help rejuvenate you and get you prepared for a top-notch tomorrow. Here are five they suggested trying:

Wrap up your dayThis includes responding to every email you received during the course of your day, says Julie Morgenstern, author of "Time Management From The Inside Out." "Do this, even if just to tell the sender that you've received their email, and will get back to them within the next day or so with an answer."

Plan for tomorrowTake a look at the rest of your work. "See what's on their schedule for the next day (and two beyond that), pull necessary prep documents and files, and have everything set to hit the ground running the next morning," says Morgenstern. And prioritize that massive To Do list. "Name your top 3 (to 6) priorities for the next day-to ensure you proactively complete those priorities, no matter what else flies at you unexpectedly," says Morgenstern. Don't forget to do the same for your team. "Plan your team's next day's priorities, and send out instructional emails or check ins."

Take time for friends and familySuccessful people invest intentional time in their personal networks, says efficiency expert Andrew Jensen. "They recognize that success at work is empty without success in their home and with their family," says he adds. The key is to make it quality time. "They actively exercise listening, while restraining from dominating the conversations," says Jensen.

They take care of themselvesInvesting in your health is always a smart personal, as well as business decision (if you're constantly sick, or even just tired, you won't function at your peak). "[Successful people] eat a healthy dinner, understanding the value of nutritiously investing into themselves and the corresponding returns they can expect. They exercise, channeling away pent up stress while strengthening their bodies and helping ensure a better night's sleep," says Jensen. While you're taking care of your body, don't forget to keep your personal finances healthy, too. "Don't let it pile up and become an increasingly stressful distraction," says Jensen.

They sleep for 8+ hoursThink staying super late is great for your career? While there are some circumstances that warrant it, in general sleep is a good career choice. "A good night's sleep is the secret weapon of highly successful people," says Alex Doman, CEO of Advanced Brain Technologies and author of "Healing At The Speed of Sound." "In the short term, a lack of adequate sleep can affect judgment, mood, ability to learn and retain information, and may increase the risk of serious accidents and injury," says Doman, adding that over time the effects may be even more grave. "In the long term, chronic sleep deprivation may lead to a host of health problems including, diabetes, cardiovascular disease, depression, and obesity."

Make these five behaviors after-hours habits, and you might find that you become efficient -- and successful -- over time.

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http://www.cbsnews.com/news/5-things-successful-people-do-after-5-pm/