Real Estate Investing Revives by Jim Woodard on Creators.com

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Real Estate Investing Revives

Investors are taking a new and positive view of homes and other real estate as a viable target for their investment funds. The trend is worldwide.

That's the consensus of investors responding to a survey and study commissioned by Barclays Wealth, a wealth management firm. It was a global survey of more than 2,000 wealthy (high-net-worth) investors. It showed renewed confidence in investing in residential and commercial real estate.

Properties in the United States were most appealing to the investors, with China and India coming in second and third. About 35 percent of respondents said they planned to increase their real estate investing.

It's interesting to note that women were more attracted to real estate investments than men. About 44 percent of women found real estate to be more intriguing than other asset classes, compared with 28 percent of men.

"Now that real estate prices seem to be stabilizing globally, wealthy investors are thinking about increasing their allocations in this asset class," said Michael Crook with Barclays Wealth. "But it's clear from the survey results that the demand from these wealthy investors for real properties will depend on the availability of credit and the sustainability of the economic recovery."

The report noted that despite the economic and financial headwinds, wealthy investors have confidence in real estate as an investment; they plan to increase their portfolio allocations in residential and commercial properties in the near term. Of investors surveyed, 75 percent expressed the view that residential real estate looks particularly attractive from an investment perspective, but 60 percent of investors note that tight credit conditions are currently preventing them from taking the plunge.

It's also significant that 26 percent of investors believe that real estate has better long-term prospects than other asset classes. More than half of respondents believe the value of their real estate investments will increase over the next two years. Nearly 40 percent of the survey's respondents with investment assets of $50 million or more have greater than 50 percent of their investment portfolio in real estate.

Smaller and more localized investors are also becoming more active.

Foreclosed and other distressed homes, along with short-sale properties and apartments, are the most actively sought properties in today's market.

Q: Are the number of home foreclosures still increasing?

A: No, they have been decreasing over the past four months, according to RealtyTrac, a real estate research firm. In November, foreclosures decreased 8 percent from the previous month.

"November was the fourth straight month that the U.S. foreclosure activity has declined after hitting an all-time high in July," said James Saccacio, CEO of RealtyTrac. "November foreclosures were the lowest we've seen since February.

"Loan modifications and other foreclosure prevention efforts, along with the recently extended and expanded home buyer tax credit, are keeping the lid on most visible symptoms of the nation's ailing housing market — foreclosures and home value depreciation. This is providing a welcome respite for the real estate industry," he said.

Nevada, Florida and California still have the most foreclosures.

Q: Are FHA loans only available for home financing?

A: FHA mortgages are not only being enhanced to make them more accessible and affordable to home buyers, they are also structured to serve the real estate needs of other groups.

For example, the Federal Housing Administration (FHA), working through the Department of Housing and Urban Development (HUD), has a special program for providing insured mortgage financing for hospitals and critical care facilities. Applicants for these mortgages can now obtain financing for projects for which they qualify. Many have been cut off from the credit markets due to the collapse of the bond insurance business and other factors, according to a report carried in National Mortgage News.

"The FHA's Section 242 mortgage insurance program is designed to support hospital projects by helping to reduce their cost of capital," said Steven Hunt, a senior account executive for HUD. The program focuses on hospital construction but can be used for other purposes. It's used mostly at urban hospitals, which is now available in 43 states.

The program has been ignored by many hospitals in the past because the HUD standards have been perceived to be too onerous. And municipal bond deals associated with the program have been few in number and relatively small in size. But now the program is gaining more attention and considered to be more viable in today's market.

To find out more about Jim Woodard and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.