Jeff Collins Staff Writer — Orange County Register — July 5, 2015 12:00 a.m.
Chinese investors continue to pour money into U.S. real estate, with California still a top destination. Hotels, condos and online real estate ventures also are booming.
And luxury amenities appear to know no bounds. Soon, some Miami high-rise condo owners will be able to take their cars up to their homes with them.
“Sleep with your sports car,” says the website for the Porche Design Tower north of Miami Beach.
And someday soon, an app in your car will notify you about nearby homes that might interest you.
Those were among the hottest real estate topics at the recent conference of the National Association of Real Estate Editors (NAREE) conference in Miami.
The weeklong conference featured some of the nation's top housing economists and key industry leaders sharing the top trends they see happening this year. Here are seven of them.
The Chinese real estate investment boom keeps getting bigger, as measured by the amount spent buying U.S. homes and investing in U.S. mega-developments.
Chinese home shoppers spent $28.6 billion on U.S. homes in the year ending in March, double the amount spent two years earlier, the National Association of Realtors reported. At least $10 billion of that went to buying homes in California.
In addition, Chinese citizens seeking green cards are a growing source of cash for housing and commercial developments under a federal program known as EB-5.
The program allows foreign investors to get permanent U.S. residency for themselves, their spouse and children under 21 if they invest enough to create at least 10 jobs here, said Miami attorney Ronald Fieldstone.
Minimum investments range from $500,000 to $1 million.
Since most foreign investors don't have the ability to create their own businesses, designated organizations pool cash from multiple investors, funneling the money into job-creating development projects.
EB-5 investors in 2014 claimed the full 10,000-visa allotment by August. This year's allotment was gone by May. More than 80 percent of the visas are going to Chinese citizens.
The most recent data available show EB-5 investments totaled almost $2 billion in 2013, of which $317 million was spent in residential and commercial real estate development, according to Invest in the USA, an industry trade group.
EB-5 spending in Orange County totaled $25.1 million in 2013, up from $2.1 million, Invest in the USA reported.
“It's very hard to get residency here. EB-5 is a foolproof way,” Fieldstone said.
EB-5 money is helping to finance the Hunters Point Shipyard and Treasure Island projects, two San Francisco housing developments managed by Orange County-based FivePoint Communities, he said.
High-rise condo development has been on hold in Orange County since the housing crash, although two new projects are under review. Before the crash, developers built nine condo towers here.
In South Florida, however, developers have 357 condo towers with 43,150 units in the works, according to Miami condo consultant Peter Zalewski, creator of Condo Vultures.
The condo boom – in a region notor ious for overbuilding high-rise condo towers just before the crash – has been underway since 2011, he said.
The average price for a 1,000-square-foot unit in Miami starts at $800,000, in an area that had a first-quarter median house price of $269,000.
Foreign buyers, mainly from Latin America, account for most of the demand, with many putting up to 50 percent down to reserve a unit, Zalewski said.
One of the most distinctive luxury towers is the 57-story Porche Design Tower. It features a specially designed elevator that whisks residents' cars into glass-walled “sky garages” next to their units.
Most of the units also come with swimming pools on private balconies. Condos in the $560 million residential tower start around $4 million.
A recovering economy is creating a boom in the hotel business.
Hotel occupancy rates are hitting record levels this year in Orange County and across the nation, and are expected to set another national record in 2016, said Jaime Lane, senior economist for PKF Hospitality Research.
Lane said strong demand from both business and leisure travelers is driving up occupancy levels.
“People have money to spend again, and they're spending it on travel,” Lane said.
In Orange County, the projected 2015 hotel occupancy rate is 77.6 percent, up from last year's record 76.6 percent. The U.S. occupancy rate is projected to be a record 65.7 percent this year, up from 64.4 percent in 2014, PKF figures show.
Based on 2014 occupancy rates, Orange County hotels ranked eighth busiest among U.S. metro areas, following such cities as New York (85 percent), Oahu (84 percent), San Francisco (84 percent) and Los Angeles (79 percent).
The short-term vacation rental site Airbnb is a “market distrupter,” with a value that may have surpassed the 4,000-hotel Marriott chain, PKF's Lane said.
Vacation rental sites like Airbnb, VRBO (Vacation Rentals by Owner) and HomeAway allow people to rent out a spare room or their entire home. Increasingly, landlords and tourist rental operators are using the sites to fill investment properties or a second home.
Despite ongoing battles with city regulators around the globe, Airbnb is the biggest and fastest growing vacation rental site, Lane said. The 7-year-old firm says its valuation totals $24 billion, surpassing Marriott International's total value of $21 billion, the Wall Street Journal reported recently.
The website has more than a million listings, Lane said. InsideAirbnb.com reports it had nearly 27,500 listings in New York this past spring, 14,520 in Los Angeles and 5,426 in San Francisco.
There are at least 800 in Orange County, according to an Airbnb search.
“Hotels are seeing new competitors they wouldn't otherwise have,” Lane said.
This year's summer homebuying season should be the best in four years, says Nela Richardson, chief economist for online real estate site Redfin.
Redfin uses early indicators such as online requests to view homes and written offers. Home-tour requests on Redfin were up 24 percent from last year in May and 30 percent in June, Richardson said. Offers were up 13 percent in May and 1.3 percent in June.
The number of offers in which buyers waived a home inspection were up 6 percent both months. That's clearly a strong indicator of buyer demand, since waiving the inspection is a huge risk for buyers, she said.
The housing crash ended when big private equity firms and hedge funds began buying up single-family fore closures en masse to hold as rentals.
Now, says Dan Ganguly, CEO of Irvine-based HomeUnion, 95 percent of those investing in houses are individuals rather than big firms.
He maintains that as homeownership rates fall, the benefits of buying houses to rent out will rise. The national rate fell to a 22-year low of 63.7 percent this year, U.S. Census figures show. Orange County's homeownership rate was down to 57.5 percent in 2013.
“The rental economy will continue to go up,” said Ganguly, whose firm invests clients' money in houses across the nation. “That means that investing in residential real estate is going to continue to be viable.”
Ninety percent of home searches now begin online. And the online real estate world today is dominated by two companies.
In February, No. 1 website Zillow paid more than $2 billion to acquire No. 2 Trulia. In September, Rupert Murdoch's News Corp. announced a $950 million agreement to buy Move Inc., operator of Realtor.com, the third-largest online listing company.
Ryan O'Hara, Move's new chief executive, said Realtor.com hopes to benefit by networking with News Corp.'s other properties, including the Wall Street Journal, Dow Jones, social media and video curator Storyful and book publisher HarperCollins.
“We hope to turbo-charge Realtor .com,” O'Hara said, claiming that the site's page views are up nearly 40 percent this year, so far and it has overtaken Trulia for the No. 2 spot.
Zillow and Trulia, meanwhile, are capitalizing on their early start in the mobile market; they were among the first to develop apps for the Apple Watch.
And soon, your car could be sending alerts as you drive: “You've been looking for a three-bedroom, two-bathroom house with a pool? Here's one.”
“Everything,” said Zillow spokeswoman Katie Curnutte, “will be more personalized.”
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