Total sales volume to international clients is estimated at $82.5 Billion for the 12 months ending March 2012, up by 24 percent from the previous 12-month period of $66.4 Billion, based on information in the 2012 Profile of International Home Buying Activity.[1]

• International sales are divided evenly between foreign clients who have permanent residences outside the U.S. (Type A) and recent immigrants (less than two years) or temporary visa holders residing for more than six months in the U.S. for professional, educational, or other reasons (Type B).
• International clients continue to be attracted to the US residential property market  for a variety of reasons: as a place to live for recent immigrants, temporary workers, and students relocating to the US;  as an investment or  portfolio diversification asset; for vacation purposes; and for stability and security reasons.
• Moreover, the inexpensive US home prices coupled with favorable exchange rates in some countries such as China, Canada, and Brazil appear to have encouraged buyers although the weaker euro likely discouraged potential homebuyers from countries using the euro.

What Does This Mean to Realtors®?

International clients have specific interests and needs.  Information on addressing this market is available at http://www.realtor.org/global.

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[1] International transactions for the 12 months ending March 2011 had been estimated at $ 82 Billion. As a result of the re-benchmarking  of total existing home sales using the 2010 Census data, the estimate for 2011 was revised to $ 66.4 Billion.

The stock market has sunk by 10 percent from the March peak periods.  Back in March, I alluded to a likely topping off in the stock market because of impending soft economic data over the horizon.  Read that blog entry here >

With an understanding that forecasting is a hazardous sport with many misses, I will attempt to make another call on the stock market.  The current correction is likely coming to an end.  The basis for this projection is principally due to

1. The U.S. economy is in no danger of an impending recession
2. Corporate profits are sky high with huge cash reserves sitting on the sidelines
3. Greece dropping the euro will devastate Greece, but not others

After every recession there is a recovery. The current problem is that expansion to-date has been frustratingly slow.  But America is in no danger of falling into another recession of the GDP falling for two consecutive quarter or net job losses occurring for several consecutive months.  The key is that housing market is recovering.  Increased home sales and housing starts leads to income generation and induces many secondary spending impacts, such as at furniture stores and for lawn care.  Housing, or more formally called residential construction spending in GDP accounting, will be growing by 13 percent in 2012 and a further 18 percent in 2013.  Such a growth rate will be pushing up the GDP by at least 0.5 percent points going forward, which is much better than the net negative that occurred during the housing market bust periods.  With housing recovery and the fact that the overall national income is rising at 2 to 3 percent, it is hard to foresee how the U.S. economy could go into a recession.  One notable short-term subtraction to the economy is the cuts in government spending.  When jobs are cut at state and local government levels, there is less money circulating in the local economy over the short haul.  However, an improvement to the government finances will help long-term economic growth.  The U.S. economy (GDP) is therefore forecasted to rise 2 to 2.5 percent in 2012 with job creation to the tune of 1.5 million to 2 million this year and the next.

The second factor that will help support the stock market from sinking further is that corporate profits are at a record high.  The latest $2 trillion is more than double the amount in late 2008.  The stock market valuation in the end is a reflection of profits, current and future, and given the high current profits further declines in the stock market is not necessary.

Finally, the Greek problem will be limited.  Germany, the European economic powerhouse where people retire at the age of 60 to 65, has no interest in helping out Greece where many people retire with good pensions at the age of 55.  The borrowed money to pay for the generous pension will soon end.  Greece, whether from its own choice or from being forced upon from outsiders (as no new loans are provided), will leave the Euro currency.  The Greek Drachma, its former national currency, will return.  Unfortunately, the value of the Drachma will be essentially worthless, so the Greek citizens will suffer a drastically lower standard of living.  Fortunately though, other countries with high debts, such as Portugal, Spain, Ireland, and Italy will witness the harm of leaving the Euro and they will quickly understand that there is no such thing as a free lunch.  Economic restructuring of Portugal, Spain, Ireland, and Italy will then help these countries as well as the broader global economy.  Greece will take a longer time to recover, but its weak currency over time will draw many tourists to travel to Greece on the cheap.  The bottom line is that Greece will be an isolated problem and not a big European problem that can meaningfully alters the global economy.

The bottom line: U.S. economy expands, though slowly; jobs get created, though slowly; home sales continue to do better this year compared to the last; and finally already high corporate profits will rise even more.  Therefore, a further measurable stock market correction is no longer required.  Keep in mind, however, that the stock market has repeatedly proven to be highly irrational, with big, unjustifiable ups and downs over the short term.

• A number of Realtors® responding to the April RCI Survey indicated continued exceptionally tight credit conditions.
• A comparison of FICO scores for loan transactions as reported by Realtors® responding to the RCI over the February/March/April time span compared with FICO scores reported by Fannie Mae’s “Acquisition Profile by Key Product Features” – showing lending conditions in the pre-boom normal housing markets of a few years ago – shows that credit availability to lower scoring applicants appears to have declined.
• Realtors® provided FICO information based on their understanding of the buyers’ credit situations; in many cases the information was estimated. Overall the data seem to substantiate relatively tight credit conditions.
• Additional information on a variety of topics related to current residential market conditions may be found here.

I’d like to sell some of the surplus garden produce and eggs from my homestead. Do I need special farm liability insurance to do that? 

We checked with insurance agents and homesteaders in several states. The answers varied widely from state to state and policy to policy.

In one case, the agent said not to worry about it unless you’re really the cautious type. However, if you want to be sure you would be covered if a customer were injured while visiting your property or by consuming your products, start by discussing farmers market insurance with your agent. Some agents told us the liability coverage with their standard homeowner’s policy would provide some protection, as long as your agriculture-related income is less than a certain threshold, such as $1,000. One agent recommended you check the exclusions on your homeowner’s or rental policy, and if there isn’t a specific exclusion, you should be covered under your regular policy.

Other companies offer a special rider or endorsement attached to the standard homeowner’s policy specifically to provide liability coverage for small-scale farms that earn less than $10,000 (or another specified amount) annually from agriculture. If you meet the farmstand regulations, you can obtain extra liability protection for as little as $25 to $50 per year. If you desire even more protection against a possible worst-case scenario, you can purchase an umbrella policy for a few hundred dollars annually that will pay $1 million or more for liability claims.

Some providers (often state- or regionally-based) offer special “country lifestyle” or “small farm” policies for those who don’t need the same level of coverage a large commercial farm or ranch would need. The Blumenthal and Donahue Agency in New England, for instance, has a standard homeowner’s policy plus farm and product liability for small farmers in their region (many of whom have just 1 acre). Agents can customize policies for specific needs, such as beekeeping, Christmas tree growing, sheep breeding, etc. In the Midwest and Rocky Mountain states, Farmers Union has a small-farm liability insurance package for those who earn less than $20,000 from farm income and own or lease fewer than 80 acres.

If you rent your homestead, you may want homestead insurance beyond whatever the property owner carries. Renter’s insurance usually includes some liability coverage but, as with many homeowner’s policies, yours may not cover liability for people who use your products.

If your insurance company is not able to offer farmers market liability insurance, or the cost is exorbitant, shop around for a provider who can help. (Independent agents who represent multiple companies can do the shopping for you.) Ask other local homesteaders or market growers for their recommendations, or consult your state Farm Bureau. Farmers’ co-ops and other local farm organizations sometimes partner with insurers to offer goods and services to members at reduced rates.