Quite a lot happened in the world of real estate in 2015, and 2016 looks to be more of the same. Before we look ahead, though, let’s take a look back at some of the biggest real estate stories of the past 12 months.
By Chris Matthews via Fortune
Every business owner has her fair share of grievances. After all, it’s not easy staying in the black. But it’s also common for people to exaggerate the significance of their problems. And that’s why many economists have taken complaints from homebuilders about a shortage of qualified construction workers with a grain of salt. These analysts assumed that the homebuilding community had just gotten used to the glut of cheap labor that the great recession produced. But homebuilders may actually have a point. On Wednesday, the Census Bureau announced that new home construction fell 11% in October, suggesting there may indeed be a supply problem—in terms of labor and land—in the housing market, rather than just an issue of weak demand and a lack of available credit. Recoveries in home prices often come a bit ahead of a broader economic recovery. The real estate market rebound began in earnest in 2012, as investors anticipated that the eventual recovery of the labor market and continued population growth would justify higher home prices.
By Stuart Eisenberg and Anthony La Malfa via Real Estate Weekly
Used by more than 60 million people in 190 countries, Airbnb – the trusted community marketplace for people to list, discover and book unique accommodations around the world – could become the preferred lodging of choice for travelers in the near future. And investors agree. In late June, Airbnb closed a $1.5 billion funding round with a staggering $25.5 billion valuation, one of the biggest private rounds in history. Given the growing and expansive reach of, and interest in, Airbnb, it is increasingly positioned to meaningfully impact the real estate industry, especially the hotel and multi-family rental markets as it shifts demand away from traditional options. In fact, the dramatic growth of Airbnb is catching the attention of many hotel professionals, whether they want to admit it or not.
By Jim Wyss and Mimi Whitefield via The Miami Herald
When the communist island began allowing citizens to buy and sell their homes almost four years ago, it was a godsend for Nieves Puig Macías. The 56-year-old retired architect is suffering from an array of health problems — from bad kidneys to a bum arm — that make it hard for her to get around her three-story home. She’s been hoping to sell it and move into a ground-level dwelling. But two years later, she says she has a new problem: greedy real-estate agents who are so keen on turning a profit that her house has languished, overpriced, on the market. In just a few short years, Cuba’s nonexistent real-estate sector has boomed into a multifaceted, sometimes frenetic industry: Hand-scrawled “Se Vende” signs hang from dilapidated colonial structures and modern condos…
By Ruth Bloomfield via The New York Times
Canyon Lake Ranch was once a playground for Christian day campers, and then was a corporate retreat with water-skiing, barbecues and cowboy shoot-’em-up shows. Hawks now circle above 108 sunbaked acres occupied by copperhead snakes, a few coyotes and the occasional construction truck. Soon this ranch will be a gated subdivision of 99 mini-mansions designed for buyers from mainland China. The developer, Zhang Long, a Beijing businessman, is keeping three plots to build his own estate along the site of an old rodeo arena. This luxury development 35 miles northwest of Dallas is the latest frontier in a global buying phenomenon as Chinese money becomes a major force in real estate around the world. The flood of money is likely to persist despite the current tumult in China. While a currency devaluation and stock market crash have crimped the country’s buying power overseas, the resulting uncertainty is making many Chinese individuals and companies eager to invest anywhere except their home country.
By Nav Athwal via Forbes
Crowdfunding has become something of a buzzword among investors these days and it’s been particularly well received in the real estate sector. Though it’s still in its infancy, real estate crowdfunding is rapidly reshaping the way individuals find and invest in properties. This shift has brought benefits not only for investors but also for real estate companies and for the real estate market as a whole. But this rapid growth also means important considerations for investors when choosing a platform to invest their capital with. The old rules for real estate investing In the pre-crowdfunding era, investing in private real estate was all about who you knew. Under the Securities Act of 1933, private securities investments (including securities of real estate companies) could not be marketed publicly. That meant that access to private deals was limited to investors who were able to seek them out through connections in their personal network. Or to better phrase it, the old country club model of finding and investing in real estate.
By Alexandra Gibbs via CNBC
While high-technology and community ventures have dominated the headlines when it comes to crowdfunding, more challenging areas of investment, such as real estate, are also finding success, according to one industry executive. More people are being drawn into this increasingly crowded space, with platforms like Realty Mogul, Property Moose and Fundrise leading a sector which globally raised over $1 billion in real estate during 2014. By the end of this year, that figure is expected to almost triple, up $2.57 billion worldwide, according to a Massolution report released this year. “(Crowdfunding in real estate) It’s absolutely catching on” says Jilliene Helman, founder & CEO at RealtyMogul.com, told CNBC Wednesday.
By Ben Zimmer via TechCrunch
The Federal Reserve values U.S. real estate at an estimated $40 trillion, making it the largest asset class in the country. So it shouldn’t surprise us that, as TechCrunch recently reported, in the last quarter of 2014, venture funding of real estate tech firms reached nearly $300 million. Venture capital firms that back the likes of Uber, Instagram and Buzzfeed are pouring money into rising tech startups. Residential listing and brokerage app Compass (formerly known as Urban Compass) was recently valued at $800 million and has lured top talent from tech giants like Google and Twitter. Redfin reinvented real estate brokerage by combining advanced technology with full-service brokers and raised $71 million in their latest round.
By Tony Manfred via Business Insider
Nearly three years after winning a competition to design a residential building with units smaller than 400 square feet, Carmel Place is on the verge of completion. Located in Manhattan’s Kips Bay neighborhood, the building is the first micro-apartment development in New York City. Its 55 units range between 265 and 360 square feet, and market-rate units cost between $2,650 and $3,150 a month. Since 1987, New York has required units to be 400 square feet or larger, but the city made an exception for this project — which was pitched as a solution to the lack of affordable living options for singles who want to live in Manhattan by themselves. Tobias Oriwol, project developer for Monadnock Development, told INSIDER that the units are specifically designed to make the most out of their limited square footage. “People really don’t care too much about the size as long as the apartment does what they want it to do,” he said.
By Ian Salisbury via TIME Magazine
On Oct. 3, the Consumer Financial Protection Bureau plans to roll out a key piece of its program: new rules about how mortgage terms are disclosed to home buyers. Mortgages of course were at the heart of the financial crisis. Sen. Elizabeth Warren, the CFPB’s guiding spirit, has long argued that confusion over complicated terms led well-meaning people to make bad decisions in the run-up to the housing crash. The two new disclosure forms, which replace the current four, are designed to tackle that problem head-on, making sure borrowers get clear information and giving them more time to digest it. Of course, not everyone is happy about the changes. Some borrowers may now find it harder to get a loan or slower to close on the purchase.
By Robert Shiller via The New York Times
Home prices have been climbing. They have risen 27 percent nationally since 2012, even more in places like San Francisco. But why worry? If you accept the efficient markets theory — and believe that real estate is an efficient market — then these prices are based on “new information,” even if you don’t know what that information is. The problem with this kind of thinking is that the efficient markets theory is at best a half-truth, as a voluminous literature on market anomalies shows. What’s more, even that half-truth is grounded mainly in the stock market, which attracts professional investors who sometimes do make the market behave efficiently…