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Steaming hot U.S. real estate simmers down

Real estate rise to new heights
Real estate rise to new heights
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The U.S. real estate market is moving towards a sluggish track as housing prices increase and home sales decline, a report on The Journal said.

The report said that analysts forecast that the sector “has become more challenging” and that it “would become harder to make money from real estate investments,” especially when the Federal Reserve starts to increase interest rates in 2015.

Citing Standard & Poor’s/Case-Shiller index data, the report noted that home prices soared to 9.3 percent in May, compared with the previous year. It noted, however, that the rise failed to reach analysts’ expectations, and recorded the lowest annualized gain for the market since February 2013.

Home prices dipped the following month to 0.3 percent, marking the first “negative month” since January 2012, the report added.

Home supply, meanwhile, has climbed to 5.8 months of demand, the highest it has been since October 2011, due to declining home sales and mortgage applications.

Real estate investment trusts (REITs), which invest a pool of its shareholder’s money into mortgage funds and real estate assets, among many, are also expected to be hurt by the slowed demand and “if interest rates rise”, according to the report.

“REITs could come under pressure if interest rates rise. Last week, yields on 10-year Treasuries climbed as evidence grew that the U.S. economy had firmed, making a rate boost more likely,” the report said.

“Further, REITs are considered expensive based on ‘adjusted funds from operations,’ a widely used metric for valuing these shares,” it added.

A Fox Business news report last week also noted that the property market has started to cool stating that 18 out of 20 cities posted “slowed” annual price gains in May.

It also said that while home sales have edged up to a record eight-month high in June, “they are still 2.3 percent below last year's level.”

“Home sales have been restrained by weak wage gains and tight credit, particularly for first time buyers,” Fox Business reported.

The coming months could become challenging to home sellers. But one way for them to counteract the downtrends is by using video marketing technologies like those offered by digital media company RealBiz Media Group, Inc. (OTCQB: RBIZ).

RealBiz Media’s consumer site Nestbuilder.com, for instance, offers a platform (i.e. Nestbuilder Agent) where agents can create virtual tours, video listings, and professional agent profiles that would allow them to build their brand and generate new businesses.

RealBiz Media has also developed a Television video-on-demand network, a MicroVideo App network, and a Virtual Tour network through its HomeTourNetwork division. Once it has developed its digital video network, RealBiz Media’s video products would be able to reach over 70 million households in the United States.

RealBiz Media currently provides its marketing platforms to nationally-recognized real estate firms by the likes of Keller Williams, Era Real Estate, Century 21, and Prudential Select Properties.