realestateserives

Redesigned Beverly Hills and Hollywood Hill Real Estate Website Goes Online

2011-04-18T03:58:00.000-07:00

Seasoned Beverly Hills Realtor Scott Prather has just redesigned his website, making it an even better, more interactive resource for Beverly Hills houses for sale and real estate throughout Los Angeles.

Beverly Hills, CA (PRWEB) April 18, 2011

Boasting a fresh new look and video homepage, a streamlined interface and an enhanced selection of features and services, Realtor Scott Prather's website, http://www.ScottPrather.com, is back and better than even. The site has been redesigned so as to provide users with a better, more enjoyable online experience.

“The majority of home searches begin online these days,” says Prather, “but when you're looking for a home in Beverly Hills, you're not just going to need information about the property itself, you'll also want to learn more about the neighborhood, schools, and other important area details. You'll probably also want to know more about the unique home-buying and selling process here, financing, etc. This kind of complete information picture is what I strive to provide through my website.”

Prather, a fourth-generation member of a prominent real estate family, has been specializing in Los Angeles real estate and houses for sale in Beverly Hills, CA for the better part of three decades. His background, years of experience, and extensive network of contacts all combine to give him an edge over other real estate professionals in the region.

The redesign of Prather's website is a reflection of his ongoing commitment to continuously raise the bar in customer service. “Real estate is both an art and a science,” he says, “but most of all, it is about being of service to others.” The site now not only has a new, elegant design, it is also easier to use and has a comprehensive suite of tools and resources. This includes highly detailed listings of houses for sale in Hollywood Hills CA, a customizable property search feature, community resources, and guides for homebuyers and sellers.

“Whether you're looking for homes in Hollywood Hills or you want to ensure that you're pricing your home right and marketing it effectively, I am here to help,” says Prather. “Browse through my site to learn more about my services and the real estate market in the Los Angeles area.”

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Mohammed happy with real estate sector indicators

2011-04-18T03:45:00.000-07:00

Shaikh Mohammed said he is satisfied with the promising positive indicators for the real estate sector in the emirate of Abu Dhabi in particular and the UAE in general.

His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said on Sunday he is satisfied with the promising positive indicators for the real estate sector in the emirate of Abu Dhabi in particular and the UAE in general.

Shaikh Mohammed said this while visiting the 5th Cityscape Abu Dhabi 2011 at the Abu Dhabi National Exhibition Center. He termed the situation as a source of confidence and optimism and bodes well for “our people and our society”.

He affirmed that the UAE will remain a trendsetter in various fields whatever challenges it faces, considering such challenges as a test of energies of the youths and national institutions.

Shaikh Mohammed stopped at stands of various developers and viewed an array of latest urban infrastructure developments and mega cultural, recreational, tourist and services projects being undertaken by those developers in the emirate of Abu Dhabi.

One of the region’s most premier events for the real estate industry, the Cityscape, will run until Wednesday.

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Cityscape Abu Dhabi opens in under one week

2011-04-11T02:34:00.000-07:00

With less than one week to go until doors open, Cityscape Abu Dhabi 2011 aims to aid the restoration of investor confidence and knowledge at the region's most premier exhibition for the real estate industry.

Taking place from 17-20 April 2011 at Abu Dhabi National Exhibition Centre (ADNEC), Cityscape Abu Dhabi will be the largest gathering of real estate professionals in the Middle East so far this year and is being held at the Abu Dhabi National Exhibition Centre under the patronage of HH Sheikh Mohammed bin Zayed al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.

Going into its fifth consecutive year, Cityscape Abu Dhabi offer developers an opportunity to connect with the investors and end users, further understanding their aspirations. Understanding the need for more transparent processes and a steady stream of up to date information for property professionals, the exhibition Introduces local, regional and international projects to a global audience. The highly anticipated exhibition will host exhibitors from the region and across the globe, including Mubadala Real Estate & Hospitality, Al Qudra, the Abu Dhabi Urban Planning Council, Aldar, Baniyas, Sorouh, TDIC, ICT, DMA and Burooj.

Cityscape Abu Dhabi will welcome back a number of popular features as well as some brand new elements. Providing a platform for those involved within the market to network with those alike and potential business associates, Cityscape Abu Dhabi will offer a unique mix of face-to-face networking opportunities including the Investor Round Tables. These will offer an exclusive opportunity for leading institutional investors and developers to discuss hot sectors and partnership opportunities, as well as share strategy, within an intimate environment. There will be multiple Investor Round Tables running throughout the course of the exhibition, each with a specific focus on a key sector.

One of the exhibition's new networking initiatives is the Business Matching Service which gives participants the opportunity to pre-arrange meetings with industry colleagues at Cityscape Abu Dhabi. Giving direct access to exhibitors and visitors before the doors open, in the free dedicated business-networking lounge in Hall 3, the Business Matching Service offers everyone the opportunity to target and connect with new prospective business partners. Additional networking events will include the annual exhibitor cocktail party which provides an outstanding opportunity for international and regional executives to meet and network in a relaxed and informal atmosphere.

For More information Visit : http://www.ameinfo.com/261747.html

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Presidio Real Estate Chooses MRI Software to Manage its Commercial and Residential Properties

2011-04-11T02:06:00.000-07:00

San Antonio-based property management and real estate service provider Presidio Real Estate has made MRI Software its exclusive property management software provider. Following dissatisfaction with an “off-the-shelf” property management solution, Presidio returned to MRI upon the launch of CM Express, and was the first client to purchase the new software-as-a-service offering targeted to small- and medium-sized businesses.

Presidio Real Estate and its principals have specialized in residential and commercial property management and real estate services for over 15 years, focusing on managing clients' long-term needs. As a growing business providing management assistance for HOAs, commercial real estate managers, and investors, Presidio felt that the immediate benefits of CM Express fit its needs perfectly. “We were extremely pleased that MRI Software was able to customize a Commercial Management package to meet our accounting needs as well as provide the report formatting within our price point,” said Gloria J. Contreras, Senior Property Manager at Presidio. “This allows us to offer our clients an overall financial detail summary and budget forecast to manage their portfolios effectively. “

CM Express, launched in early December, is MRI's new Software-as-a-Service (SaaS) property management offering designed for growing commercial property management organizations. Packed with all of the robust features of MRI's core offering, including accounting, budgeting, and extensive reporting components, CM Express distinguishes itself by requiring no additional investment in hardware, personnel, or the other costs associated with an on-premise software implementation. Additionally, MRI's experts implement and configure the software so that it meets the needs of growing property managers like Presidio. Cleveland-based MRI has provided property management software to the global real estate industry for 40 years.

“In the current economic environment, it's especially important to provide maximum return on our clients' investments,” said Patrick Ghilani, Vice President of Global Professional Services at MRI. “We're delighted that our CM Express package meets the needs of growing property managers like Presidio, and I look forward to a long, successful partnership.”

About MRI Software, LLC.

MRI offers business management software solutions to the global property management and investment industries as well as to corporate real estate managers. As a leading provider of real estate enterprise software applications and hosted solutions, MRI serves the multifamily, commercial, and investment advisor companies, helping them improve their bottom line and maximize their returns on their diverse business portfolios. MRI leverages its 40 years in business to develop long-term successful relationships with its clients. For more information, please Click Here

Farm, services sector push economic growth

2011-02-28T04:53:00.000-08:00

New Delhi: Driven by good performance of agriculture and services sector, the Indian economy grew by 8.2 per cent in the third quarter of the current fiscal, up from 7.3 per cent in the corresponding period a year ago.

According to the data released by the government on Monday, farm sector during the third quarter ending December, recorded a growth rate of 8.9 per cent, up from a decline of 1.6 per cent in the corresponding period a year ago.

The services sector, including financing, insurance, real estate and business services during the same period recorded a growth rate of 11.2 per cent as compared to 8.5 per cent during the same period last year.

Electricity, gas and water supply is another sector that has done well as it grew at the rate of 6.4 per cent in third quarter compared to 4.5 per cent in the same period last fiscal.

Mining and quarrying growth jumped to 6 per cent in third quarter from 5.2 per cent in the same three-month period last fiscal.

Manufacturing and construction activity has slowed down, growing at pace of 5.6 and 8 per cent cent, respectively, in the three-month period as against 11.4 and 8.3 per cent respectively in the corresponding quarter.

The government expects the growth to top 8.5 per cent in the current fiscal. The growth rate for the first and second quarters was unchanged at 8.9 per cent each.
Source: http://ibnlive.in.com/news/farm-services-sector-push-economic-growth/144632-7.html

Real Estate Repeats as the Top PPD Legal Services Request for 2010

2011-02-24T04:41:00.000-08:00

ADA, Okla., Feb. 24, 2011 /PRNewswire/ -- For the second year, Real Estate Issues is the leading Pre-Paid Legal Services, Inc. (NYSE: PPD) legal service request from among an estimated 2.1 million requests from PPD's members (customers) during 2010.

The 342,000 requests for the real estate-related legal service inquires, represents approximately 16.2 percent of the total estimated 2.1 million legal service requests for 2010.

Real Estate, Landlord/Tenant Issues and Foreclosure – The approximate 358,000 requests for legal services include residential and commercial real estate transactions, landlord and tenant issues and legal counsel related to foreclosure and short sales.

By category, the other top five legal service requests include:

Consumer Finance – Approximately 198,000 or 9.4 percent of total requests for legal services related to retail transactions for warranties, guarantees and other contracts;

Family Law – Approximately 188,000 or 8.9 percent of total requests for legal services related to divorce, child support, child custody and child visitation;

Traffic Issues – Approximately 187,000 or 8.9 percent of total requests for legal assistance related to moving violations, traffic tickets and auto accidents; and

Collections – Approximately 153,000 or 7.2 percent of total requests for legal services to support members against other parties and to defend members from third-party debt collectors.

Along with Real Estate Issues, Consumer Finance and Family Law held the same respective positions in the 2009 legal service ranking, while Traffic Issues rose to the fourth position in the 2010 ranking. Collections fell to the fifth position in the 2010 ranking compared its fourth position in the 2009 ranking.

The top five legal service requests, totaling an estimated 1,068,000 requests, account for approximately 50 percent of the total legal services requests for the year. In addition to the top five legal service requests for 2010, Pre-Paid Legal Services provider law firms provided legal counsel on other major legal service requests including: 6) Estate Planning (approximately 150,000 requests), 7) Employment (approximately 118,000 requests), 8) Criminal violations (approximately 100,000 requests), 9) Civil Litigation (approximately 92,000 requests) and Bankruptcy (approximately 72,000 requests). The remaining 2010 legal service requests, an estimated 500,000 requests, were for a variety of legal issues and legal consultation requests.

Charles Willinger, Jr., a founding member of Willinger, Willinger & Bucci, P.C. (http://www.wwblaw.com), the PPD provider law firm for Connecticut, says there is clear pattern within the ranking of top legal service requests for 2010.

"People lose a job, then they lose their house and then, sometimes, even their family," Willinger said. "It's like the proverbial house of cards. One problem leads to another and they all begin with the pocketbook," he said.

Willinger, Willinger & Bucci, P.C., based in Bridgeport, Connecticut, has been the PPD provider law firm for Connecticut since 1999.

Davis Miles, PLLC (http://www.davismiles.com) Partner and Co-Founder Charles E. Davis says PPD's national ranking of top legal service requests is consistent with the annual ranking of legal service requests at Davis Miles.

"This list reflects the legal service needs of average Americans, and while there may be some variation in the ranking from month to month or year to year, the legal issues remain consistent," Davis said. "The real difference, as I see it, is that the Pre-Paid Legal Service member has a means and an opportunity to deal with these issues before they become insurmountable problems."

Davis Miles, PLLC, based in Tempe, Arizona, has been the PPD provider law firm for Arizona since 2004 and the provider law firm for New Mexico since 2008.

Richard A. Campbell, a partner with Deming, Parker, Hoffman, Campbell & Daly, LLC (http://www.deminglaw.com), says it is no surprise that Consumer Finance, including issues related to warranties, guarantees and contracts, is among the top legal services requests for 2010.

"During the past year, we've seen more incidents where companies are denying claims to customers for questionable reasons," Campbell said. "This is particularly true with respect to insurance claims, and given the state of the economy, it's no surprise," he said.

Deming, Parker, Hoffman, Campbell & Daly, LLC, based in Atlanta, Georgia, has been PPD provider law firm for Georgia since 1990.

Source: http://www.prnewswire.com/news-releases/real-estate-repeats-as-the-top-ppd-legal-services-request-for-2010-116804618.html

Abu Dhabi residential rentals drop 10%

2011-02-14T03:00:00.000-08:00

The residential market in Abu Dhabi did not see any major increase to supply in Q4 2010. While the market continues to experience an overall under-supply based on the number of households relative to units, said a study released on Sunday.

Average rentals declined between 5 per cent to 10 per cent during fourth quarter, according to the report titled "Abu Dhabi Real Estate Market Overview - Q4 2010" by Jones Lang LaSalle.

The lower to mid-market segments of the market remain significantly under supplied, the report said.

A further 23,000 units are scheduled for completion during 2011, bringing total supply to around 208,000 units. In reality, some of these projects are likely to experience further delays.

While developers, the report said, in Abu Dhabi have scaled back many projects since the market correction at the end of 2008, the additional supply entering the market is generating an oversupply situation for most asset classes.

Consequently, average rentals and sale prices continued to decline in most sectors during Q4 2010, it said.

Market conditions in Dubai continue to have a negative impact on Abu Dhabi due to the inter-relationship between the two markets, the report added.

It said other than selective relationship lending, liquidity remains tight and many developers continue to experience cash-flow issues.

No major new supply has entered the office market in Q4 2010. Several large-scale projects are expected to be delivered in 2011, increasing the office supply by more than 25 per cent.

Quoted rental prices have decreased from the previous quarter with few transactions occurring.

New supply has entered the retail market in Q4 2010 with the full opening of Dalma Mall in Mussafah. There remains a shortage of quality space, with occupancy rates of more than 95 per cent being achieved in high quality centers.

Rental rates have remained stable over the past year in major malls, but asking rents have decreased significantly for upcoming malls outside Abu Dhabi Island, it added.

Supply continues to outpace demand in the hotel market. Abu Dhabi continues to develop its leisure offering, with the opening of Ferrari World on Yas Island in Q4.

Average room rates and hotel occupancies have declined significantly during 2010, with occupancies below 60 per cent (year to November) for the first time in more than 5 years.

The market is witnessing a widening gap between tenant and owners rental expectations, which is reducing the level of leasing activity.

Some tenants are seeking to renew for short periods on the assumption that the market will move further in their favour during 2011, it said.

Tax value's role in house sale is subtle

2011-02-11T02:52:00.000-08:00

Charlotte real estate agents are telling homeowners their new tax values shouldn't be a big factor in selling or buying a house. But they can play a role - especially if the values have fallen.

The Mecklenburg assessor's office mailed 2011 revaluation notices for about 297,500 single-family houses and townhomes this week. About 63 percent climbed over their 2003 values and almost 1 in 10 were up by 50 percent or more, an Observer analysis shows.

It's the first countywide mass appraisal in eight years, and many homeowners have expressed shock and frustration over values they think are too high - or too low.

Joe Clorite, a Keller Williams agent, said he expects that some of the falling home values will help convince homeowners looking to sell that high asking prices are unrealistic.

"It actually helps us and verifies we were right if we haven't been able to convince them," he said. "It makes it easier for them to swallow."

He said the clients he's contacted so far saw their assessed home values fall, which confirmed his suggested prices.

On the other hand, Clorite said, valuations that rose sharply could spark sellers to question why they're not asking for more money.

Derrick Thomas saw his value fall, but it won't affect his asking price for a one-story, vinyl-sided home in northwest Charlotte's Windy Ridge neighborhood. The area has been plagued by foreclosures, and assessments plummeted as much as 45 percent.

Thomas' house value fell to $58,900 from $106,000 in 2003.

But he said he never expected to get anywhere near the 2003 value for the house, which he and investors bought last year in a foreclosure sale for $33,000. "We went by what other homes here are selling for. We've got it priced at $69,900," he said.

Thomas said he thinks the drop in assessed value should help him sell, because he'll be able to tell buyers that property taxes will likely drop by about half from about $130 each month.

Pat Riley, president of Allen Tate Real Estate, said he doesn't expect the change in assessed values to shake up the housing market.

"I don't think it's a big event," Riley said. "All in all, I think they did a pretty good job."

Aiming at fair market value

The county aims to estimate fair market value as of Jan. 1. The practical goal is to come within 5 to 10 percent of that value, says county revaluation team leader Chuck Hicks.

The revaluations are required by state law so homeowners can pay a fair share of property taxes based on what their land and buildings are worth.

The most important appraisal in buying and selling a house, real estate agents emphasized on Thursday, is done by a licensed appraiser for a fee.

That individual appraisal is required by lenders and helps them decide how much to loan on a property. If the fee appraisal is less than the buyer's offer, lenders often base their loan on the appraisal's lower price. The buyer has to come up with the difference.

Jonathan Osman at Keller Williams Realty SouthPark is hearing about assessed values that are all over the map. Most of his sellers have called in unhappy about big increases in south Charlotte. "Most would love to sell at those prices; some ... tried and failed."

He cited a recent home sale in Eastover. "Closing price was around $740,000 and the new tax value of the home is $1.4 million."

Osman doesn't think the county's values play much role in home sales because they're mass appraisals: "It's not like they sent somebody in your house and did a true market analysis."

Housing market has suffered

Sandy Coyer, a Keller Williams agent in the Lake Norman area, said she thinks values there have risen fairly. She said she hasn't seen any completely off-base increases, but hadn't looked at all of her listed properties Thursday morning

"The people that are getting an increase are saying, 'Hey wait a minute, I thought the market was bad,'" she said. Even though the housing market has suffered in recent years, people aren't taking into account the rise in prices for much of the decade in Charlotte.

One way the county's new values play a role is when a buyer wants to know what the property taxes are. The real estate agent usually posts that information with listings on the Multiple Listing Service. Home flyers often advertise a price as "below tax value."

Coyer hasn't ever had a sale derailed because of potential property taxes and doesn't expect that to become a problem. Buyers who look at high-priced properties usually can handle the taxes, and those moving from the Northeast or Midwest are often pleasantly surprised by relatively lower rates, she said.

Brian Augustine, a real estate agent for Elite Team Properties, which specializes in prestigious neighborhoods like Myers Park, said most of the clients he's talked with have seen huge valuation jumps that don't reflect what they could actually sell their house for.

Big Credit Unions Banking Again on real estate Loans

2011-02-07T02:31:00.000-08:00

Local credit unions are beginning to return to commercial real estate lending, a business line that was all but abandoned by many lenders during the recession.

Lockheed Federal Credit Union, the second largest credit union in Los Angeles County, began offering commercial real estate loans last week for the first time since 2006. The move comes just months after Kinecta Federal Credit Union, the largest, resumed real estate lending after a yearlong hiatus.

While many commercial banks remain hesitant to expand their loan portfolios due to regulatory pressures and a continued perception of risk, the return of the county’s two biggest credit unions to the marketplace will likely encourage its competitors to do the same.

“As we’re seeing this stability set in now in 2011, credit unions are feeling more comfortable branching out or expanding the lines of business that are available to them,” said Daniel Penrod, an analyst for the California Credit Union League, an industry trade group.

While credit unions have not historically been major players in commercial real estate financing, a number of larger institutions have offered loans of as much as a few million dollars to acquire office buildings, retail stores, apartment buildings and other large projects – though they tend to stay away from complex or unusual properties.

However, some analysts are concerned that credit unions, despite a conservative reputation, may be taking on more risk than is prudent by venturing into a commercial property market that they believe remains unsettled. The market is still suffering from a combination of high unemployment, falling property values and tightened lending standards, resulting in widespread borrower defaults.

Recently, there have been signs of a possible rebound, including stabilizing office vacancy rates in Los Angeles. But there are major concerns about the impending maturities of a high volume of loans originated during the boom.

Bert Ely, a bank analyst in Alexandria, Va., noted that many banks have yet to return to commercial real estate, which should give credit unions pause.

“It actually gets kind of scary if the credit unions jump in where the banks fear to go,” he said.

Back in the game

It’s unclear how many of the county’s roughly 170 credit unions offer commercial real estate loans, but only a dozen or so have sufficient size to do so in any real volume.

John Bretthauer, senior vice president of commercial lending for California Credit Union in Glendale, said the number of active lenders is much smaller than it was prior to the recession. His institution stopped making commercial real estate loans in 2009 and has no plans to resume.

“Most of the credit union industry is shrinking their assets,” Bretthauer said.

To officers of Lockheed, though, the timing feels right.

The Burbank credit union has not offered commercial real estate loans since 2006, around the time the overheated market reached its peak.

In the subsequent crash, Lockheed, like many lenders, sustained losses on loans made to commercial real estate borrowers. The institution, which has $2.9 billion in assets, has foreclosed on five commercial properties over the past two years. It had $40 million set aside at the end of last quarter to cover all loan losses.

Many credit unions that offered commercial real estate loans stopped during the recession, either to tend to losses in their portfolio or because a decline in overall lending meant their assets were shrinking, which pushed them up against a regulatory cap on commercial lending. According to federal guidelines, credit unions’ commercial loans cannot exceed 12.25 percent of total assets.

Why buyers and sellers of real estate should work with a 3rd party?

2011-02-03T02:21:00.000-08:00

Building owners should utilize a third-party intermediary or brokerage firm when selling their properties in order to achieve the highest possible price for their real estate, while ensuring that their long-term investment and wealth strategies are executed. At this juncture, sellers are facing declining but slowly improving property values in many markets nationwide. Those values, combined with historically low interest rates, make it an opportune time to buy real estate. Now more than ever, sellers require the knowledge of a market expert who understands how to achieve the highest price per square foot, while maintaining the investment goals of their clients, all while having superior knowledge of the submarket in which a property is located.

The key to maximizing value for the seller is the ability of the agent to create a market for each asset. The primary driver to a competitive bidding environment is broad exposure. With the right representation and marketing, an agent will provide a professional package with defensible underwriting to a large universe of qualified buyers. The result is usually a number of offers from which the seller can decide which best meets their objective with regards to price and terms.

China's January Home Prices Post Biggest Gain in Six Months, SouFun Says

2011-02-01T02:15:00.000-08:00

China’s January home prices rose 1 percent, the biggest month-on-month gain in six months, according to SouFun Holdings Ltd., as home buyers defied the government’s property curbs.

Residential prices in all 100 cities tracked by SouFun climbed from December, with average values increasing to 8,645 yuan ($1,312) a square meter. The gain followed a 0.9 percent advance in December’s home prices, the nation’s biggest property website owner said in an e-mailed statement today.

China last week raised the minimum down payment for second- home purchases, told local governments to set price targets on new properties and introduced taxes for residential properties in Shanghai and Chongqing. The curbs followed two interest rate increases in the past four months and a ban on third mortgages.

“The market hasn’t really responded to the government’s policies yet,” said Sylvia Wong, a Hong Kong-based property analyst for UOB Kay Hian Ltd. “Let’s focus on February’s data to see if the strong government curbs really work.”

Changzhou, a mid-sized city in eastern China, posted a 2.6 percent gain from December, the biggest advance in the country, SouFun said. Prices in Guangzhou, the nation’s southern business hub, climbed 2.5 percent. They rose 1.6 percent in Chongqing and 0.7 percent in Shanghai, it said.

SouFun started compiling the monthly home data of 100 cities in July last year and usually releases them before the national statistics bureau’s figures. The government’s housing data for January is scheduled to be released in mid-February.

Rising Home Prices

China’s home prices gained for 19th month in December, rising 6.4 percent from a year earlier, the statistics bureau said last month.

Sales volume slumped in 23 of the 30 cities that SouFun monitors, with 15 of them declining by more than 20 percent in January from December, according to a separate report released by SouFun over the weekend.

China International Capital Corp. cut its 2011 forecast for the nation’s property transaction volume after the government’s curbs. Transaction volumes are expected to drop 10 percent from a year earlier to 940 million square meters in 2011, compared with an earlier estimate for a 5 percent increase, analyst Bai Hongwei wrote in a report dated yesterday. New lending to developers and mortgage loans may both fall about 30 percent in 2011, according to the report.

The measure tracking property stocks on the Shanghai Composite Index lost 0.7 percent as of 1:22 p.m., the most among five industry group on the benchmark gauge.

China’s property market may be heading into a bubble as the economy’s reliance on real estate reaches a level close to the housing peaks in the U.S. and Japan, according to Citigroup Inc.

China’s property prices will fluctuate within a 10 percent range this year, said Shen Minggao, Citigroup’s China research head, adding that the country “may only avoid the bubble burst if current property tightening is effective.”

Appraisals: The new deal breaker in real estate

2011-01-31T03:27:00.000-08:00

APPRAISAL PROCESS REFORM:

In 2009, the Home Valuation Code of Conduct became the industry standard for hiring appraisers. Lenders have to use a middleman or a process that ensures a random selection of appraisers.

The code sprang from an agreement between the New York State Attorney General and the Federal Housing Finance Agency that oversees Fannie Mae and Freddie Mac.

As of May 1, 2009, institutions that delivered loans to Fannie Mae or Freddie Mac have been required to represent and warrant that appraisals adhered to the requirements found in the Home Valuation Code of Conduct regarding appraisal management, ordering and review by lenders.

Fannie Mae and Freddie Mac are the largest purchasers of home mortgages, so other lenders nationwide followed suit by adopting the code, and it has since become an industry standard.

Wells Fargo Home Mortgage, which handles the largest number of mortgages in Minnesota, fully supports the appraisal independence standards, according to Tom Goyda, a spokesman.

"Almost all appraisal assignments are made through appraisal management companies, which are responsible for ensuring the appraisers they work with meet all licensing, certification and regulatory requirements," Goyda said in an e-mail. "These important quality control measures help ensure that the appraisals we obtain are fair, accurate and compliant with all governing standards and laws."

The tougher standards have fueled the proliferation of appraisal management companies, which appraisers complain can eat into their fees. Industry observers say there's a belief among appraisers that some appraisal management companies hire the cheapest appraisers and not always the best ones.

"There were a lot of anecdotal examples of appraisers working outside their market," Chitester said.

Industry observers are hopeful that new federal legislation taking effect this spring will stop that unintended consequence of stricter standards.

The Dodd-Frank Financial Reform Bill aimed at cleaning up Wall Street will usher in new rules for financial services providers and products. It also includes the first modernization of real estate appraisal regulations in more than 20 years, according to the Appraisal Institute.

The act requires that "reasonable and customary" fees be paid to appraisers to reflect what an appraiser would typically earn absent the involvement of appraisal management companies. Chitester said it's hoped the language will ensure appraisers pocket most of their set fees.

Resale home prices expected to rise

2011-01-29T02:03:00.000-08:00

The average price of resale homes in Calgary will likely increase by more than five per cent by the end of this year compared to 2010, says Royal LePage.

The expected 5.4 per cent hike will likely be second in Canada only to Winnipeg, where the average price is forecast thttp://www.calgaryherald.com/business/Resale+home+prices+expected+rise/4189597/story.htmlo rise seven per cent, says the company in a report.

The average price of two-storey homes was $404,622 at the end of 2010, while detached bungalows fetched $392,167 and condos were $250,311.

In Winnipeg, two-storey homes averaged $296,750, with bungalows about $266,500 and condos about $170,286.

"Real estate activity in the Calgary market was down slightly (in 2010 compared to 2009), with average listings in all housing types selling slightly lower than asking price," says Ted Zaharko, broker-owner of Royal LePage Foothills.

"However, we witnessed multiple offers occurring in the market in the final quarter of 2010 as buyers began to realize that house prices aren't going to continue to fall in 2011."

After a decline in sales in 2010, activity in Calgary is expected to increase 6.7 per cent this year.

"With good interest rates, a strong economy and a rebounding energy sector, the trend in Calgary's real estate market is expected to pick up in both prices and the rate of sales," says Zaharko.

Nationally, the average price of homes increased between 3.9 and 4.6 per cent in the last three months of 2010 compared to the previous year.

Markets shrugged off a lacklustre third quarter and returned to postrecession growth.

"Trends in the housing market continue to be driven by the lingering after-effects of the recession," says Phil Soper, president and chief executive of Royal LePage Real Estate Services, in a news release.

"Canadians realize that interest rates are unsustainably low and that homes will become effectively more expensive when mortgage rates return to normal levels. We will likely see more price appreciation early in 2011 as some buyers complete transactions in advance of anticipated higher borrowing costs."

Across Canada, the average price of homes is forecast to rise three per cent this year to $348,600, while the number of transactions is expected to drop two per cen

The Real Estate Council Announced its 2011 Community Initiatives

2011-01-27T03:03:00.000-08:00

The Real Estate Council announced its 2011 Community Initiatives investing $300,000 in cash leveraged by the pro bono professional services of its members at its Community Breakfast on January 20 at the Belo Mansion. These initiatives commit the intellectual capital of The Real Estate Council's members together with the funds of the organization matched by grants from its community partners to four key program areas: housing, education, job creation and the environment.

This year's partner organizations include ACCION Texas, Inc.; Builders of Hope CDC; CitySquare (formerly Central Dallas Ministries); Dallas Faith Communities Coalition; Family Gateway, Inc.; Jubilee Park and Community Center; Operation Relief Center, Inc.; The Dallas Foundation (Zero to Five Funders' Collaborative Fund); and Uplift Education.

Holt Lunsford of Holt Lunsford Commercial and TREC vice chairman, said, "The Real Estate Council thanks our Community Partners who helped provide financial support for our organizations. We appreciate the support of Bank of America Foundation; BBVA Compass Foundation; Citi Foundation; Embrey Family Foundation; Frost; Jackson-Shaw Foundation; JPMorgan Chase Foundation; Meadows Foundation; Union Bank Foundation."

Ross Perot Jr., chairman of both The Perot Group and Hillwood, was the keynote speaker. He told the audience that Texas is in a great position to recover from the economy. "We see great potential for Texas," Perot said, adding that there are excellent near-term opportunities for the residential builders. "It's a great time to build inventory, and we see builders prepared to build." For the investor market, Perot added that deal flow is accelerating.

"The build-to-suit is coming back, and these big companies moving into North Texas need large buildings," Perot said.

He also predicted that the Super Bowl this February will lead to more business and more corporate relocations to North Texas.

A special thanks to the breakfast sponsors: Alvarez & Marsal; Ernst & Young; Haynes and Boone, LLP; Holt Lunsford Commercial.

About The Real Estate Council:

Founded in 1990, The Real Estate Council (TREC) is a dynamic organization of more than 1,300 commercial real estate professionals and 500 companies representing 95% of the top commercial real estate businesses in North Texas. TREC pursues industry advocacy efforts on local and statewide public policy issues and works to improve the quality of life in Dallas with initiatives that address housing, education, job creation and the environment. Over the last 20 years, The Real Estate Council's FightNight, Giving Gala and Community Partners Program have raised more than $20 million. TREC is a leader of efforts shaping the future of Dallas including the original $1.5 million investment that spearheaded Woodall Rodgers Park, as well as $6.3 million in pro bono legal and title services and $250,000 in funding that helped create Dallas' Urban Land Bank. In 2010 the City of Dallas was awarded a $2.225 million U.S. Housing and Urban Development grant made possible by a $275,000 Transit Oriented Development study funded by The Real Estate Council and two of its Community Partners.

Ontario Realty Corp to merge back with government

2011-01-25T03:06:00.000-08:00

The province is merging its real estate holding company back into the government fold in a bid to save money, the Star has learned.

The Ontario Realty Corporation is the real estate service arm of the government that manages one of the largest portfolios in Canada consisting of nearly 6,400 buildings and structures.

The ORC will be folded into Infrastructure OOntariontario, a government source said. It is unknown how many jobs will be lost, if any, or how much this merger will actually save.

This is the first organization cut in a Liberal effort to reduce the number of public agencies by 5 per cent in order to shave down the $18.7 billion deficit.

Finance Minister Dwight Duncan made the 5 per cent reduction commitment last month as part of an austerity package aimed at cutting government spending.

“We will continue with our plan to reduce the number of government agencies by 5 per cent and redirect savings from the back office to front-line public services like schools and hospitals and reducing the deficit,” the source said.

“Our government has continually focused on providing value for taxpayer dollars and making government work better for people.”

There are more than 600 agencies in Ontario, 259 of which are controlled directly by the province and the top 14 of which spend more than $1.7 billion a year, Duncan said at a Canadian Club lunch speech in December.

“We will reduce that number of agencies by 5 per cent,” he said. “In these difficult times, we need to look under every stone to cut back on agencies with overlapping functions or agencies whose function could either cease to exist or simply be performed more efficiently by other means.”

The ORC properties range from detention centres to courthouses, heritage buildings and prime downtown office space.

Union Budget 2011-12 will give Indian Real Estate the break

2011-01-24T01:52:00.000-08:00

However, the real estate sector has a direct bearing on every Indian’s life – be it from the point of view of housing, workplace, business premises, shopping or investment.

Through a hailstorm of bouquets, brickbats, controversies and triumphs, the Indian real estate sector has always been one of the mainstays of the country’s economy. At some level, every Indian is connected with it; in some way or the other, it affects every citizen of this country.

The same could be said for the stock market, since a telling segment of the population is either trading or indirectly invested in it via insurance policies and mutual funds. However, the real estate sector has a direct bearing on every Indian’s life – be it from the point of view of housing, workplace, business premises, shopping or investment.

It is time that the Government takes practical cognizance of the vitally important role the real estate sector plays in the Indian economy. The Union Budget rolls around every year, and every year it presents the Government with an opportunity to iron out the more glaring inconsistencies and introduce the most obviously called-for reforms, and thereby either consolidate or strengthen its stance as a champion of economic growth and progress. Every year, the spokespersons for the Indian real estate sector petition for reforms that will give the sector the required forward momentum.

While we realize the limitations, reservations and uncertainties that have been following the wake of the property market, we know that the fundamentals that drive this industry in India are time-tested, resilient and extremely robust. Encouraged, as always, by our continued optimism, we once again hope that the Union Budget for 2011-2012 will give Indian Real Estate the break it so richly deserves.

Real estate industry sees signs of life after slowdown

2011-01-22T02:52:00.000-08:00

After the roller coaster of 2010, Rochester-area real estate professionals are looking to a rebuilding year in 2011.

Last year was marked by strong sales when federal tax credits were in effect to spur homebuying. But when the credits expired, the market slowed dramatically.

According to data released Friday by the Greater Rochester Association of Realtors, the 10,261 existing homes sold in the region last year were the fewest since the market's recent peak in 2005.

The volume of sales is important because, by some estimates, the real estate industry accounts for at least 10 percent of the overall economy.

The good news is that home prices edged up in 2010 — a sharp contrast to many parts of the country where values continued to fall because of overbuilding and inflated prices.

As the new year begins,Real estate agents in Rochester said they're seeing renewed signs of activity. Would-be buyers are increasingly eager to make a commitment as they see interest rates creep up, making them realize that monthly payments are likely to get more expensive as rates rise.

"Since Jan. 1, we have definitely seen a more vibrant marketplace," said John Antetomaso, an agent and partner at ReMax Plus in Brighton. Buyers have stepped up the search for a home compared to just a month ago, he said.

The economy remains the biggest challenge, said Michael Haymes, president of ReMax Realty Group in Pittsford. But he noted that consumer confidence is improving and said he is "bullish about 2011."

Ryan Tucholski, chief executive of the Realtors association, said that despite the decline in sales in recent years, the Rochester market has fared better than many other markets. While the drop in sales activity from peak to trough was 23 percent in Rochester, much of it due to the recession, the decline was more than 40 percent in the St. Petersburg area of Florida, for example.

Tucholski, who had been CEO of the Lakeland Association of Realtors in Polk County, Fla., said that Rochester doesn't have the type of speculative building that occurred in Florida.

"It's very steady compared to other parts of the country," he said of the local market.

Improving consumer sentiment may keep the market steady. According to a study released by the Siena College Research Institute on Thursday, New Yorkers expect the overall real estate market and the value of property to increase over the next year.

And with interest rates inching up but still low by historical standards, there's more of an urgency to buy, said Karen Leonardi, vice president of corporate affairs at Nothnagle Realtors, the largest real estate agency in the area.

"Even though we've been telling people to buy now while interest rates are low, until the rates actually started to rise there wasn't much movement," she said.

"But now that buyers are seeing them finally start to rise after previously only hearing that it was going to happen, they're acting."

Carolyn Stiffler, board president of the Realtors association, said she expects a more level market in 2011 without the ups and downs created by the federal tax credits. The hottest price range this year should be homes costing between $110,000 and $150,000, she said, compared with homes from $80,000 to $100,000 that were hot in 2010, when first-time buyers dominated the market.

Regardless of the price range, buyers will continue to seek value this year, said Armand D'Alfonso, CEO of Nothnagle Realtors. "Homes need to be priced right," he said.

The first question a buyer will ask an agent is "how long has the home been on the market?" D'Alfonso added. The longer a home sits on the market, the less desirable it appears to a buyer so it's important to price it compellingly right from the start, he said.

D'Alfonso said he expects hot areas this year to include Greece, Brockport and Batavia as well as east-side suburbs such as Pittsford and Fairport.

Keller Williams Realty of Greater Rochester also is seeing increased activity, said Sharon Quataert, partner and agent in Greece and Brighton. The new year has brought in more requests from buyers looking at homes, she said.

That's a change from the fourth quarter of 2010. The Realtors association data showed that home sales in the 12-county region fell 31 percent during the October-December period compared with a year earlier, largely due to the expiration of the tax credits.

The credit for first-time buyers was in effect during the fourth quarter of 2009.

But that credit, along with a tax break for repeat buyers, had expired by the time the fourth quarter of 2010 rolled around, and sales fell to 2,134 houses from 3,081 in the fourth quarter of 2009.

"With the tax credit, we essentially experienced nine months' worth of buyers that went though the market in a period of four months," Stiffler said.

The median selling price increased 5 percent in the fourth quarter to $119,500, compared with $113,500 during the same quarter in 2009.

Pending sales were down 47 percent, with 887 purchase offers accepted during the October-December period. Pending sales are often an indicator of future market activity.

For the full year, sales fell 5 percent, though the median selling price rose 3 percent to $119,900.

Real Estate Investing: 5 Postscripts You Need to Know

2011-01-21T02:24:00.000-08:00

1. 1099s for landlords 2011. Generally, businesses are required to file Form 1099-Misc. Beginning in 2011, landlords will be required to issue 1099s for services rendered for their rental properties. If an individual or company provides a service such as repairs, legal and professional fees, tax planning and preparation, cleaning, pest control, management, etc. for an amount in excess of $600, you will be required to report the payment(s) on Form 1099-Misc. When you contract for services, please provide the payee with Form W-9, available at www.irs.gov, to obtain his address and Tax ID#. Forms 1099 must be prepared and remitted by Jan. 31, 2012.

2.Renting to relatives can be a sticky wicket. The IRS views all transactions between related parties as suspect. In order to take all of the deductions to which you are entitled, and not have the rental reclassified by the IRS to “personal use,” make sure the rent is charged at fair market value and that you are treating the rental in a professional manner. So we’re talking rental or lease agreements on file as well as a bona fide business relationship. It would be advisable to obtain a list of comps in your area to substantiate the rent you charge to your relative. Keep that list in your tenant file along with the rental agreement in case of audit.

3. Renting part of your home is an interesting topic expanded upon in IRS Publication 527 . In these dire economic times, many people are renting out the odd spare room to make ends meet. Allocate your expenses between personal use and rental purposes and claim your rental income and expenses on Schedule E. The rules listed in this publication also apply to vacation homes that are used for personal purposes as well as for rental. Speak to your tax advisor to work out the amounts you can deduct.

4. Limits on deductions apply to rental properties. Rentals are considered passive activities. Unless you are a real estate professional, you can deduct losses from these activities only against other passive income. Any unused losses and credits may be carried forward to future tax years. There is an exception. If you actively participate in the activity, you may deduct $25,000 in losses in the current year. If your modified adjusted gross income exceeds $100,000 ($50,000 if married filing separately), the amount of deductible loss will phase out. There is no deduction allowed currently if your income is greater than $150,000, is a deduction for the cost of the property, the cost of improvements, furniture, furnishings, machinery and equipment expensed over the useful life.

5. Depreciation is a deduction for the cost of the property, the cost of improvements, furniture, furnishings, machinery and equipment expensed over the useful life. You cannot deduct depreciation for land or for any equipment you purchase to make improvements to the property. For example, if you buy a table saw so you can cut baseboard and other lumber for a remodel to the property, you cannot take a deduction, depreciation or otherwise, for the cost of the saw. You also cannot take a Section 179 deduction, in which you expense the full cost of furniture, fixtures, machinery, and equipment in the year of purchase. This special allowance is allowed only for businesses and not for a rental activity listed on Schedule

iPhone enabled real estate search made simple with IDX Broker software

2011-01-19T01:47:00.000-08:00

Century 21 Nature Coast, Greg Younger, has synced an IDX solution to his website, bringing Crystal River, Florida property listings to the easy-to-use search page his clients can access online. Citrus County MLS (CCMLS) listings are displayed and updated automatically as new listings are uploaded and prices fluctuate. Never before has such a revolutionary technology been so accessible and simple to use.The search features Younger supports makes it simple for home seekers to explore his website and scan the CCMLS listings. With so many various property types, the five unique search functions his IDXsolution employs, it is easy to narrow the CCMLS and customize their own search. By creating parameters, potential buyers can search for homes online on their terms. Connecting with listing agents and sellers to gain additional information and schedule showings is another specialized ability available to home seekers, thanks to the IDXsolution Younger has enlisted for his website.

Managing a real estate website has never been easier for agents and brokers, like Younger. He is given the tools to help him customize almost every aspect of his search pages. Editing the CSS and global wrappers allow Younger to change the design, look and functionality of his website, in an effort to create a recognizable branding for his online real estatesolution. IDX Broker software has forever changed the way Younger conducts business, even giving him access to the IDX application for iPhone, making his real estate business truly mobile.

About Greg Younger

Greg Younger has over 25 years of solving problems via the use of technology and owned a consulting company that developed technology driven solutions for Fortune 500 companies and financial institutions. Younger says, “My approach is more of a consultant approach. A consultant does not tell you what to do, a consultant listens to your needs and desires and educates you so that you can decide what is in your best interest. Together we will get your home sold.“

About IDX, Inc.

Based in Eugene, Oregon, IDX Inc. is nationally known as a leading provider of real estate search applications. IDX, Inc. actively manages over $1 trillion worth of active listings data from over 400 individual Multiple Listings Services (MLS). IDX, Inc. provides integrated IDXsoftware, customizable listing search utilities and lead management tools for real estate based websites ( IDX Broker ). In addition to the primary web-based software, IDX also provides an integrated WordPress widget for use in WordPress based blogs and websites ( IDX Broker WordPress Plugin ) as well as a dedicated mobile application available for the iPhone and iPad ( myAgent IDX ). The entire suite of real estatesoftware available from IDX is easy to manage and maintain and helps real estate professionals display real estate data from their multiple listing service (MLS) regardless of their technical ability. For more information on all the services provided by IDX, Inc.

Assocham study finds scope for 14 new clusters in Kerala

2011-01-16T20:43:00.000-08:00

The industry body Assocham has appealed the Kerala government to set up 14 new industrial clusters under a Public-Private Partnership (PPP) model to provide investment and employment opportunities in the state.

There are more than 6,500 clusters running pan India but out of these around 450 clusters have got recognition and support of the Government of India. Only 40 recognised clusters out of these operate in Kerala. Out of the 40 existing and recognised clusters, around 5 clusters are dedicated to food processing, 2 to rice milling, 2 to agricultural implements and 1 each to tuna fish and natural fibre. The rest are non-food related industrial clusters.

Assocham has strongly advocated that there is an urgent need to increase the number of such clusters in the state as well as to expand the size of existing clusters which have enormous potential to reach the next level of sustainable growth.

Industrial clusters are defined in a report by United Nations Industrial Development Organisation on “Industrial Clusters and Poverty Reduction ” as “a geographically proximate group of inter-connected companies and associated institutions in a particular field, linked by commonalities and complementarities.”

These have long attracted the attention of researchers and policy makers for the growth prospects they offer to small and medium sized enterprises (SMEs).

as estimated a budget of Rs 500 crore, which according to the Chamber, is required to provide the basic & essential infrastructure for their better future prospects. Once these clusters become operational, it shall give additional 10% revenue to the exchequer. “Cluster development not only creates huge employment at the lowest cost but also brings prosperity, sustainable employment generation & inclusive growth around these regions.”

Rawat was talking to reporters after releasing an Assocham study on “Clusters Development in Kerala for Inclusive Growth.” Once operational, the clusters will contribute 10 per cent of their revenue per annum to the exchequer and Kerala would be known as the “organic state” of the country. As per the Assocham study, five dedicated “organic clusters” are needed to be set up by the state government.

Last year India exported around Rs 530 crore worth of organic products in which Kerala's share was Rs 30 crore. As the international market for organic products was worth Rs 2 lakh crore, Rawat pointed out that there was a huge potential for organic products from Kerala.

In the coming 5 years, Kerala has the capability to export Rs 1,000 crore worth of organic products. To make it easier for the development of these clusters Assocham is trying to set up a Cluster Development Authority in Kerala.

E- Cluster Model
Assocham also feels that despite immense economic activity in the country, substantial percentage of SME entrepreneurs in the state are using obsolete technology & plant machinery which is not only increasing time & cost of production, but also restraining them from further sustainable innovation and quality control.

Keeping in view the globalisation and highly stiff competition in market place, it’s a challenge for them to survive continuing with obsolete technology & plant – machinery. Assocham is of the firm opinion that there is a pressing & genuine need to encourage them to adopt best technology & machinery so that it could also enable the government or other institutions to interconnect and intra-connect across all clusters by adopting E- Cluster Model. E- Cluster Model will help them to survive, grow and win against top corporates.

Cluster Development Authority
Assocham has also recommended the state government to constitute a statutory body as Cluster Development Authority for the purpose of proper utilisation of fund and to assist them in gearing up their growth pace and keep a track on the plan/ schemes initiated by the government.

Incline Village real estate: How accurate are home valuation services on the Internet?

2011-01-10T20:15:00.000-08:00

INCLINE VILLAGE, Nev. — With all of the changes in the real estate markets around America during the past few years, the accuracy of computer-generated property values has become even more of a challenge. Internet-based services such as Zillow, House Values and others try to use an algorithm to analyze recent sales in a particular ZIP code and then generate an approximate valuation for a particular property.

You may have tried doing this for your own home and been surprised at the estimated value. In a micro market such as Incline Village where we have virtually all custom homes, I don't think you can really get an accurate valuation this way. Doing a comparable sales analysis is a rather complicated and time-consuming project here. There are many nuances to each property such as quality of construction, driveway access, materials and finishes, location, view, setting, and other intangibles. Two properties next door to each other can have important differences in their respective locations (view, road noise, sun exposure, etc) that have a huge impact on their fair market values.

I recently took a look at the Zillow website and checked out a few properties in my neighborhood that are not currently for sale. These are properties I am intimately familiar with and have a pretty good idea as to what they would reasonably sell for in our current market. The Zestimate (or Zillow Estimate) was routinely off by anywhere from 30% to 50% on the low side. I also hunted around their website to try and find the margin of error chart for each county that they used to have and I was unable to locate it.

When I was first concerned about this issue in 2009 I took the liberty of contacting the marketing department at Zillow. I asked them if they could please stop using their computerized algorithm in places with custom homes such as Incline Village. After a long conversation with a nice gentleman in their marketing department named Drew Myers, he said to me, "Custom homes are something you can't put an algorithm to." So why are they continuing to do business as usual?

I was hoping that by now these various house valuation services would only provide raw statistical data from actual sales and not try to provide what effectively amounts to as their own computer-generated appraisals. But that is not the case and these uninformed property valuations are a great disservice to buyers and sellers of Incline Village and Crystal Bay real estate.

One of the reasons that the National Association of Realtors is working hard to build a nationwide database is so that agents and their clients can have access to the detailed historical sales data for every property in the country. It will take another few years for this project to be completed, but if it's successful the end result will be a wealth of information at our fingertips.

Anyone buying or selling property in Incline Village should consider computerized valuation services on the Internet to be nothing more than an enjoyable parlor game. Ask a licensed real estate agent or an appraiser to provide you with the comparable sales data for your home or condo if you are thinking of putting it on the market. Then you can analyze the statistics to determine a value for your property and establish the asking price when putting it up for sale.

Real Estate Report - 10/01/11

2011-01-09T21:41:00.000-08:00

This week we continue our series looking at looking at council areas with the greatest increase in hold periods over the last five years, with a focus on two council areas in Tasmania. In our tax tip we look at positive gearing.

News

According to RP Data, Australian home values slumped November as higher interest rates hurt housing affordability. In November, home values in capital cities declined by 0.2 per cent and the rest of the state saw declines of 0.1 per cent. The figures represent declines across all dwelling types. The key driver in the softening of housing values has been the Reserve Bank and retail banks lifting the variable mortgage rate from 6.3 per cent in November 2009 to 7.8 per cent in November 2010.

Suburb in Focus

This week we continue our series looking at looking at council areas with the greatest increase in hold periods over the last five years, with a focus on two council areas in Tasmania. A hold period represents the time between when a property is bought and sold, and can be an indication of the appreciation rates and desirability of the area.

First let’s look at West Coast, a council area located on Tasmania’s coast, around 400 kilometers north-west of Hobart. With a population of 5,006 in the last census, the West Coast council area says it is the ‘Gateway to Tasmania’s Wilderness’, priding itself on picturesque views that include harbors and lakes, rainforests and rivers, dunes and historic sites. As a popular destination for visitors, the area is supported by tourism, mining and fishing industries. The coastal town of Strahan sits on Macquarie Harbor, lined with nineteenth-century buildings facing the harbor. Former mining town Queenstown is an hour inland from Strahan and a stop on the hire-car circuit around Tasmania.

According to figures from RP Data, houses in West Coast recorded the largest increase in hold periods in Tasmania for the five years to 2010. Last year the average hold period was 8.1 years in 2010, up from 4.8 years in 2005. The median price of a house in West Coast has risen 53.8 per cent in the five year period, to $100,000 in 2010.

Our next council area is George Town, located around 250 kilometers north of Hobart. With a population of 6,527 in the last census, George Town sits on the northern tip of the main island, on the eastern bank of the mouth of the Tamar River. The council area offers a choice of urban, rural or coastal living, with a broad selection of panoramic waterfront accommodation. A range of community service initiatives are offered by the council to support families and the elderly. While for those looking to widen their educational and employment options, Tasmania’s second largest city, Launceston, is around 40 minutes drive south along the East Tamar highway.

Taking a look at the figures, houses in George Town recorded the second largest increase in hold periods in Tasmania for the five years to 2010. Last year the average hold period was 7.7 years, up from 5 years in 2005. The median price of a house in George Town has climbed 64.4 per cent in the five year period, to $236,750 in 2010.

Tax Tip

And now to the Tax Tip of the week from Depreciator - the Tax Depreciation Schedule specialists.

Positive gearing is when the rental returns on your property are more than the outgoings, including interest on the loan. This creates a situation where tax must be paid on the net income. Positive gearing is attractive because in addition to potentially high rental yields, the cash flow received from these properties can be used to fund your next investment.
As always, do remember to consult with a tax accountant or tax professional before making any tax related decisions.

Real estate players explore new strategies

2011-01-07T21:05:00.000-08:00

HCM CITY — Real estate players will change both profile and tactics to better exploit the market, the services provider CB Richard Ellis has forecast.

"Funds will move from being just traders to become traders/developers/project managers, and marketers," managing director Marc Townsend said, citing the example of VinaCapital which has created its VinaLiving brand of houses and set up VinaProjects to manage its projects.

"They will also focus on developing their core, scalable, mixed-used projects, divesting off those outside this focus," he said.

Local developers would continue to dominate the market since foreign rivals would find better opportunities in their home.

In HCM City, developers were sitting on a large amount of residential units, primarily condominiums, with existing supply at the start of 2011 at around 80,000 units and a new supply of 40,000 set to come into the market.

"This new supply number is double compared to 2010. So, they will need to find new ways to set themselves apart from the competition to sell and lease their properties. Therefore, 2011 will see a triple of their marketing spend with increased advertising and marketing incentives."

They would be open to more flexible payment terms and using multiple marketing agents, set up their own in-house sales teams, and continue with below-the-radar mergers and acquisitions and collaborations with others to increase sales and find financing.

Buyer interest in landed properties would remain strong as people started to invest again in property.

Upgrades to roadways – especially the Thu Thiem Tunnel, to be opened in April – would mean competition for landed property in districts like 9 and Nha Be would be felt, with buyers preferring this option to high-end condominiums closer to the city centre.

Townsend also expects a further price fall this year following the 20 per cent slide in 2010, unless there are some significant changes.

Meanwhile, price decreases are also expected in the serviced apartment (more than 700 units will enter the market this year compared 220 in 2010) and office segments.

Viet Nam has been rated the fourth most preferred emerging market for real estate investment in 2011 by the Association for Foreign Investors in Real Estate.

After being unranked last year, it has taken over the position Mexico held last year behind Brazil, China, and India.

Mexico has slipped to fifth place.

Real estate and construction

2011-01-06T21:50:00.000-08:00

Real estate

The housing market depends in great part on job creation, according to Lee Eckroth, of Town & Country Realty in Corvallis, so it’s no surprise that residential real estate has also taken a dive over the past few years.

“There’s a lot fewer transactions than four years ago, said Eckroth, who specializes in residential and investment properties. “However, from a trend standpoint, the good news for the Corvallis area is that it’s stabilized.”

According to data available from the Willamette Valley Multiple Listings Service, the recent peak for home sales in the Corvallis area was 2007 when 647 homes were sold for an average price of $307,000 and were on the market an average of 102 days.

In 2009, 462 homes were sold for an average price of $281,000 and last year 466 homes were sold for an average price of $279,000.

In addition, the total days on the market dropped from 135 days to 126 days from 2009 to 2010.

“Corvallis is still a very desirable place to live,” Eckroth said. “We’re fortunate to have a lot of good professional agents and companies in the area.”

In Linn County, the number of residential home sales has stayed pretty consistent over the past three years, with 1,003 sales in 2008, 968 in 2009 and a rebound back up to 1,009 last year. The average number of days on the market was also steady only varying by three days (from 140 up to 143) over the past three years.

The average sales price dropped consistently over that same time period however, from $192,160 in 2008 to $158,285 last year.

“The buyers I see moving to Linn County are here for employment,” echoed Albany real estate broker Jessica Pankratz. “With the new medical school that will open this year in Lebanon, the VA home that will be built, and new businesses that are being created for green energy products, we are seeing an influx of buyers that are looking for a nice or brand new home, not necessarily a ‘fixer’ or a ‘steal.’ This means conventional sale homes are also selling, not just foreclosures.”

Pankratz specializes in residential and small commercial real estate for Town & Country. Her focus is Downtown Albany.

The main trend she is seeing in commercial real estate is an increase in clients looking for a small office space to rent. “They may be expanding their home-based business, or moving out of their home office.”

Pankratz said that buildings for sale in downtown Albany rarely hit the market and are not listed online as a result. “Prices are trending up, especially in the historic part of downtown Albany – and especially if they have more than one source of rental income potential.”

That uptrend in prices is due in large part to the Central Albany Revitalization Agency and the City of Albany, she said. CARA offers grants and low-interest loans to businesses for small to large capital improvement and the city continues to enhance the downtown infrastructure with projects such as the Broadalbin Promenade.

Federal tax credits have also had a positive impact on the market in both Benton and Linn, according to Eckroth and Pankratz.

“The credits motivate buyers that are on the fence about buying a home, she said. “It lowered our inventory and kept people actively interested in purchasing.”

Financing has become, rightly so, more of a challenge for those purchasing a home than it was in 2007, Eckroth said. So the first step for homebuyers is to make sure they are pre-qualified for a loan and able to purchase. “Once you’ve got that in place, finding the home is the fun part, he said.”

However, Pankratz doesn’t think the added difficulty in getting a loan has affected the mid-valley market very much.

“I think both state regulations and the quality of our local lenders has kept the mid-Willamette Valley from the financial disasters we have seen in California and Florida … lenders here didn’t go for the more ‘creative financing.’ There are very few local foreclosures that are based on (bad) investing. Most are due to medical bills, divorce and/or lack of employment,” she said.

As far as foreclosures go, at first the hardest hit area was Lebanon and a few pockets of newer subdivisions in Albany. However, as time has gone on, Lebanon is shifting to a more conventional market as investors have snapped up a lot of the lowest price homes.

“I think they are smart because property values can only appreciate due to higher rents for a wealthier workforce caused by the new large employers that will be moving to the area in the next few years,” Pankratz said. She projected that the amount of foreclosures will hold steady over the first half of 2010, as there are still a high number of short sales to be foreclosed upon and the number of properties that are past the short sale time period and are due to be auctioned off is still high.

Commercial real estate specialist Gary Pond of Commercial Associates in Corvallis said that sales were down overall this year.

Pre-recession, Commercial Associates often had four to five lease transactions under way at a time. Now it’s one or none most of the time.

In addition, the criteria and benchmarks for financing for commercial property clients have tightened as well, requiring a higher income per dollar of debt that will be loaned.

“Corvallis is kind of funny. It’s like it lives in its own market bubble. You can look around at what’s happening to everybody else and see what’s on the way. We seem to lag.”

For leasing, Pond sees decent demand in the medical field, where there seems to be a shortage of adequate commercial space for lease.

The energy efficiency of buildings has become an important to bringing tenants in, so is flexibility of space, he said.

Two bright spots this year for Commercial Associates was their involvement in the Kings-Walnut Professional Center to find a place for the clinic to expand into as well as the sale of the U.S. Forestry Service building on Research Way to Benton County.

Pond also pointed to Dickerhoof Properties successful project anchored by the Market of Choice in northwest Corvallis and to the Sunset Center, off Philomath Boulevard, which has maintained more than 90 percent occupancy since it was built in 2000.

The former CH2M Hill building, which now houses City Hall on the ground floor, and some open spaces in several buildings on the Hewlett-Packard campus t shared by innovative firms have factoring into the local market over the last year as well.

The last couple years was characterized by clients waiting for the recession to get worse, instead of better. Now, many have stopped waiting for the other shoe to drop, Pond said.

“The feeling we get is that there are people out there wanting to do things. They are tired of waiting around for things to happen, so they are making things happen themselves.”

Construction

There are absolutely more people remodeling than building new in the down economy, according to Dave Henderer of Henderer Design + Build.

“Although, I don't know how many people decided to remodel instead of have a new home built, I'm sure that remodeling in the Corvallis area at least outpaced new construction (in 2010). Maybe not in total dollars spent, but in certainly number of projects.”

Henderer Design + Build revenues were stable, but down over 2009 and 2010. Henderer’s business peaked in 2008, when they completed several larger remodeling and addition projects that were designing in 2007.

There are many challenges in the current economy, Henderer said. “Too many to list: getting the phone to ring and competing against individuals — more and more unlicensed/uninsured people.”

“One advantage that I see is that home owners are taking more time to make better decisions, they're not rushing into hiring a contractor like they might have been in the past, worried that if they didn't commit to a contractor they might lose a ‘spot’ in their schedule,” he said. “Another may be that unscrupulous contractors and tradespeople are going to be held to higher standards than before, which also helps to level the playing field.”

Looking into 2011, Henderer’s hope is that things settle down a bit and become less volatile. “We're not in an election year, things seem to be stabilizing and picking up on the East coast, which usually means that in about six months, we'll see the same uptick.”

“I hope that housing starts pick up and based on current supply, there is a pent up demand for new homes, which puts people back to work,” he said. “I think it may be a long time, if ever, we see a building economy like we had in the mid-2000's but somewhere in between would be nice.”

The recession has certainly brought challenges to construction companies, agreed Tom Gerding, principal of T. Gerding Construction.

He said that 2008 was the recent peak in construction projects for his company, when they did about $36 million in business. Since then, business has dropped off each year to about 30 million in 2009 and 27 million in 2010.

“In 2010, volume was down probably 25 percent,” he said.

However, T. Gerding had a number of new projects completed in 2010 including the Kings-Walnut Professional Center, that now houses new Corvallis Clinic offices off Walnut Boulevard in northwest Corvallis, a new surgery center for Beaver Sports Medicine and a new fire station in Amity.

In addition, the company is putting in 36,000 square feet of new classroom and library space at Santiam Christian High School, and wrapped up projects at Reedsport High School, West Albany High School and a facility for the Yakima Educational Service District in Spokane, Wash.

T. Gerding also built new offices for itself in 2010. The new 13,000-square-foot headquarters at the corner of Airport Avenue and Highway 99W is in line to receive gold-level certification from the U.S. Green Building Council.

“We’re actually blessed. We’re finding the work, and being as competitive as we can,” Gerding said. “It’s a lot of hard work and effort amongst our staff – turning every rock and stone to find work and show the value to our clients.”

Gerding said that despite the drop in profits, the company hasn’t had any layoffs, however they’re not using as many carpenters as they have in the past. He expects the construction jobs market to remain slow through April and hopes to be back to 100 percent by the summer.”

“I guess I would say that I have a measured optimism for 2010,” Gerding said. “What’s helped us most is our past history with clients and our negotiated base in health care, in public works and the private commercial sectors.”

Hopeful

“I really don’t think there’s been one particular industry or business in our area that received a significant uptick in 2010,” agreed Janet Steele of the Albany Chamber of Commerce.

“I know people who have been laid off or lost their business. They are anxiously waiting for job opportunities.”

The chamber takes a leadership role in the business community, providing services, advocacy and networking opportunities to local business people.

“We’re always hoping that as a community, we will have a great year,” Steele said. “We hope that agriculture will have a good season and that our manufacturers will start getting orders.”

“On the national level, they say they can feel it and (recovery) is happening. But when you talk to the business owner on the ground floor of the local economy, they aren’t seeing it. They’re just hopeful that it’s on the way.”

Albany is looking forward to a new Wal-Mart planned to go in off Highway 20 near I-5, in the same area as Coastal Farm Supply. There’s also hope that a Lowe’s would come in and provide construction and employment opportunities as well, Steele said.

But big box stores are not the entire answer to the community’s woes.

“Small business need to improve. Eighty-five percent of our economy in Linn and Benton counties are small businesses,” she said. “All those factors need to come together small and large to turn this around.”

Mineola: a Commercial Real Estate Mecca

2011-01-05T21:02:00.000-08:00

Whether it be commercial or residential, the real estate mantra is still location, location, location. And for Mark Timpone, a partner in the commercial real estate firm of Metro Realty Service LLC, Mineola qualifies as prime real estate, a gold mine for businesses or entrepreneurs to lease or buy buildings.

"Mineola, you can't beat it," said Timpone, who currently has three properties available for sale or lease in the village.
One of eight partners with the Farmingdlae-based firm, Timpone covers the Jericho Turnpike corridor in Nassau County west of Glen Cove Road. Within his territory, Mineola is in the sweet spot.
His firm has been "crazy busy" of late, he said. "The market picked up toward the end of the summer, which is an unusual time. We usually see a slowdown during the holiday season but we didn't get that this year. I have seen increased interest and activity as of late. Increased activity will typically lead to more deals getting done. More deals getting done will lead to a greater confidence in those sitting on the sidelines."
Mineola happens to be one of the slower markets in Timpone's territory but he knows that is temporary. "We are getting a lot of phone calls, a lot of inquiries but no deals yet," he said. "That will change."
Metro Realty lists three properties for sale in Mineola:

85 Washington Ave. – Timpone describes the location as great warehouse space with an interior loading dock. "Loading docks and high ceilings for small space are hard to come by," he said.
121 Jericho Turnpike – current tenant and owner is the flooring retailer Nice Carpet. Jericho Turnpike in Mineola is especially prime location according to Timpone. Asked why a business would want to set up shop there, he said, "Mineola offers a company that needs exposure on one of Nassau County's main thoroughfares an opportunity to get that exposure inexpensively."
207 Elm Place – a bit out of the way, but Timpone sells the location as "a great manufacturing or assembly space with a loading dock" nonetheless.

"All three locations offer easy access to all points east and west on Long Island for passenger and commercial vehicles," Timpone said. "You can't beat Mineola."
What's great about Mineola, as residents know – and which Timpone uses as a selling point -- is its proximity to New York City and accessibility through the Long Island Rail Road, which means 35-minute train commutes to Manhattan. There is also Winthrop-University Hospital and the government offices affiliated with the county seat.
The hospital and the businesses that it attracts "offers a great deal of opportunity to any company in a medical-related business ranging from medical space to warehouse space," Timpone said.
Based on the increased activity he is seeing, Timpone's outlook for 2011 is positive – both for Mineola and the rest of Long Island. "In my opinion this is a great time for a prospective buyers and or tenants to acquire space in western Nassau County," he said. "I see a great deal of opportunity right now. Landlords and sellers are interested in getting deals done."

Commercial real estate prices bottom out in region

2011-01-04T21:55:00.000-08:00

The commercial real estate leasing market hit the bottom and has nowhere to go but up this year -- except in Sacramento, where the market might sort of flop around on the bottom for a while longer.
That's according to the 2011 Real Estate Forecast released this week by Grubb & Ellis, a real estate services and investment firm. The company is projecting slow recovery nationwide in the leasing market for all property types, as 2010 turned out to be not as bad as originally thought and 2011 appears headed in the right direction. However, Sacramento's high unemployment and bleak prospects mean the area should continue to lag behind the national average, according to the report.

"The commercial real estate market in Sacramento has begun making progress, but the local economy and employment levels will need to grow in order for our market to experience a sustained recovery," Bob Dean, the company's Pacific Northwest executive managing director, is quoted as saying in a press release announcing the report.

Nationwide, the office vacancy rate should drop to 17 percent this year, down from 17.8 percent at the end of 2010. The Sacramento vacancy rate should drop slightly but still hover around 20 percent by the end of this year in large part because of the high unemployment rate -- still around 12.8 percent. That unemployment rate is not expected to drop much this year, according to the report.

"This suggests 2011 will retain the anemic economic pallor that has gripped the region for the greater part of the last three years," the report states.

The national industrial vacancy rate should drop to 10.1 percent by the end of this year, down from 10.5 percent at the end of 2010. Locally, the vacancy rate should stay the same at about 12.5 percent, according to the report.

Retail has been a pleasant surprise for most economists and retail leasing has recovered more quickly than analysts had projected. The rich are back to making money -- or at least not losing it -- and as a result, luxury retailers are on their way to recovery. The rest of us, however, are still suffering from relatively high unemployment, meaning a "slow recovery for big-box discount retailers and other merchants," according to the report.

Realty firm Parsvnath Raises Rs 120 cr via Stake Sale

2010-10-26T21:34:00.000-07:00

Realty firm Parsvnath Developers has raised Rs 120 crore by selling 24.5 per cent stake in its office complex project at Connaught Place, in the national capital, to private equity firm Red Fort Capital. In a filing to the Bombay Stock Exchange, Parsvnath said it has partnered with Red Fort Capital to jointly develop the office complex, spread over five acres.
The project ‘Red Fort Parsvnath Towers’, with a leasable area of three lakh sq ft, would be developed by its subsidiary Farhat Developers Pvt Ltd (FDPL). “The entities controlled by Red Fort Capital have acquired 24.5 equity stake in FDPL by inducting Rs 120 crore as foreign direct investment,” the filing said. When contacted, Parsvnath chairman Pradeep Jain said the total project cost of the office complex is Rs 200 crore that includes Rs 99.5 crore upfront payment to the Delhi Metro Rail Corporation (DMRC).
Parsvnath has executed a concession agreement with DMRC to deliver the project on a BOT (build-operate-transfer) basis. The construction will be done by L&T. Earlier this month, Parsvnath Developers had announced that it has raised Rs 270 crore through private placement of shares with institutional investors to fund ongoing projects. Last year too, the company had raised Rs 168 crore through the QIP route and Rs 190 crore through stake sale at project level.
Parsvnath had raised Rs 115 crore by divesting a 22 per cent stake in a housing project in Delhi to Red Fort Capital. In another PE deal, the company had raised Rs 75 crore by selling a stake in a Gurgaon housing project to Sun Apollo. The company has a land bank of 194 million sq ft, of which it is undertaking construction of 80 million sq ft on fast track basis.

Keonics Plans Real Estate Investment in Bangalore

The Karnataka State Electronics Development Corporation Ltd (Keonics) is planning to construct a hotel or a shopping mall and service apartments at Electronics City in Bangalore. A shopping mall or a three-star hotel is slated to come up on the one acre adjacent to the National Highway at Electronic City phase one. The service apartment is being planned on 1.17 acres inside the Electronics City.
The Electronics City project of Keonics is a landmark that was developed on 332 acres on Hosur road. It houses over 100 information technology and electronics companies including Wipro, Infosys, HP, Siemens, 3M, Indian Telephone Industries and Motorola. The combined strength of the companies is around 30,000 people.

Currently, malls and other such facilities are lacking in the area. Employees working in and around Electronics City have to travel long distances on Hosur road to find such facilities. Keonics wants to provide these amenities in the region. It is planning to take up the construction work through a public-private partnership. The corporation plans to lease the land to a private partner for 30 years. The project partner is expected to bring the finance for the project, develop a design, build market for the facilities created and operate.
At the end of the lease period, the property will be transferred back to the corporation.
According to a senior Keonics official, the lease amount fixed for the commercial complex project is around Rs 3 lakh a year. For service apartment project, it is Rs 2 lakh a year.
The corporation recently has called for bids from project management consultants such as real estate firms, property developers, hotel operators and IT companies.
“As the projects are being taken up via public-private partnership through a bidding process, the minimum upfront non-refundable/non-adjustable price for the prospective bidders is Rs 4 crore per acre.
Bidders have to bid the upfront price for the project over and above the minimum price fixed,” the official said.

FHA-Backed Loans Revive Easy Credit And Risks To Gov't

2010-09-17T22:02:00.000-07:00

The subprime market as we knew it might be dead and buried. But it hasn't really gone away. It's just wearing new clothes — government issued by the Federal Housing Administration.

FHA-backed loans are by definition risky. They require only 3.5% down and are meant for first-time buyers who can't qualify for conventional loans.
In the last six months, FHA's share of the market has trended up, more so than loans backed by Fannie Mae and Freddie Mac. They were bailed out by the government in 2008 and have higher underwriting standards.

The New Mortgage King
Early this year about 25% of all mortgages being made were guaranteed by the FHA, up from just 2% a few years ago.
And as FHA's volume of home purchases relative to Fannie and Freddie has continued to go up, its share of the mortgage market is at least 30% now, estimates Edward Pinto, a housing finance consultant and Fannie Mae's chief credit officer in the late 1980s.

"The market is becoming more and more reliant on (FHA) and they've taken tremendous amount of purchase share from Fannie and Freddie," Pinto said.
In July, 75% of FHA's insurance volume was for home purchases vs. 59% in the six months ending in March. Most of the rest was for refinancing.

"The income ratios might be a little tighter and more income verification required than in 2006, but the FHA is indirectly becoming a subprime lender through its guarantees of low down payment mortgages," said Eric Ojo, analyst with Standard & Poor's. "The FHA has basically taken over the role (of subprimes)."
The FHA allows up to 6% in seller concessions, and the higher the seller concessions, the more loans are at risk of defaulting. Mortgage premium insurance can also be financed as part of an FHA loan. Those two factors can drive up the amount financed to well over 100% of the home's value.

Code For 'Back Sliding'
The FHA had said it would reduce allowable seller concessions to 3% but a Housing and Urban Development official said last week at a mortgage bankers conference that the FHA might take a balanced and flexible approach in its final ruling. That is code for "back sliding," Pinto said.

Earlier this month Federal Deposit Insurance Corp. Chairman Sheila Bair urged more stringent underwriting standards considering the government's high stakes in the mortgage market.
"Clearly there is a strong correlation between the amount of skin in the game a borrower puts in up front and how that loan performs," she said in an interview on CNBC.

As FHA-backed home purchase loans are on the rise, the government has moved to hold Fannie and Freddie — bailed out by taxpayers so far to the tune of $148 billion — to higher standards than before, with stricter underwriting guidelines.
"The administration understands that if Fannie and Freddie were to do high-risk lending it would lead to more losses and incense taxpayers further," Pinto said. "So they're pushing potential further losses into the FHA in the hope that the market will turn around."

But it hasn't in many parts of the country. Some surveys forecast price declines of 5% to 10% over the next year in some markets. Housing demand has plunged since the homebuyer tax credit expired. Meanwhile, bank repossessions are hitting new highs.

If housing prices continue to decline, claims could rise more sharply than expected on FHA-backed loans, since borrowers have little or no equity to begin with.

"The first rule of lending is when you're in a hole stop digging. And they're continuing to make the hole deeper," Pinto said.
Including the government takeover of Fannie and Freddie, the federal government holds sway over more than 90% of the new-mortgage market. It's a tale of two markets. One includes FHA and its smaller cousins Veteran's Affairs and the Department of Agriculture (which backs rural-home loans).
Loans backed by Fannie and Freddie hark back to pre-boom days of standard fixed-interest products. Down payments are typically at least 20%, though 10% products can be had with private mortgage insurance.

"It's the same underwriting standards in down payments and debt-to-income ratios you saw earlier in the 2000s," said John Courson, CEO of the Mortgage Bankers Association.
The average credit score on a Fannie and Freddie loan is 760 — "unbelievably high," said Brian Chappelle, partner at Potomac Partners, a mortgage consulting firm.

Worried that they'll be forced to buy back bad loans, lenders who use Fannie and Freddie often overlay even tighter lending standards than the government's.
"There's a lot of pressure on lenders to make sure every 't' is crossed and every 'i' is dotted," said Guy Cecala, chief executive and publisher of Inside Mortgage Finance.

Some housing watchers say the tighter requirements have moved the pendulum too far in the other direction from easy money, hurting the recovery by keeping a lot of good borrowers out of the market.
Chappelle says banks add fees to borrowers with credit scores under 720. "If you're a borrower with a 650 Fico score you're going to pay two additional points. So on a $200,000 loan you're going to pay $4,000 extra."
Adds Cecala: "I've talked to borrowers who say they still can't refinance their mortgage because their income went down in 2008 and the government underwriting requires income verified with two years of tax returns. They have to wait until 2010 is over to produce 2009 and 2010 returns even though their income was higher (in 2009)."

Meanwhile, some state housing finance agencies are getting back into riskier loans to low-income first-time buyers. In partnership with the FHA, California recently launched a low-interest, 30-year mortgage.
"Liquidity is returning to the marketplace very slowly," Courson of the MBA said.

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Builders vie for NYC waterfront housing project

2010-09-16T21:54:00.000-07:00

NEW YORK (Reuters) – Several real estate powerhouses said they will bid for the first phase of what New York City Mayor Michael Bloomberg says is the city's biggest affordable housing project in 35 years.

Friday is the deadline for bids on two sites in Long Island City, located in the borough of Queens, where 1,000 new homes will be built. At least 60 percent of those new homes will be set aside for middle- and lower-income people.

Competitors for the waterfront Hunter's Point South project who said they will bid were: AvalonBay Communities Inc, Douglaston Development/Levine Builders, and a venture between The Durst Organization and Jonathan Rose Companies.

Spokesman for the Related Cos and L+M Development Partners, which Crain's New York Business said would also submit a bid, were not immediately available.
The project, which includes shops, a park and a school, is a centerpiece of Bloomberg's effort to ensure that working families can still afford to live in the city.

Before the real estate market downturn, some of the biggest developers concentrated on luxury housing only to see demand falter for some of their projects. Working-class housing now looks like a safer bet. Public subsidies for the new Queens project are expected to include tax-exempt bonds.

Jeffrey Levine, chairman of Douglaston Development/Levine Builders, said by telephone that "The subsidies and the market create a very good formula for a low risk."

The blend of grants and municipal debt each developer seeks could help drive the city's choice of builder, he added.
Hal Fetner, chief executive officer of Durst Fetner Residential said in a statement: "The Hunter's Point South Site provides a unique opportunity to combine superior design in a highly visible location with a significant commitment to affordability and sustainability."

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US homes lost to foreclosure up 25 pct on year

2010-09-15T22:13:00.000-07:00

LOS ANGELES – Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis.

The increase in home repossessions came even as the number of properties entering the foreclosure process slowed for the seventh month in a row, foreclosure listing firm RealtyTrac Inc. said Thursday.

In all, banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.
August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The previous high was in May.
Banks have been stepping up repossessions to clear out their backlog of bad loans with an eye on eventually placing the foreclosed properties on the market, but they can't afford to simply dump the properties on the market.
Concerns are growing that the housing market recovery could stumble amid stubbornly high unemployment, a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April.

That's one reason fewer than one-third of homes repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.
"These (properties) are going to come to market, but very slowly because nobody wants to overwhelm a soft buyer's market with too much distressed inventory for fear of what it would do for house prices," he said.

As a result, lenders are putting off initiating the foreclosure process on homeowners who have missed payments, letting borrowers stay in their homes longer.

The number of properties receiving an initial default notice — the first step in the foreclosure process — slipped 1 percent last month from July, but was down 30 percent versus August last year, RealtyTrac said.

Initial defaults have fallen on an annual basis the past seven months. They peaked in April 2009.

Still, the number of homes scheduled to be sold at auction for the first time increased 9 percent from July and rose 2 percent from August last year. If they don't sell at auction, these homes typically end up going back to the lender.
More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

In all, 338,836 properties received a foreclosure-related warning in August, up 4 percent from July, but down 5 percent from the same month last year, RealtyTrac said. That translates to one in 381 U.S. homes.

The firm tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.
Among states, Nevada posted the highest foreclosure rate last month, with one in every 84 households receiving a foreclosure notice. That's 4.5 times the national average.

Rounding out the top 10 states with the highest foreclosure rate in August were: Florida, Arizona, California, Idaho, Utah, Georgia, Michigan, Illinois and Hawaii.
Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures.
Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can't qualify or fall back into default.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. Nearly half of the 1.3 million homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

The program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners since March 2009.
Regardless, many troubled borrowers have seen their efforts to get a loan modification stymied.

Larry Book of Winter Garden, Fla., was one packet away from a permanent loan modification from Chase under the Obama administration's foreclosure prevention plan after more than a year of back and forth and one failed attempt.
But his modification never went through. Instead, his loan was transferred from Chase to IBM Lender Business Process Servicers in July and he was told he owed $9,562.62 and must bring his mortgage current by Sept. 15 or foreclosure proceedings will begin.

"It just becomes too exhausting," Book said about the modification process. "That's why some people walk away. But I've invested too much and given up too much to just let it go."

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Bank takes over properties at Ala. coast's Wharf

2010-09-14T21:32:00.000-07:00

BAY MINETTE, Ala. – Regions Bank has taken possession of an amphitheater, marina and 178 largely undeveloped acres at The Wharf development in Orange Beach for $18.16 million in a pair of foreclosure auctions.

The auctions Monday drew a small crown on the Baldwin County Courthouse steps, and no one submitted bids except Regions, which is among lenders involved with the troubled coastal project.

Regions loaned The Wharf's developers, AIG Baker Shopping Center Properties, more than $49 million five years ago to develop the parts of the 222-acre project bid on Monday.

The Press-Register reported Tuesday that the bank's bids, made in the name of Oarlock Asset Management One LLC, will reduce AIG Baker's obligations by $18.16 million.

The marina property, which includes 190 slips on the Intracoastal Waterway, a dock store and a restaurant building, went for $6.4 million. The bank paid $11.92 million for the 10,200-seat concert venue and 167 acres.

AIG Baker also borrowed $84.2 million from JP Morgan Chase Bank, which holds liens on much of The Wharf's developed commercial property.

BBVA Compass, which loaned AIG Baker $73.1 million in 2005, has listed for sale 90 unsold condominiums at The Wharf's Levin's Bend tower, as well as the development's 27,000-square-foot convention center. The newspaper reported that the convention center, which sits on 2.68 acres, is listed at $3 million and condos are being offered in a $14.5 million package.

"There are no immediate changes in terms of day-to-day operations and any decisions will be made after careful consideration, with the interests of all parties, including the local community, in mind," said Regions spokeswoman Evelyn Mitchel.
Regions attorney Stephen Monk said the bank has engaged a property management firm to run the marina and the amphitheater, which is scheduled to host a concert by Hank Williams Jr. and Gretchen Wilson on Sept. 25.

"To the greatest extent possible Regions wants to keep managing the property, keep working the property and ultimately they'll end up selling the property, I guess," he said.

Shucker's Oyster Bar, which is part of the property in the Regions bid, remains open.

"We plan to stay open as long as it's profitable for us," manager Terri Days said. "But I am concerned about what's going on around us."

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Citi defends $75M mortgage disclosure settlement

2010-09-13T21:44:00.000-07:00

WASHINGTON – Citigroup Inc. on Monday defended as fair and in the public interest its $75 million civil settlement with the government over charges it misled investors about billions in potential losses from subprime mortgages.
The third-largest U.S. bank made its arguments Monday in a filing to a federal judge in Washington. The judge said last month she was "baffled" by the proposed settlement with the Securities and Exchange Commission and wasn't ready to approve it without more information. New York-based Citigroup said the $75 million penalty is "fair, reasonable, adequate and in the public interest."

The SEC defended the settlement on the same grounds in its own filing last week. The agency had accused Citigroup of repeatedly making misleading statements in calls with analysts and regulatory filings about the extent of its holdings tied to high-risk mortgages. Citigroup had said the exposure was $13 billion or less; the SEC said it exceeded $50 billion.

The SEC announced the settlement of unintentional civil fraud charges on July 29.
"The SEC's case is exclusively one of negligent disclosure," Citigroup said in its brief. The SEC "does not allege any willful, intentional or reckless misconduct by Citigroup or any of its officers, directors or employees."

Citigroup was one of the hardest-hit banks during the financial crisis and received $45 billion from the $700 billion financial bailout — among the largest of the government rescues. The bank repaid $20 billion of the bailout in December. The other $25 billion was converted to a government ownership stake in the company, which the government has said it will sell by the end of this year.
When the housing bust hit in 2007 and borrowers defaulted, Citigroup's losses reached tens of billions of dollars on complex instruments linked to mortgages, pushing the bank to the financial brink.

In a hearing last month, U.S. District Court Judge Ellen Segal Huvelle asked SEC attorneys why the bank's shareholders should be punished for the alleged misdeeds of Citigroup executives. The agency also settled charges with former Chief Financial Officer Gary Crittenden, who agreed to pay a $100,000 civil penalty, and the former head of investor relations, Arthur Tildesley Jr., who agreed to pay $80,000. Tildesley now is the head of cross marketing at Citigroup.

Citigroup noted in its filing that it originally argued to the SEC against any penalty being imposed, maintaining that current shareholders would bear the expense. However, the bank said, its board eventually approved the $75 million deal, largely because the alternative of a public and costly trial was undesirable.
Citigroup said the disclosures in question were "entirely voluntary" and that bank employees "believed in good faith" that the securities linked to subprime mortgages were safe investments that wouldn't suffer substantial losses. "It is important to bear in mind how widely held that belief was at the time," prior to October 2007, the bank said in the filing.

Citigroup said in its filing it has taken "significant efforts" to improve its procedures for making disclosures and controlling risk.

Huvelle's questioning of the Citigroup settlement was the second major legal challenge to the SEC recently. Last year, a federal judge in New York rejected a proposed $33 million settlement between the SEC and Bank of America Corp. to resolve civil charges accusing the bank of misleading shareholders when it acquired Merrill Lynch in early 2009. The judge reluctantly approved an amended $150 million settlement in February, shortly before the case had been scheduled to go to trial.

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Where to Buy a Home for Less Than $800 a Month

2010-09-12T21:40:00.000-07:00

While the nation's real estate crash has been a nightmare for homeowners, it has created some outstanding opportunities for would-be buyers. Home prices in 20 major cities dropped 33 percent from the summer of 2006 to the spring of 2009--and in certain markets, the plunge was even steeper. At the same time, the federal government's efforts to revive the housing market have helped drive financing costs to record lows. Thirty-year fixed mortgage rates fell to an average of 4.32 percent for the week ending September 2.

That's the lowest level in nearly 40 years of record-keeping. Lower property values and dirt-cheap mortgage rates have combined to restore affordability to many real estate markets that were once wildly overpriced. "Right now, housing is about as affordable as it has been since at least the 1970s," says Patrick Newport, a U.S. economist for IHS Global Insight.

To see how far your real estate dollar will stretch in different places across the country, U.S. News examined housing costs on a monthly payment basis. We started with the National Association of Realtors' median home price data for 159 distinct metropolitan statistical areas as of the second quarter of 2010. After subtracting a 20 percent down payment from a market's median price, we plugged the remaining figure into a mortgage calculator using a 4.32 percent interest rate on a 30-year fixed loan.

The exercise produces a monthly payment figure for mortgage principal and interest, which represents the bulk of most property owners' monthly housing costs. (Note that this figure does not include monthly costs for utilities, insurance, or taxes, which can vary a great deal from one place to another. Nor does it reflect the one-time costs associated with a home purchase, such as the down payment and closing costs.) Using this calculation, here is a look at 10 places where you can buy a home for less than $800 a month.
[In Pictures: 10 Great Places to Buy Homes for Less Than $800 a Month.]

1. Austin, Texas: Anyone who's ever visited lovely Austin knows that it's much more than just the capital of the Lone Star state. Great barbecue, abundant green space, and a world-class music scene have turned this city of 735,000 into one of the nation's most beloved destinations. And as the home of the University of Texas and the heart of a dynamic local economy, Austin offers a wonderful quality of life to residents and visitors alike. The median home price in the Austin area stood at nearly $197,000 in the second quarter of this year, a slight increase from a year earlier. After a 20 percent down payment--of $39,400--monthly payments for mortgage principal and interest on a median-priced home in Austin come to $782.

2. Sarasota, Fla.: Although exotic mortgage products and investor excitement sent home prices in Sarasota soaring during the housing boom, the subsequent crash hit the market as hard as anywhere in the state. Median home prices in the Sarasota area plummeted from $311,000 in 2007 to $185,000 in the second quarter of this year. But this steep drop only makes this sun-drenched community on Florida's west coast more attractive for home buyers, says Jack McCabe of McCabe Research & Consulting. McCabe says Sarasota's smaller size provides its residents with a more manageable lifestyle--with less traffic, for example--than big cities like Tampa Bay or Orlando. At the same time, the area has a beautiful waterfront and plenty of art museums and theater productions. Anyone considering buying property in Florida should have Sarasota at the top of their list, according to McCabe "It's a great market," he says. "I really expect in the next 20 years it is going to be one of the most desirable markets in Florida for baby boomers to retire." The median home price in the Sarasota area was $185,000 in the second quarter of this year. After putting 20 percent--or $37,000--down, monthly payments for mortgage principal and interest on a median-priced Sarasota area home come to $734.
[In Pictures: 10 Cities for Real Estate Steals]

3. Albuquerque, N.M.: A vibrant blend of Native American, Latino, and Anglo cultures makes Albuquerque one of the nation's most diverse communities. Residents can explore this unique heritage through the city's expansive menu of museums, art galleries, and theaters. Its enviable climate--which averages more than 300 days of sunshine a year--provides plenty of opportunities for golfing, biking, and hiking. During the winter months, skiers and snowboarders can hit the nearby Sandia Peak Ski Area during the winter months. The median home price in Albuquerque was $178,000 in the second quarter of this year, down about 2 percent from a year earlier. After a 20 percent down payment--or $35,600--monthly payments to cover mortgage principal and interest on a median-priced Albuquerque home are roughly $706.

4. Minneapolis/St. Paul: If you can stand the tough winters, the Minneapolis/St. Paul area is a great place for outdoor enthusiasts call home. The Twin Cities, as they are known, have more than 330 parks, and the Minneapolis metro area alone has more than 20 lakes. Golfers, meanwhile, can pick from more than 170 nearby courses. The median home price in the Minneapolis/St. Paul area was $176,000 in the second quarter of 2010, a decline of roughly 4 percent from the same period in 2009. Buyers that make a 20 percent down payment, which totals $35,200, will have monthly payments of about $698 for mortgage principal and interest on a median-priced home in the area.

5. Columbus, Ohio: With a population of 733,000, Columbus is the home of Ohio State University and the state capital. This friendly Midwestern community serves as the headquarters of 14 different Fortune 1000 companies. And while Columbus rattles with enthusiasm during Ohio State's football season, the Buckeyes aren't the only game in town. In addition to an NHL franchise and a minor league baseball team, the area has more than 100 art galleries, 20 theater companies, and 18 museums. The median home price in Columbus was nearly $150,000 in the second quarter of this year, a 10 percent increase from the same period a year earlier. After a 20 percent down payment--of $30,000--monthly payments for mortgage principal and interest on a median-priced Columbus home come to $595.
[In Pictures: 9 Smart Ways to Come Up with Down-Payment Cash]

6. Phoenix, Ariz.: After appreciating substantially during the real estate boom, the median home price in the Phoenix area has dropped nearly 44 percent since 2007. Despite the recent turmoil, the area's sunny climate and abundance of outdoor activities continue to offer a wonderful quality of life for retirees or growing families. The median home price in the Phoenix area was nearly $145,000 in the second quarter of this year. After putting 20 percent--or $29,000--down, monthly payments for mortgage principal and interest on a median-priced home in the Phoenix area total about $575.

7. Columbia, S.C.: Located in the heart of South Carolina is the historic city of Columbia, the state capital. With a hot, sunny climate, the area's more than 700,000 residents can enjoy an afternoon at the Riverbanks Zoo and Garden, take their boat out on Lake Murray, or stroll through the art galleries and coffee shops in the city's entertainment districts. The median home price in Columbia was $142,000 in the second quarter of this year, up about 3 percent from the same period in 2009. Buyers that make a 20 percent down payment, which totals $28,400, will have monthly payments of about $564 for mortgage principal and interest on a median-priced home in Columbia.

8. Boise, Idaho: Boise's sunny, high-desert climate is great for checking out the 2,700 acres of parks in and around this Idaho state capital. And as the home of the Boise State University Broncos, football fans will have all the excitement they can handle on Saturdays in the fall. The median home price in the Boise area was $140,000 in the second quarter of this year, a decline of roughly 13 percent from a year earlier. After a 20 percent down payment--of $28,000--monthly payments for mortgage principal and interest on a median-priced home in Boise total about $556.
[Visit the U.S. News Personal Finance site for more insight and money management tips.]

9. Pittsburgh: This once-rusting steel town has spent the past quarter-century transforming its economy into an innovative center of technology, healthcare, financial services, and education. And with short commutes, popular professional sports franchises, and all sorts of outdoor activities, Pittsburgh now considers itself "America's Most Livable City." The median home price in Pittsburgh was $127,000 in the second quarter of this year, a modest increase from the same period in 2009. Buyers who make a 20 percent down payment, which totals $25,400, will have monthly payments of about $504 for mortgage principal and interest on a median-priced home in Pittsburgh.

10. Atlanta: With a young, fast-growing population, Atlanta is an exciting city in the heart of the South. The median home price in the Atlanta area was nearly $123,000 in the second quarter of this year, up slightly from the same period a year earlier. After a 20 percent down payment--or $24,600--monthly payments for mortgage principal and interest on a median-priced Atlanta home come to $488.

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Homeowners, Beware Association Costs

2010-09-09T22:26:00.000-07:00

House and condo owners may face extra costs as their homeowner associations struggle with unpaid assessments, the legacy of neighbors hit by job losses and foreclosures.

Communities that don't plan properly, or incur unexpected expenses, can saddle homeowners with a tab for special assessments, higher dues or deferred maintenance. It behooves the 60 million people who live in associations nationwide, and those considering buying in one, to learn what these communities must tell them and when.

Dig For Details
Homeowner associations "rarely" provide a complete or updated set of disclosure documentation, says Jacquie Berry, whose company Community Association DataSource reviews these documents and association finances for prospective buyers. Worse, she said, "most of the ones I'm reviewing now are underfunded."
Berry's firm, based in San Jose, Calif., sells a 12-page association financial health report for $375, roughly the cost of a home inspection.

Homeowners and prospective buyers should review state laws plus documents that associations are required to provide, and ask questions. But dig even deeper, advises Patrick Hohman, author of the new book "Condos, Townhomes and Home Owner Associations: How to make your investment safer."

"If you can't get a straight story about the condition of the property, ask to see the minutes" from the past year's board meetings, said Hohman, a longtime condo association board member.

Many states don't require associations to provide these to prospective buyers. But prospective buyers can ask the seller for this information. Board meeting minutes are likely to provide clues to association issues and problems.

The top association issues today are unpaid and delinquent dues, and inadequate reserves. But how do reserves work?

Requirements Vary
Each state has its own rules. In California, associations must physically inspect common-interest facilities and infrastructure and determine maintenance needs every three years. They must do a reserves budget every year. But they're not required to actually fund that reserves budget. And associations are often loath to fund reserves if it means higher dues.

Florida condo associations must do a reserves study every three years and a budget annually, which must be funded according to a formula that looks at needed maintenance, the size of the complex and other factors, said Roberto Blanch, an attorney with Siegfried, Rivera, Lerner, De La Torre & Sobel, in Coral Gables, Fla.

However, unlike condo associations, Florida HOAs aren't required by the state to do these reserve studies and budgets, Blanch says. And some other states have no association reserves requirements.

Kentucky has a new condominium act, signed into law in April. It requires condo associations to do annual budgets and monthly balance sheets, Hohman says. And condo associations must disclose reserves funds (if any), and any anticipated capital expenditures for the current year and the following two years, he says. But homeowner associations are currently exempt from this Kentucky law.

Governance Gone Wrong
Bad things happen when associations mismanage their finances. Homes in an HOA or condo association that has too many delinquent assessments or inadequate reserves won't qualify for government-backed mortgages. That puts more downward pressure on the community's property prices.

Plus, if an association has a budget shortfall, needed maintenance may get put off, further eroding property prices.

And reserves aren't meant to cover shortfalls in operating budgets due to unpaid or delinquent assessments, though they can be tapped temporarily. In California, every association must do an annual operating budget and reserves budget, says Adrian Adams, founder of Adams Kessler, a Los Angeles-based law firm specializing in association laws.

Associations should reflect delinquencies in the operating budget and estimate for it, Adams says.

"If a shortfall is unexpected, the board can impose a special assessment of up to 5% of the budget to cover the expense," he said.

Or California associations can borrow from their reserves, if they've funded them, to cover the shortfall, but Adams says that borrowing must be repaid in one year. California association boards also can put a line item in the reserves to account for unexpected expenses, like dues shortfalls.

Also a new law in Florida, effective July 1, allows a condo association to collect a tenant's rent if the tenant's landlord is behind on association dues, Blanch says.

Policies And Conflicts
Homeowners and prospective buyers should understand more than an association's financial health.
• What are the policies on pets, parking, noise, rental and dues-collections? What are the architectural guidelines?
• Are there any signs of a coming special assessment?
• Is the association self-managed or is there outside management? Is there an on-site property manager?
• What does the assessment fee cover and what doesn't it cover?
If a community is well-managed, this information will be readily available in updated disclosure documents. But sadly, poor management is more common than one might think.

Once again, how association disputes are handled varies from state to state. But some states require various measures of alternative dispute resolution to keep the matters from going directly to the courts.

In California, an owner can demand a "meet and confer" meeting with his or her association to discuss a dispute. The association must participate if a member requests it (but not vice versa), says Sandra Bonato, a partner with Berding & Weil, in Alamo, Calif.

If that meeting doesn't solve the issue, an owner can request alternative dispute resolution, either binding or nonbinding arbitration or mediation, she says.
Still no resolution? Then the owner can sue, or even attempt a recall of the board. In California, it takes a petition of just 5% of the association members to demand a board recall election.

An association must make a members list available to an owner who requests it for a mailing the owner wants to do for an association matter, like a petition.
What gets association boards into trouble?

"Many times boards meet in secret about things that could have big ramifications," said Beth Grimm, an attorney specializing in condo and HOA law in Pleasant Hill, Calif. This ticks off the membership. Whereas if a board is open and communicative it diffuses anger, she says.

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Home lending pace rises; most are refinancings

2010-09-08T22:26:00.000-07:00

NEW YORK — Americans applied to buy homes at the highest pace last week since May, but more than 8 of every 10 loan requests was for a refinancing, Mortgage Bankers Association data show on Wednesday.

August employment and July pending home sales surpassed forecasts and could portend a rise in deeply depressed home sales, economists said.

Still, about 82 percent of all loans last week were for refinancings rather than purchases, with unemployment still high at 9.6 percent and the U.S. housing market groping for a bottom.

Total loan requests fell by a seasonally adjusted 1.5 percent last week, as refi demand dropped 3.1 percent from the highest levels since May 2009. Home purchase applications rose 6.3 percent.

Home buying demand climbed back to levels seen in late May but stayed almost 40 percent lower than a year ago, said Michael Fratantoni, MBA's vice president of research and economics.

"On the other hand, refinance volume dropped last week for the first time in six weeks, but the level of applications to refinance remains close to recent highs, as historically low mortgage rates continue to draw borrowers into the market," he said in a statement.

Fixed 30-year mortgage rates hovered just above the lowest rates since the MBA started record keeping in 1990, rising 0.07 percentage point last week to 4.50 percent.

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THE END OF THE MORTGAGE “BROKER”

2010-09-07T21:44:00.000-07:00

What? How can this be? Realtors are still using Mortgage Brokers left and right, so how can I be saying that this is the end of the Broker? It's called the Financial Reform, and it is completely changing the mortgage landscape as we know it.

I have discussed in my previous blogs the effect this reform is having and will continue to have on borrowers and their disclosures and benefits. But what is going to happen to the Mortgage Brokers? First, let's define Mortgage Broker vs. Loan Officer, and then I will show you how it will negatively affect borrowers, Realtors, and of course Mortgage Professionals.

MORTGAGE ORIGINATOR (MO) - This is the new umbrella description for anyone who is an individual that is licensed to "originate" a mortgage.
LOAN OFFICER (LO) - This is typically someone who works for a direct lender. A direct lender can be the banking giants that we see on every street corner, or it can be a mortgage lender that is a small office tucked away in your neighborhood.
MORTGAGE BROKER BUSINESS (MBB) - Is a company that can broker loans to various lenders, and can make varying commissions depending on the program or lender they broker to.
MORTGAGE BROKER (MB) - Is an individual who works for the MBB and usually makes much larger commissions than the LO, but not the salary or draw the LO makes. This commission usually comes from a Yield Spread Premium (YSP).
YSP - The percentage the lender pays the MBB for the mortgage, and it's usually incentivized based on rate, program, or lender. This was the allure of being a MB and working for an MBB, but the financial reform is eliminating the YSP.

The financial reform has introduced a new rule that takes place in April 2011, and this rule takes away the ability for any lender or MBB from "incentivizing" or charging more for a particular program or rate. In other words, they are eliminating the YSP and forcing everyone to make the same amount of money or percentage based on the loan amount only.
Not only that, FHA now requires the Lenders be responsible for the actions of the MBB. This way the MBB can't originate 50 fraudulent loans and then file for Bankruptcy leaving no one responsible. Instead the Lender (with large financial net worth and liquid money) is held responsible for the loan that the MBB originated. So in turn, Lenders now highly restrict and limit the MBBs while requiring then to have large sums of net worth and a majority of that liquid, the same way the Lenders are required by FHA. This is not possible for most, or they are simply being pushed out of the business. HENCE, THE PROVERBIAL DEATH OF THE MORTGAGE BROKER BUSINESS AND MORTGAGE BROKER INDIVIDUAL.

Why does this matter? Because there will soon be a mass exodus towards the lending giants and the smaller lenders.
Why should this matter to you? Because now there will be far less competition in the market, which means a smaller potential for you borrower to get the best possible deal. Competition is what drives our economy, and it is why our nation has been such a successful capitalist country for centuries. Yet, the BIG Government has their hand in the lending industry to such an extent that the competition will not be very strong.
I understand why this was done. Borrowers can now see EVERYTHING that is being charged and why. As I have marketed my niche to LOs that can't offer the Reverse Mortgage, I have seen a lot of seasoned veterans who many have owned their own MBBs working for a small salary and tiny commissions at one of the banking giants. This is the beginning of the end of Mortgage BROKERS as we know them!
P.S. I have always been a MB, but now am a LO at a small lender. I am fortunate enough to work for someone who saw the writing on the wall last year, and I will still earn like an MB and work like an LO. The best of both worlds! Thank you for reading my post!

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Housing quagmire: Is it time to remove relief?

2010-09-05T21:57:00.000-07:00

FORTUNE -- For the growing number of struggling homeowners in this country, more help is on the way. Additional aid from the federal government will begin making its way to them next month -- one program would help qualified homeowners refinance their mortgages after seeing their property values fall below the amount they owe, and the other includes another round of funding to help the unemployed or underemployed with their payments.

It's easy to see the need for such programs. Theoretically, they keep people in their homes and bring some stability to the fragile housing market. But the plethora of programs announced since the housing crisis started have largely been failures, suggesting that any effort to fight foreclosures and boost home sales is going to be a futile one.

Home prices have shown few signs of sustained recovery. While the S&P/Case-Shiller Home Price Index showed a 1% rise in June from May -- its third consecutive monthly increase -- the index's committee chairman at S&P warns that it's nothing to get too excited about as other more recent data on home sales and mortgages point to fewer gains ahead. Purchases of new homes in July fell 12.4% from the previous month to an annual pace of 276,000, the weakest since data began in 1963, according to the U.S Commerce Department.

Not even record low mortgages rates have boosted home sales or enticed a debt-weary public. Of course, this doesn't seem much of a shocker. Experts say home prices - which have fallen by more than 30% since 2006 -- are still inflated by 15% to 20% in many areas.

So why try to prop up prices any longer with federal programs? Is it time to simply let prices freefall, clearing the way for a genuine correction of the real estate market?

It's true that there are plenty of reasons to keep prices from falling lower. For one, a further decline would put more mortgages under water, adding to the litany of foreclosures and the worries for banks. And falling home prices would probably fan worries about deflation, which could send the overall economy into another tailspin -- further depressing everything from wages to sales to consumer confidence.

But evidence is mounting that government interference in the housing market might be doing the broader economy more harm than good, at least for the long-term. A government tax credit that expired in April to encourage homebuyers did help boost sales, but that proved only to be a temporary crutch. The Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) may have slowed the rate of foreclosures some, but the programs have largely been criticized for failing to give homeowners permanent relief.

The few who are buying homes now might likely be overpaying for them. And many latching onto their properties are being convinced it's okay to continue trying to pay off a home they can barely afford -- echoes of the homeownership encouragement that led us into the bubble in the first place.

"Throughout this whole debate there's been this unwillingness to look at the data realistically," says Dean Baker, co-director of the Center for Economic and Policy Research, a Washington DC-based think tank. Baker is among many who predict home prices will fall further. He says that many recipients of government support will probably eventually lose their homes, and the federal funding that supported their temporary stay will mostly end up benefiting the banks that hold their mortgages.

"We're just putting more people in the trap," Baker says of government policies that basically encourage people to buy or stay in homes beyond their budget. "I don't feel good that we're finding more suckers."

Baker's solution: Let the market dictate where prices should fall. As for the many homeowners who would likely face foreclosure, give them the option to stay in their homes by letting them rent their homes for up to five years - a proposal similar to one introduced by Raul Grijalva, a Democratic congressman from Arizona.

Paving the way for a true market correction would not be easy to endure -- letting home prices free-fall is a scary thought. But is a gradual decline that could prolong real economic recovery really any easier to stomach?

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MGIC added $1.2B in mortgage coverage in August

2010-09-03T21:45:00.000-07:00

MILWAUKEE – Private mortgage insurer Mortgage Guaranty Insurance Corp. said Friday it added $1.2 billion in new primary insurance coverage in August and the number of delinquent loans it insures declined.

The company, which sells mortgage insurance coverage to lenders, ended the month with 224,410 delinquent loans. That's down from 229,012 delinquent loans at the end of July.

MGIC is the primary subsidiary of MGIC Investment Corp. and had $202.4 billion in primary insurance in force covering 1.3 million mortgages as of June 30.
MGIC shares added 64 cents, or 8 percent, to $8.62 in afternoon trading.

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A decade of change in housing patterns

2010-09-02T22:42:00.000-07:00

You look back 10 years, what did you get? A little bit cleaner and deeper in debt. With apologies to Tennessee Ernie Ford, that’s a brief synopsis of how U.S. home life has changed during the past decade, according to the latest “American Housing Survey,” released last week.

Published every two years by the Census Bureau and Department of Housing and Urban Development, the exhaustive analysis pokes into everything from what you owe on your abode to whether you’ve seen a mouse in your house. Owners and renters are equally dissected.

Msnbc.com compared key elements in the latest survey, covering 2009, against the same variables in the 1999 edition and discovered that we’re living larger and, as a nation, collectively way cooler. But when it comes to home style, most of us remain stuck in Mike Brady’s vision of architectural beauty — the 1970s.

A data-dredging journey through the past 10 years also finds that we’re spending extra domestic time outside and that we’re a tad more careful about protecting what’s ours. Of course, the recent mortgage crisis colors some of the numbers in bright red. Below are nine ways in which America’s housing has grown — and groaned — since 1999.

Amenities:

Which household pleasantries must we have? Toasty ambience and dry rides. Simply put, we prefer fireplaces and garages. Both are more apt to be found in or at current U.S. homes than they were a decade ago.

As of last year garages were available for 66 percent of owners and renters, up from 59 percent a decade earlier. The survey also found an increase of three percentage points in the number of homes with fireplaces.

“We love our fireplace,” said Danny Kofke, a homeowner in Hoschton, Ga., about an hour from Atlanta. “On fall and winter Sundays, we usually have family over ... and we have a fire while watching football.”

Kofke, his wife, Tracy, and their two daughters also prefer to “eat on the porch as much as possible when the weather is nice.”

That makes the Kofkes typical Americans. In 2009, 85 percent of U.S. homes boasted decks, patios, balconies or porches – up from 81 percent in 1999.

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Foreclosure trims number of underwater homes

2010-08-30T21:45:00.000-07:00

LOS ANGELES — Foreclosures are helping to thin the ranks of U.S. homes with mortgages that exceed what the properties are worth, new data shows.

Real estate data provider CoreLogic said Thursday there were 11 million homes with so-called underwater mortgages at the end of June. That's down from 11.2 million at the end of March and represents the second consecutive quarterly decline. The number of underwater mortgages typically rises when home prices are falling.

Foreclosures, rather than rising home prices, accounted primarily for the declines.

"They basically were just flushed out of the system," said Sam Khater, CoreLogic's senior economist. "There is a small decline and that's good news. The bad news is it's occurring via foreclosures."

The higher the number of homes with underwater mortgages, the greater the probability of more defaults.

In all, 23 percent of U.S. homes with mortgages were underwater at the end of June. Another 2.4 percent of homeowners with a mortgage had less than 5 percent equity in their home, making them more likely to end up underwater if home prices drop further.

The total number of underwater mortgages represent roughly $2.9 trillion in mortgage debt, according to the firm.

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Housing's a wreck. Builders rally. Huh?

2010-08-29T22:12:00.000-07:00

NEW YORK (CNNMoney.com) -- Stop me if you've heard this before. The housing market is still in shambles.

Existing home sales plummeted in July. New home sales sunk as well, hitting a record low. And even though luxury homebuilder Toll Brothers reported a surprise quarterly profit Wednesday, that was largely due to a tax break. Sales were down slightly from a year ago and orders dropped 16%.

Despite this, some investors appear willing to once again bet that the housing market has hit bottom. Shares of Toll Brothers (TOL) were up more than 2% in early afternoon trading.

The S&P SPDR Homebuilders (XHB) exchange traded fund, which holds other builders such as KB Home (KBH) and Pulte (PHM), as well as building materials makers and home improvement retailers, rose 1.5%.

It's a strange reaction to say the least. The broad market is down because of more gloomy housing data. But the companies that are most directly tied to the health of the housing market are up?

It doesn't make a heck of a lot of sense. It may be a case of traders betting for the umpteenth time that this is finally a bottom for housing.

That's a mistake. Now that the tax credit for homebuyers has expired, it's difficult to imagine what can juice the real estate market again in the near-term.
"The sales numbers have been uniformly and strikingly bad and it's probably only a matter of time before prices start slipping again," said Zach Pandl, economist with Nomura Securities in New York. "It's clear that the housing recovery was dependent on government aid. Without that, a recovery is not going to continue."

Pandl argues that the Federal Reserve and Treasury need to do more to help the housing market, such as making financing easier and continuing to do what they can to keep interest rates low.
But Steven Kyle, professor of applied economics at Cornell University in Ithaca, N.Y., argued that already super-low mortgage rates aren't making much of a difference.
"The market has been propped up artificially. Interest rates are as low as you could want and we're still not off to the races," he said.
Kyle added that there's no reason to get excited about the prospects for housing until inventories decline further and home prices rise at a more steady, consistent rate.

Weak housing strengthens Bernanke's hand

So traders may be banking on the fact that the worst is really over for housing. But one fund manager who owns shares of Pulte said he's holding the stock for the long haul, not because he expects immediate improvement on the horizon.
"Investors may be factoring in a lot of the bad news into the stock prices of the builders but I don't think many people are looking for a turn in the market yet," said Craig Hodges, co-manager of the Hodges Pure Contrarian fund in Dallas. "Things will eventually get better but nobody knows when."

Still, even for a long-term housing bull, that lack of certainty is a big problem. Vicki Bryan, senior analyst who covers homebuilders for Gimme Credit LLC, a corporate bond research firm based in New York, said that people are clinging to the false hope that housing will improve before the economy.

But given the big glut of homes already out there and worries about more foreclosures as unemployment remains high, she said housing is going to lag, not lead a rebound.

"There is a lot of wrong-minded thinking. People are assuming that the housing market is going to lift the economy out of recession. But the economy is going to need to improve first," Bryan said. "We could scrape around at low levels for several years."

- The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney.com, La Monica does not own positions in any individual stocks.

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Fewer mortgages are in default

2010-08-27T22:08:00.000-07:00

NEW YORK (CNNMoney.com) -- Fewer mortgage borrowers are delinquent on their loan payments, according to the latest data from the Mortgage Bankers Association.

The nation's overall delinquency rate dropped to 9.85% in the second quarter, down from 10.06% of all loans outstanding three months earlier.

Even better, the percentage of seriously delinquent loans -- ones 90+ days late or already repossessed by lenders -- dropped to 9.11% from 9.54% in the first quarter.

The drop in loans 90 days or more late was the biggest the MBA has ever recorded, according to the MBA's chief economist, Jay Brinkmann. "That shows we're making headway," he said.

He cited three reasons for the improvement:

Fewer loans are coming into the default process;
The homebuyers tax credit, which increased demand for homes, generated many pre-foreclosure sales, removing the attached delinquent loans from the statistics;
The government- and lender-led mortgage modifications "cured" some payment problems.

However, even with those bright spots, there was one troubling finding: First-time delinquencies increased after four quarters of decline. It inched up to 3.51% in the second quarter from 3.45% in the first quarter. According to Brinkmann, the reversal reflects the weakness in both the housing market and the overall economy.

"It's a question of jobs," he said. "It takes a paycheck to make a mortgage payment."

Underscoring the trend is the foreclosure trend among borrowers with conventional loans, like 30-year, fixed rate mortgages. They accounted for nearly 36% of foreclosure starts during the quarter. And these safe loans rarely get into trouble unless they lose employment or income.

The four worst hit states -- California, Florida, Arizona and Nevada -- still account for nearly 60% of national delinquencies, but California's numbers dropped dramatically this year. At the end of 2009, California foreclosure starts made up nearly 20% of the nation's total. That dropped to 14.7% during the second quarter.

Another positive trend is the gradual downturn in the number of borrowers who are underwater on their mortgages, owing more than their homes are worth.
CoreLogic reported today that the rate of borrowers underwater dropped to 23% in the second quarter from 24% in the first.

When borrowers fall underwater, it increases the chance that they'll lose the homes. Brinkmann calls it one of the two "triggers" that lead to foreclosure.

If homeowners have positive equity, they can use it as a source of cash to pay bills, including mortgages. But if their cash reserves are gone and they can't afford to make payments because their income has dropped, foreclosure is almost inevitable.

CoreLogic found that negative equity is worst in five states: Nevada (68%), Arizona (50%), Florida (46%), Michigan (38%) and California (33%).

Have you just become delinquent on your mortgage payment? Is it because you lost your job? If so, send an email to realstories@cnnmoney.com and you could be profiled in an upcoming story. Please include a contact phone number. For the CNNMoney.com Comment Policy, click here.

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Say goodbye to the McMansion

2010-08-26T21:56:00.000-07:00

NEW YORK (CNNMoney.com) -- The American home is shrinking. Toll the bell for the McMansion.

After years of growth, the Census Bureau recently reported that median new home size fell to 2,135 square feet in 2009 after peaking at more than 2,300 earlier in the decade.

"Home buyers are asking for less, cutting back on options and reducing square footage," said Steven Pace of the North Carolina-based Pace Development Group, which builds both custom and tract houses ranging in price from below $250,000 to more than $2 million.

"They're saying, 'Maybe we don't need that 5,000 square footage;" he said. "'Maybe our bath doesn't need to be big enough for our whole family and all our neighbors to take a shower at the same time.'"

Kermit Baker, chief economist for the American Institute of Architects, pointed out that consumers don't ask for as much for spaces devoted to single purposes, such as media rooms for watching videos and game rooms for shooting pool. Instead, the requests are for rooms with shared uses.

"We continue to move away from the 'McMansion' chapter of residential design," he said.

QUIZ: Do you have an All-American house?

Now, the typical U.S. owner-occupied home has six rooms, with three of them being bedrooms, according to the Census Bureau's annual American Housing Survey. The most common number of baths is two or more.

For those who remember the days of long, hot summers. Those are over, too. Nearly 90% of all new homes now have central air conditioning. And 63% of all homes are now cooled.

These are a big increases from even 10 years ago, when only 52% of owner-occupied homes -- i.e. non-rental properties or second homes -- boasted central air.

More than three-quarters of all homeowners now load up dishwashers, up from 65% a decade ago. And garbage disposals can be found in nearly half of owner-occupied homes, up from 46%.

On a broader scope, the survey revealed that, despite the recent hoopla about the new urbanism and return to cities, most Americans still lead a "Leave it to Beaver" lifestyle.

Of the more than 76 million owner-occupied homes in 2009, 63 million were traditional detached, single-family residences. And city dwellers, you're outnumbered: Far more homeowners live in the suburbs than in cities.
Regionally, the South, held the largest number of owner-occupied units, followed by the Midwest, then the West and finally the Northeast.

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5 years after Katrina, homeowners insurance costs more

2010-08-25T22:00:00.000-07:00

Five years after Hurricane Katrina leveled a large part of the Gulf Coast, homeowners as far away as Maine are still paying the bill.

Home insurance rates for some coastal areas have shot up 30% or more. Thousands of homeowners who live along the East Coast have had their policies canceled. And when the next disaster hits, many homeowners will be forced to bear a greater share of the cost of rebuilding.

Insurance industry executives say the unprecedented cost of Katrina, combined with predictions of more violent weather in the future, forced insurers to review their exposure to vulnerable areas.

Insurance companies "decided they couldn't be all things to all people," says Don Griffin, vice president of personal lines for the Property Casualty Insurers Association of America. "Some of the very large companies looked at their whole coastline and realized even New York has a fairly significant exposure should a major event hit there."

HURRICANE KATRINA: Five years later

Homeowners, meanwhile, are still dealing with the limitations of their pre-Katrina coverage. Marshall Hill, 46, of D'Iberville, Miss., says State Farm promptly paid his claim after the hurricane hit his four-bedroom, 2,000-square-foot ranch house. But the insurer covered only about $48,000 of the $125,000 in damages to his home. Damage caused by rising water wasn't covered by his homeowners policy, and Hill didn't have federal flood insurance.

Hill took out a second mortgage and a Small Business Administration disaster assistance loan to make up the difference between his insurance payout and the cost of rebuilding the home. Hill now has a federal flood insurance policy that costs about $200 a year. He says he didn't have any trouble getting another policy from State Farm for not much more than he paid before Katrina.

"As ugly as the whole thing was, we actually felt kind of fortunate," Hill says.

Others haven't been as lucky. What has changed:

Higher rates

From 2005 through 2007, the latest figures available, the average premium for homeowners insurance in the USA increased 7.6%, according to a survey by the National Association of Insurance Commissioners. But the average doesn't reflect what many homeowners have experienced. Some inland states saw much more modest increases, while homeowners in coastal areas experienced double-digit rate increases.

In Florida, for example, average premiums jumped 41% from 2005 through 2007, according to the NAIC survey. Average rates in Louisiana rose 22%. Rhode Island homeowners saw their rates go up by nearly 12%, while average premiums for New York homeowners rose 11%.

"After the insurance industry looked at the devastation caused by Katrina, it said the underwriting price (for homeowners insurance) should be higher than it is," says Bill Sinn, insurance industry director for Pitney Bowes Business Insight.

Homeowners who live far from the ocean shouldn't assume they're immune to disaster-related rate increases, says Ross Buchmueller, chief executive officer at PURE (Privilege Underwriters Reciprocal Exchange), an insurer that provides insurance to homeowners with high-end coastal properties. After coming ashore in Texas in September 2008, Hurricane Ike moved inland and caused $1 billion in insured losses in Ohio, he says. That has led insurers to review their pricing models to determine whether they've accounted for the risk of inland storms, he says.

An exodus by large insurers

Starting this month, State Farm Florida will drop 125,000 Florida homeowners whose policies are up for renewal, representing about 15% of its business in that state. State Farm hasn't written any new policies in Florida since February 2008.

It could have been worse: State Farm threatened to pull out of Florida altogether last year after state regulators turned down a request for a 47% rate increase. Under a consent order reached with regulators in December 2009, the insurer agreed to keep 550,000 State Farm policyholders and raise rates by about 15%.

Florida was hit by eight hurricanes from 2004 through 2005, says State Farm spokesman Chris Neal. The costs of those disasters made it unprofitable for State Farm to stay in Florida, Neal says.

While the consent order will stabilize State Farm in the short term, it doesn't guarantee the insurer will remain in Florida, Neal says. "When you're paying out more than you're taking in, you can't sustain that forever."

Similar pullbacks have occurred throughout the country, including in regions that haven't experienced a major hurricane in years. Since Katrina, major insurers such as State Farm, Allstate and MetLife have reduced coverage in parts of New York, Connecticut, New Jersey, Rhode Island, Maryland and Massachusetts.

Katrina, along with a record number of hurricanes in 2004, led some insurers to conclude "they were too exposed to coastal areas given the premiums they were able to charge," says Robert Hartwig, president of the Insurance Information Institute, an insurance-industry-funded educational organization.

Consumer advocates contend that major insurers have used Katrina and other disasters as an excuse to get out of a less-profitable segment of their business. For large insurers, "auto insurance is a lot more profitable than homeowners" insurance, says Amy Bach, executive director of United Policyholders, a consumer rights group. "It's just a business strategy."

New players

While some major insurers have moved out of coastal areas, others have stepped in to fill the vacuum, Hartwig says. "Coverage is available, and it remains affordable in these areas, although it's more expensive than it was five years ago," he says.

Howard Mills, director and chief adviser of Deloitte's Insurance Industry Group and former superintendent of the New York State Insurance Department, agrees. The impact of non-renewals in coastal states "was not nearly as great as people would have thought, because other insurers really jumped into the breach," he says.

For example, PURE, which insures homes valued at $1 million or more, now provides insurance to about 8,000 families in 17 states. The company's decision to launch its business in Florida in 2007 "was directly related to the lack of availability" of insurance in that state for high-end homes, Buchmueller says.

But some of the new players are small and untested, raising questions about their ability to withstand the cost of a major disaster. For example, some start-up companies that are writing homeowners policies in Florida are financially unstable, says Weiss Ratings, an independent provider of ratings for financial institutions.

Royal Palm Insurance and Edison Insurance, both of which opened for business in Florida in 2006, are rated as E+, or "very weak." People's Trust Insurance, which began operating in 2008, is rated as D+, or "weak."

"The percentage of companies rated E+ that subsequently are subject to regulatory takeover by insurance commissioners is very high," says Martin Weiss, president of Weiss Ratings. "They go bankrupt at a high rate."

Michael Gold, chief executive and founder of People's Trust, says his company, which has 30,000 policyholders, has sufficient capital to withstand a hurricane of even greater magnitude than Katrina. "We're not the teeny company Weiss thinks we are, and they really don't have an idea of all the capital we have," he says.

Royal Palm and Edison Insurance didn't respond to requests for comment.

Higher deductibles

Insurers that are still providing coverage in coastal and other high-risk areas are increasingly charging a percentage-based deductible, which could cost some policyholders thousands of dollars after a hurricane, earthquake or hailstorm. Unlike a flat deductible, which is based on a specific amount, such as $500, a percentage deductible is based on the insured value of the home. For example, if the insured value is $200,000 and the policy has a percentage-based deductible of 1%, the homeowner could be forced to pay $2,000 out of pocket.

In most cases, percentage deductibles are limited to certain types of damages, such as hurricane-related claims, Mills says: "It's fairly specific and is intended to spread the risk around." While percentage-based deductibles have been around for years, their use has risen since Katrina, he says.

Bach says the insurer that covers her parents' Long Island, N.Y., home switched them from a $500 flat deductible to a percentage-based deductible of 5% after Katrina. "We felt lucky they didn't get dropped," she says.

Emphasis on prevention

Griffin says Katrina demonstrated the need for tougher building codes and standards, particularly in vulnerable areas. Some homes that were built using more stringent construction standards sustained minor roof damage from Katrina, while older homes located right across the street were wiped out, he says.

Under a law passed by the Florida Legislature in 2008, some owners of high-end homes risk losing their coverage from state-owned Citizens Property Insurance unless they install hurricane-resistant windows and doors. Citizens is the largest property insurer in Florida.

But a new report by the Institute for Business & Home Safety, a research organization funded by the insurance industry, said states haven't done enough to promote disaster-resistant construction.

"Building codes along the Gulf Coast today are mostly disappointing, with only Louisiana getting high marks for taking proactive steps to adopt a statewide building code," Wanda Edwards, IBHS' director of code development, said in a statement.

Hill says he believes his rebuilt home is strong enough to withstand another hurricane — and will be in even better shape after he installs a more hurricane-resistant roof next summer. "This is home," he says. "Mother Nature is not going to run me off."

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Plunging home sales could sink recovery

2010-08-24T22:24:00.000-07:00

NEW YORK (CNNMoney.com) -- With home sales plunging to their lowest level in 15 years, economists warn that a double-dip in housing prices is just around the corner, threatening to further slow the overall recovery.

Existing home sales sank 27.2% in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units. Much of that drop is attributed to the end of the $8,000 homebuyer tax credit.

That credit brought buyers out in droves, as they tried to sign home contracts before the April 30 deadline. Now, two months later, sales are 34% below April's tax incentive-induced peak.

"Home sales were eye-wateringly weak in July," said economist Paul Dales of Capital Economics. "It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, things could get a lot worse."

The sales pace of all homes -- single-family homes, townhomes, condominiums and co-ops -- is at the lowest since NAR began tracking the figure in 1999. Sales of single-family homes, which account for a bulk of the transactions, are at the lowest level since May 1995.

Inventory has also continued to climb, rising 2.5% to 3.98 million existing homes for sale. That represents a 12.5-month supply at the current sales pace, the highest since October 1982 when it stood at 13.8 months. A six-month of supply is considered normal.

5 most affordable cities to buy a house

The combination of weak demand and glut of homes has put downward pressure on prices.

And as the recession proved, the housing market and the broader economy are closely intertwined. When housing prices collapse, so does the overall wealth and confidence of Americans.

"Falling housing prices strain the overall confidence in the economy and discourage Americans from spending," Dales said. "They also mean that banks lose money on their investments and curtail lending, meaning there is less money out there to invest and boost the economy.

The NAR report showed that the median price of homes sold in July was $182,600, up 0.7% from a year ago. Just under a third of homes sold during the month were distressed properties.

Though prices have yet to fall back, Dales expects they will decline about 5% from current levels over the next six months.

On the bright side, Dales said while a drop prices will put a dent in the economy recovery, it won't lead to another recession.

"The bulk of the downward adjustment in housing prices has been achieved over the last several years, so we're not headed for a complete disaster," said Dales. "We're going to see a double-dip in housing prices, but not a double-dip in the overall economy."

Sales by property and region: Sales of single-family homes sank 27.1% in July compared to the prior month, while condominium and co-op sales tanked 28.1%.

The Midwest fared the worst last month, with sales dropping 35% to an annual pace of 800,000 units in July. that's 33.3% lower than a year earlier.

Resales in the Northwest dropped 29.5% from the previous month to an annual pace of 620,000 units.

They fell by 25% in the West and 22.6% in the South.

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The latest real estate rip-off?

2010-08-23T21:35:00.000-07:00

NEW YORK (CNNMoney.com) -- Would you be willing to pay the original builder a fee when you resell your home? That's an obligation some developers are trying to slap on homeowners in their communities.

Many condo and townhouse dwellers are already familiar with the "flip tax," more formally known as a resale fee. Typically calculated as a percentage of the sale price, it's a fee due to the condo association or community when an owner sells. These charges fund common-area maintenance or provide a boost to reserve funds, which benefits the association's homeowners.

But in some new developments, homebuilders are including in contracts a 1% fee to be paid to them every time the house is sold -- for 99 years. And the money doesn't go for improvements or upkeep: It's just money in the builders' pockets.

That has the real estate industry and consumer protection groups up in arms.

"It's of no benefit to consumers," said Kathleen Day, of the Center for Responsible Lending. "It's another innovative way to price gouge. Every extra dollar they suck out of people's wallets takes away from other spending. It's not good for the economy."

The issue has attracted the attention of Washington, where Rep. Brad Sherman, D-Calif., is leading a charge against the fees. "Consumers are not in a position to deal with another level of complexity, one that pits plain vanilla homes against ones that come with fees," he said.

5 most affordable cities to buy a home

Freehold Capital Partners, the New York-based financial company that is developing the program, claims it has already signed up thousands of developers nationwide, representing hundreds of billions of dollars of development.

The company's plan is to monetize that future income -- essentially allowing developers to get paid now rather than later. To do that, Freehold would bundle together the estimated income from the future fees and sell that package to investors. It claims this new "asset" would be worth about 5% of the original home prices.

One company that is working with Freehold is Thieman Enterprises, a developer based in Ohio. "I think it's a fantastic program," said owner Ted Thieman. "I can get my development going again."

He said he needs the upfront cash to fund the building of infrastructure -- roads, sewers and other essentials. Working with Freehold to sell the fee package on to investors would potentially give him enough cash to get projects going and land construction loans more easily.

Ohio, though, has banned the practice. Thieman thinks that removing this potential funding source will discourage development. He said he will relocate one of his development plans to West Virginia, where he has acquired land. He's disappointed for his home state.

"We can bring billions into Ohio and jump-start the economy," he said.

A Utah builder, Development Associates, initiated a similar program several years ago in order to recover some of the up-front costs of its developments. But after complaints from homebuyers, who said they were unaware of the fees, the company withdrew them.

Some developers regularly include "transfer fees" in their sales contracts, including Lennar, one of the nation's largest builders. But the fees Lennar collects go to local housing-assistance organizations and charities, not back into its own pocket. That has helped keep the practice off lawmakers' radar.

Still, most real estate experts are against these fees. A coalition of real estate industry organizations and community groups recently sent a letter to Treasury Secretary Tim Geithner recommending that he not allow Freehold's securitization plan to go forward.

In the letter, the coalition quoted Rep. Sherman, who called the fees "a new predatory scheme."

In the past month, the Federal Housing Finance Agency proposed restricting Fannie Mae and Freddie Mac from buying or backing any mortgages that include home resale fees.

Freehold, of course, defends the program. Chief Operating Officer William White argues that the 1% resale fee will actually benefit consumers by lowering home prices: "No one will pay the same for a home with a [resale fee] as they would for the same home without the fee," he said.

That would make buying a home easier -- but reselling one at a profit harder. Meanwhile, builders could offset their lower initial selling prices by either collecting on the back-end income stream from future sales, or selling those future earnings off to investors.

No securitization package has yet been created, according to White. But he's optimistic: "We have been pleased with Wall Street's response to date."

Whether the program will ever gets off the ground is an open question: 18 states have already banned or restricted the practice, and if the FHFA proposal goes through, it could derail it entirely.

Sherman does not think the idea is dead. Not yet.

"We've wounded the beast, but we haven't put a stake through its heart," he said

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Some 3-month mortgage modification trials dragging on

2010-08-23T00:20:00.000-07:00

By Stephanie Armour, USA TODAY

Bank of America (BAC) and JPMorgan Chase (JPM) service the mortgages for half the homeowners who have been awaiting decisions on permanent mortgage modifications for three months or more, according to a government report.

Through July, the government's mortgage-aid program had a backlog of 118,000 borrowers whose trial plans have run at least six months — three months past the typical duration for determining if they qualified for a permanent modification, the government said Friday. Bank of America and JPMorgan Chase, the two biggest banks, account for about 59,000 of the cases.

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Under the government's Home Affordable Modification Program (HAMP), borrowers are supposed to get permanent modifications if they keep up their adjusted payments for a three-month trial.

But the program has been dogged by controversy.

Servicers blame delays on borrowers who don't provide necessary documentation and on the government's frequently changing requirements. Borrowers complain that the servicers repeatedly lose the paperwork they send and don't return calls.

Friday's report said the number of borrowers who have been in trials for six months or more had dropped from 166,000 in June and that servicers indicate decisions on those remaining should be made in August.

Bank of America expects to make decisions on most of them in August and September, says spokesman Rick Simon.

BofA's total number of customers in trial modifications dropped from 121,000 in June to 85,000 in July as decisions were made on who qualified for permanent modifications, he says.

JPMorgan Chase declined to comment on whether it will resolve all of the older trial modifications this month.

"We're reducing the number of aged trials each month, and we'll continue do that," says spokesman Tom Kelly.

Homeowners are not subject to foreclosure sales while decisions are being made on their eligibility for permanent modifications. But some economists question whether the administrative delays are only postponing the inevitable.

"The delays in trial modifications aren't a good thing," says Dean Baker of the Center for Economic and Policy Research.

The government's report also shows nearly half the 1.3 million homeowners enrolled in the program since March 2009 had been dropped by the end of July.

About 630,000 homeowners had seen their trial modifications canceled, while about 435,000, or roughly a third of those who enrolled, had moved into permanent modifications.

Those in permanent modifications are guaranteed lower payments for five years and then fixed terms at current rates for the life of the loan.

The median monthly payment decrease for those in permanent modifications was $513, or 36%.

About 256,000 homeowners were in active trials in July, the report showed.

"It looks like HAMP is running out of steam. Only a quarter of a million are in active trials," says economist Mark Zandi of Moody's Analytics. "The plan as originally constructed is not up to the task. There are some new programs, such as principal reduction, that may give it new life."

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Commercial real estate hit with 41% price drop, soaring delinquencies

2010-08-21T22:18:00.000-07:00

In one year, commercial real estate has seen both a drop in prices and a doubling up in delinquency rates, research analytics firms tracking the market find. Price values are down to nearly half the levels seen at the peak of the market, while the risk of default is rising and the commercial real estate foreclosure book continues to add pages.

National property prices on commercial real estate dropped 9.1% in June from last year, according to Moody's commercial property price index. The rate declined 0.9% over the first half of 2010, and while prices remain 4.2% above the current recession low of October, they are down 41.4% from the peak in October 2007.

China shares fall on local finance scrutiny

2010-08-21T22:15:00.000-07:00

Chinese shares retreated Friday on an unexpected rise in U.S. unemployment benefit claims and Beijing's announcement of closer scrutiny of local investment agencies but ended the week up 1.4 percent. The benchmark Shanghai Composite Index fell 45.67 points, or 1.7 percent, to close at 2,642.31. The Shenzhen Composite Index for China's smaller second exchange lost 2.1 percent to 1,117.33.

Investors were spooked by Beijing's announcement Wednesday that it would examine the finances of heavily indebted local government agencies set up to invest in real estate and infrastructure. "It showed that the scrutiny is getting into a substantial stage, and that might hurt earnings of real estate developers or banks," said Li Jun, an analyst for Central Securities in Shanghai.

Investors also were gloomy about the U.S. jobs market after the Labor Department said initial claims for unemployment benefits rose unexpectedly last week, a possible sign of a slowing global recovery, Li said. Resource shares lost ground on lower crude prices. China Petroleum and Chemical Corp., known as Sinopec, dropped by 2.5 percent to 8.51 yuan, while PetroChina Ltd., Asia's biggest oil and gas producer, shed 1.5 percent to 10.42 yuan. China Shenhua Energy Ltd., the country's biggest coal producer, fell 3.4 percent to 24.82 yuan. Jiangxi Copper Ltd., China's largest metal producer, lost 4.3 percent to 28.85 yuan.

Poly Real Estate Group, the country's second-biggest developer, 2.9 percent to 12.5 yuan, while rival China Vanke Ltd. shed 1 percent to 8.65 yuan. Banks fell on news reports that they might need to set aside reserves for possible loan defaults by local investment agencies. Industrial & Commercial Bank of China Ltd., China's biggest commercial lender, slipped 0.5 percent to 4.16 yuan. In currency markets, the yuan strengthened to 6.7883 to the U.S. dollar from Thursday's close of 6.7904.

BOK Financial sues family involved in developing real estate in Tulsa area

2010-08-21T22:11:00.000-07:00

Bank of Oklahoma is also seeking to foreclose on two pieces of property owned by the Remys and their business organizations — 21.86 undeveloped acres on 111th Street between Memorial Drive and Sheridan Road and the site of Compadres Mexican Grill at 2200 W New Orleans St. in Broken Arrow — that are tied to three loans issued by the bank.

The lawsuit by Tulsa-based BOK Financial Corp., parent of the bank, also requests that its claims take priority over all the other organizations that loaned the Remys money on the properties. In total, the properties are tied to seven loans issued to the Remys since 2007 by five entities, including BOK, totaling $5.69 million, according to Tulsa County land records.

The lawsuit, filed Thursday in Tulsa County District Court, names L. Leon, Sherry, Tim, Lisa, T.J., Julie and Robin Remy, the Sherry E. Remy Revocable Trust, the L. Leon Remy Revocable Trust, Remy Enterprises, Home Ventures Inc. and Landrun Design and Development Co. Inc. as defendants. Others with claims on the properties — Shelby D. and Pamela Oakley, ONB Bank and Trust Co., Precision Door Inc., SpiritBank, Tulsa County Treasurer Dennis Semler and the Tulsa County Board of Commissioners — are also named as defendants.

Bank of Oklahoma representative Jesse Boudiette said the company is declining to comment on the lawsuit. Representatives of the Remys were unavailable. In the lawsuit, BOK claims it loaned the Remys $1.07 million last August and secured it with two existing BOK mortgages on the Tulsa and Broken Arrow properties. Those previous loans were renewed in September and October for $938,000 and $572,000, respectively.

BOK claims the Remys ceased payment on the first and second loans in December and with the inclusion of interest now owe $1.14 million and $1 million on them. The Remys allegedly ceased payment on the third loan last month and now owe $580,000. In addition to the money it says it is owed, BOK seeks to foreclose on the two properties tied to its loans.

Custom home in historic Lorne Park

2010-08-20T22:08:00.000-07:00

This home sits on one of Mississauga’s most prestigious addresses, says listing agent Michael Lee. It’s a four-bedroom, two-storey custom-built home, only about six years old, full of high quality finishes and decorated by a professional designer. “Given the current conditions of the real estate market, this is, without a doubt, the best chance to own a grandiose house like this,” says Lee.

“Lorne Park is a very historic and well-known area located in southwest Mississauga, along the shore of Lake Ontario. The area is steeped in nature, with ancient trees, national parks, and a beautiful river. It is also an area steeped in heritage and where every house is different and unique. In recent years, many old houses have been rebuilt to take advantage of the beautiful land surrounding them, and the generous lot sizes. This home is one of these custom houses newly revamped for the modern age,” adds Lee.

The area is surrounded by parks and the home is close to Lorne Park Community Centre and Credit Valley Golf and Country Club. The double entry doors with glass inserts recess back from the rest of the brick facade. Throughout the main floor are high ceilings. The large foyer features a soaring two-storey ceiling with an arched window above the entrance, a stone floor with a centre design and a large crystal chandelier. The living room boasts a hardwood floor, Palladium window, cathedral ceiling and gas fireplace with marble surround. There is a formal dining room with a coffered ceiling, pillars flanking the entrance, pot lights, wall lighting, a large crystal chandelier and hardwood.

The kitchen is modern and features a centre island/breakfast bar, stainless steel appliances, ceramic tile floor, granite counters, wine rack, ceramic tile backsplash, pot lights and plenty of cupboard space. There is a breakfast area with a double glass door walkout to the back patio and pool area. The open-concept family room is adjacent to the kitchen and has another gas fireplace with a marble surround, a coffered ceiling, pot lights and hardwood. Also on the main floor is an office with a hardwood and French doors, and a powder room. The laundry room on this floor is large and also serves as a mud room. It has a slate floor and a walkout to the two-car garage.

Upstairs the spacious master bedroom features hardwood, walk-in closet and a double-door glass walkout to a Juliette balcony. It also has a five-piece ensuite with a corner tub, double sinks with marble countertop, pot lights and separate shower stall. A second bedroom has its own three-piece bathroom, double closet and hardwood. The fourth and fifth bedrooms each boast a three-piece ensuite and double closets and hardwood. There is a huge games room on this level that overlooks the foyer and has a hardwood floor, large window, pot lights and vaulted ceiling. There are skylights throughout the house. The basement is unfinished but has a separate entrance. The private backyard features a stone patio, an in-ground pool, shed and a fenced yard with mature trees and landscaping.

Private sales losing their appeal

2010-08-20T22:06:00.000-07:00

Private selling may well be losing some of its lustre, as increasing numbers of people say they would turn to an agent to drive a sale in the current market. The results feature in the latest Nielsen Real Estate Market Report for realestate.co.nz, which show just 11 per cent of people said they would definitely list their property privately, down from 17 per cent at the height of the market three years ago. At the same time just under half (47 per cent) of those surveyed said they would definitely use a real estate agent to sell their home, up from 35 per cent three years ago.

Realestate.co.nz's Alistair Helm said the "euphoria" associated with listing a property on Trade Me and selling it the next day had gone. "Today, three years later nearly half of the respondents are recognising that agents can be trusted in such uncertain times, with another third still unsure, but probably going to rely on an agent," Helm said.

The pendulum was continuing to swing back towards using agents as the complexity, litigation and current market, left people wondering why they would want to take on the role of "self employed agent" next to their day job, he said. Property investment also took a big hit in the survey, with just one in seven people saying they intended buying residential property as a future investment. This is down from one in four when the survey was conducted last year. The survey also showed a 42 per cent fall in the intention of landlords to sell.

Arizona real estate: Phoenix-area mortgage delinquencies drop

2010-08-20T22:02:00.000-07:00

Valley homeowners are doing a better job keeping up with their mortgage payments, according to a new reading of credit-bureau data. For the second straight quarter, Phoenix-area mortgage delinquencies dipped in the April to June period, reported TransUnion. As of midyear, 12.3 percent of Valley homeowners were 60 days or more late on payments, down from 12.71 percent in the first quarter and a cyclical peak late last year of 13.16 percent.

Delinquencies also have eased nationally, with 6.67 percent of borrowers two months or more past due in the second quarter, down from 6.77 percent in the first quarter and 6.89 percent late last year. "We do think we're seeing a trend of improvement," said FJ Guarrera, a vice president in TransUnion's financial-services group.

Some of the most cash-strapped borrowers already have been forced out of their homes, but those who remain are doing a better job saving money, spending less and managing payments, he said. The TransUnion mortgage study, based on a sampling of thousands of credit reports, coincides with a couple of other promising local statistics. For example, Valley bankruptcy filings have declined for the past four months. Also, Arizona's jobless rate has stabilized in the 9.5 percent to 9.6 percent range this year after climbing sharply over the past 2 1/2 years.Home values and employment are two of the biggest factors influencing mortgage delinquencies, Guarrera said. Still, the Valley's mortgage-delinquency ratio ranks as the 22nd highest of more than 360 metro areas examined.

Recovery Continues in the Mid-Atlantic Real Estate Market

2010-08-19T22:04:00.000-07:00

RealEstate Business Intelligence (RBI), an MRIS Company, just released its July 2010 statistics that shows stabilization in the Mid-Atlantic real estate market over the past three months. Data from the report suggests that the gradual recovery shown in the last two months has continued through July.

The average days on market remained unchanged at 76 days during June and July, a decrease of more than 24.5 percent compared to the same period in 2009. The total number of units sold increased 7.87 percent year-to-date (YTD) over last year, but has decreased 18 percent when comparing July 2010 to July 2009. While fewer homes sold in July 2010 than last July, the July 2010 sales took an average of 22 less days to sell than last year. (1)

"We are pleased to see that no ground has been lost since last month," said Jonathan Hill, President of RBI. "Gains of 3 and 4.4 percent in median and average sales prices respectively, a decreasing listing inventory, and a 3.3 percent decline in new listings all indicate continued market stability and strength on a greater scale."

Real estate closing costs on the rise

2010-08-19T22:00:00.000-07:00

If you got a "good faith estimate" for a loan last year and again more recently, the closing-cost figure probably went way up. Closing costs -- minus taxes -- are about 35 percent higher on lenders' good faith estimates in Maryland and nationwide this year, Bankrate.com says in its annual mortgage fee survey.

Some of that jump is actual, honest-to-goodness increase. But a big part of it, Bankrate says, is more honesty. Or at least more careful calculation. "Before this year, lenders were not penalized for underestimating fees in the good faith estimate. Now they are penalized for lowballing fees," the company says, referring to a federal rule that went into effect Jan. 1.

Maryland's closing costs, not including taxes, average $3,402 for a $200,000 loan, according to Bankrate's survey of lenders. That ranked the state 15th lowest. The national average was $3,741, which ranged from a high of $5,623 in New York to a low of $3,007 in Arkansas.

Bankrate picked one area in each state for its cost survey -- not including California, where it studied costs in two metro areas. In Maryland, it looked at the 21236 ZIP code, Nottingham in Baltimore County. About $1,500 of the total here is for origination and the rest -- about $1,900 -- is for title and third-party fees. (Here's the 2009 study, for comparison.)

Bankrate compared good faith estimates for a $200,000 loan on a $240,000 purchase. It didn't include taxes and escrow fees, which vary a lot from one area to another and can be substantial.Take transfer taxes, for instance. If you're buying in Baltimore, they'll add $3,600 to your tab for a $240,000 home.

Realestate website in Spring push

2010-08-19T21:56:00.000-07:00

Realestate.com.au is launching a campaign touting the property website as the number one choice for consumers preparing to buy and sell during the Spring season.The campaign will incorporate a mix of traditional media developed through M&C Saatchi Melbourne and social media. General manager marketing communications and insights for realestate.com.au, Joanne Whyte, said the creative for the campaign was developed after identifying a need to give consumers a fresh approach to their property search experience.

“With spring typically being the busiest time of the year for property listings, there is often a flurry of activity among house hunters and sellers. We hope to inspire and inform consumers to make the right choices – especially when making one of the most important financial decisions in their lives.” To kick-off the campaign, realestate.com.au will release an exclusive mini magazine for Sydney households. It will also be available in a national online format.

As part of the campaign, realestate.com.au has partnered with one of the nation’s largest charity partners, the Salvation Army, encouraging Australians to de-clutter their homes and donate unwanted goods to those less fortunate. M&C Saatchi will work closely alongside digital agency Amnesia Razorfish and media agency Starcom on a project basis to activate the campaign.

Area soon will be seeing a flurry of condo auctions

2010-08-18T22:46:00.000-07:00

Several Houston-area condo projects will hit the block in auction sales over the next few weeks. Developers of The Edge condominiums in Midtown will offer 27 units on Aug. 29. to shed remaining inventory. Kennedy Wilson will conduct the auction on behalf of Midtown Edge. Starting bids range from $90,000 to $140,000 on homes previously priced from $219,000 to $364,500. The high bidder may need to meet a certain minimum price set by the seller to win the bid. Bidders must register by 5 p.m. on Aug. 26.

The six-story project at 300 St. Joseph Parkway contains 93 units with one-and two-bedroom floor plans. Sizes range from 972 square feet to more than 1,500 square feet. "The builder is obviously looking to accelerate the absorption and pass the savings on to the new homeowners," said Marty Clouser, senior managing director of Kennedy Wilson Auction Group.

Ten condominium units at The Edge are listed on Houston Association of Realtors' website, with asking prices from $185,000 to $359,500. Some of the prices have been substantially lowered, with one discounted 40 percent. Nine of those are among the 27 remaining units to be auctioned. Developers are turning to auctions to signal that now may be the time to buy, said Laurie Null, an owner of the Personette Group, a firm that specializes in marketing condos, townhomes and lofts.

"The developers are using that as a tactic to basically let buyers know that prices are as low as they're going to go," she said. "The people who are out shopping are value conscious, and they're kind of testing the bottom of the market." While opening bids may start at half of the initial asking price, some have been selling for about 80 percent of the original price, Null said.

For residents who purchased in a new building when prices were higher, it could be frustrating, Null said. On the bright side, she said, once a building sells out, it can be easier for an owner to resell. In a different kind of auction, big-ticket investors will have an opportunity to bid on The Gramercy Park Condominiums, a luxury midrise project at 2600 and 2601 Gramercy Street near the Texas Medical Center. Pending court approval, the project will be put up for sale at a bankruptcy auction in Reno on Aug. 26. The sale will include 220 units with the starting bid set at $22.5 million, an amount that exceeds an existing offer.

The 224-unit project was built in 2006 and was foreclosed in late 2008. Houston-based Situs has been marketing the property since mid-2009, but the asset's complex ownership structure, several bankruptcies and litigation surrounding the property have hindered a sale to date.

"We're getting a lot of interest from significant owners of multifamily properties around the country and other investors that are really seeking all opportunities in the distressed real estate arena," Randall Tuller of Situs said. Currently, about half of the units are being operated as multifamily rentals on the south side of Gramercy, Tuller said. Units are the north side of the street are about 95 percent complete and have never been occupied. Other previously announced auctions are coming up.

Chartwell Group will auction 35 units at The Endeavour high-rise on Clear Lake on Saturday. Bidding will start at $225,000 for units originally priced from $450,000 to $3.5 million. The auction will be held at the InterContinental Hotel near the Galleria.

In Galveston, the Diamond Beach resort's remaining 40 units will be auctioned by Kennedy Wilson on Sunday at another builder closeout. Starting bids will range from $140,000 to $375,000 on units previously priced from $360,000 to more than $1 million. The auction will be held at The Omni Houston Hotel at Riverway. Kennedy Wilson recently held an auction of Palisade Palms in Galveston, where 27 units were sold for an average of $490,000 per unit.

Bidders can get details on The Edge sale to be held at the Hilton Americas Hotel at www.midtownedgeauction.com or by visiting the information office in Unit 106. Potential buyers can preview homes and learn about the process including a live practice auction at an on-site seminar Saturday at 1 p.m.

Interest in residential property investment falls sharply

2010-08-18T22:42:00.000-07:00

The number of people interested in investing in residential property has fallen sharply, an annual property survey shows. The Nielsen Real Estate Market Report, an online survey sponsored by Realestate.co.nz, found one in seven of those surveyed intended buying residential property as a future investment. That is down from one in four last year.

Specialist property lawyer and Simpson Grierson partner Greg Tower said the survey confirmed there had been a measurable decline in the number of transactions involving traditional property investors.

The survey found a 42% decline in intention to sell among holders of investment property. At the same time, the number of property investors intending to seek out private sellers rose 24%.

Nielsen Co online division research director Tony Boyte said recent events seemed to have muddied the waters as to how much prices were moving and that appeared to have caused people to put on hold plans to invest in residential property.

InnVest Real Estate Investment Trust Announces Monthly Distribution

2010-08-17T22:10:00.000-07:00

InnVest Real Estate Investment Trust ("InnVest") /quotes/comstock/11t!e:inn.un (CA:INN.UN 6.38, +0.09, +1.43%) announced today that a distribution of $0.0417 per unit has been declared to the Unitholders of record as at the close of business August 31, 2010, payable on September 15, 2010.

TRUST PROFILE

InnVest REIT holds Canada's largest hotel portfolio together with an interest in Choice Hotels Canada Inc. the largest franchisor of hotels in Canada. The hotel portfolio currently comprises 144 hotel properties, with approximately 19,000 guest rooms, operated under internationally recognized franchise brands such as Comfort Inn(R), Holiday Inn(R), Quality Suites/Inn(R), Radisson(R), Delta(R), Travelodge(R), Hilton(R) Staybridge Suites(R), Fairmont Hotels(R), Sheraton Suites(R) and Best Western(R). InnVest's trust units and outstanding convertible debentures trade on the Toronto Stock Exchange under the symbols INN.UN, INN.DB.A, INN.DB.B, INN.DB.C, INN.DB.D, and INN.DB.E respectively.

2010-08-17T22:02:00.000-07:00

Edmonton’s commercial real estate market recorded 161 transactions totalling $754 million in the first half of the year, according to the mid-year national investment report released Monday by CB Richard Ellis.

That’s up from 120 deals worth $547 million in the same period last year. CBRE said sales in both Edmonton and Calgary rebounded in the first six months of the year from “sluggish activity” in 2009. In Calgary during the first two quarters of 2010, there were 188 sales worth more than $680 million, up from 149 sales totalling $471 million in the first six months of 2009.

Both Alberta cities are below the highs recorded in the first half of 2007 when Edmonton racked up 167 sales worth $870 million and Calgary commercial real estate worth $2.9 billion changed hands through 269 transactions.

Real estate industry braces for impact of Defense cuts

2010-08-16T22:40:00.000-07:00

It isn't clear yet how dramatically Pentagon spending cuts announced last week will affect the local real estate market, but they are already making some in the industry uncomfortable. Consider the Haskell Co. A Jacksonville, Fla.-based specialist in designing and constructing buildings for corporate and institutional clients, Haskell was selected from a pool of 13 companies in August 2009 to build an $11.6 million headquarters facility for the U.S. Joint Forces Command in Norfolk. Construction is underway and is expected to be complete early next year, as scheduled.

There's just one problem: Defense Secretary Robert M. Gates said last week he will shutter the Joint Forces Command, meaning Haskell is building a headquarters building for a unit that will no longer exist. The command currently employs about 2,800 military and civilian personnel as well as 3,300 contractors, most of them in southeastern Virginia.

For Haskell, which was awarded the contract by the Navy's Facilities Engineering Command unit, it's business as usual for executives unless they hear differently. "Until the Navy tells me otherwise, we're going to build the building," said Mark Higby, a Haskell vice president. Higby said he heard about the planned cuts only from news reports and not from Navy officials. The company previously built a 22,000-square-foot facility for the Marine Corps in Norfolk.

Higby said he hoped the cuts wouldn't necessarily result in a loss of real estate. "What we're doing is an office building, so it may be that there are needs for office buildings up there anyhow," he said. Office tenants, and the tax revenue they produce, pay for many of Fairfax County's public services, and the defense industry makes up a large part of that. In the second half of 2009, during which time 4.9 million square feet was leased in the county, many of the largest transactions came from units doing defense work, including a 230,000-square-foot lease by KPMG in Tysons Corner, a 130,000-square-foot lease by General Dynamics' information technology business in the Dulles corridor and a 113,000-square-foot lease by the Missile Defense Agency at Baileys Crossroads.

"It's a concern for us," Gerald L. Gordon, president and chief executive of the Fairfax County Economic Development Authority, said of the cuts. Still, he said, the county enjoys a greater presence of companies in other industries -- such as Volkswagen of America and Hilton Worldwide -- than it has in the past, positioning it better to withstand potential losses.

"If this was 30 years ago in Fairfax County and that was happening, we would really be concerned," he said. Robert Peck, public buildings commissioner at the General Services Administration, said through a spokeswoman that it is too early to tell how the cuts would affect the federal real estate portfolio. Some independent projections have found that three years of 10 percent cuts in contractor spending, the numbers Gates announced, could cut Northern Virginia's economic growth in half over that period.

But if one looks historically at how a retooling of the military affects local real estate, there is plenty of room for optimism, according to John Sikaitis, research manager in the D.C. office of Jones Lang LaSalle. Gates has not called for a decrease in overall defense spending as he prepares the military for conflicts beyond those in Iraq and Afghanistan, and Sikaitis suggested that a shifting of resources could bring more contract work locally to firms specializing in research and development and other long-term needs. That could lead to continued local expansion. "As we do kind of escalate down in the conflicts abroad, you're going to see this renewed investment in Northern Virginia," he said.

Jayesh Gandhi positive on residential real estate space

2010-08-16T21:52:00.000-07:00

Morgan Stanley Invst Mgmt is positive on residential real estate space. Gandhi told CNBC-TV18, "From a macro perspective we like real estate quite a bit infact I would say I am fairly bullish on the medium-term to long-term view on residential real estate. We think the pent-up demand for quality housing in the mid-income, high-income category over the next three-five years or ten years is very strong and also if you see the credit availability in the sector particularly for mortgages is very good."

He further added, "Every institution in this country would want to lend in the housing sector. So that is a macro view, which is very bullish unfortunately when you look at the bottoms of microview and look at companies, there is fair amount of disappointment because companies still not generating cash flows they talk about land bank and pretty much use their capital and their resources to acquire land banks with very little execution on the ground. So to complete that we look for companies that are executing, selling and on a monthly or on a quarterly basis are doing volumes, keeping the price point or the prices flat or constant and looking at volume growth."

"In that space we have found only two names, which we have added in the portfolio. Sobha is the one and Phoenix Mills is the other one, which we have bought probably 12-18 months ago. I think the macro story in real estate is very strong and will continue to remain strong but the micro is yet to catch up and I think that is where the disappointment is but we are still watching many of these companies very closely."

Empire State Manager Fuels Energy Debate

2010-08-15T22:38:00.000-07:00

Panel discussions on building energy efficiency tend to be low-key affairs. But that was before Anthony Malkin, who runs the Empire State Building, entered the fray. At a panel discussion put on by a real-estate think tank earlier this summer, Mr. Malkin called it "outrageous" and "a crime" that a popular benchmark for the environmental sustainability of existing buildings didn't do enough to push landlords to improve energy efficiency.

He added, to some applause: "I'd go further and say it's bull—." Mr. Malkin, a New York City real-estate scion well known for skirmishes over whom he honors with the Empire State Building's lights, is becoming a vocal player in a different world: the green-building movement. Mr. Malkin insists green-building advocates and governments aren't doing enough to reward landlords who spend money to make their real estate more energy-efficient. Office building landlords should be required to disclose energy consumption in the same way that auto makers must publicize how many miles their cars get to the gallon. He's being partly driven by his concern that the U.S. uses too much energy. In his panel remarks, he warned that if the rest of the world follows this country's energy consumption model, "We're all going to die and we'll go to war along the way."

Mr. Malkin has a clear financial incentive to make people—particularly prospective tenants—more conscious about energy efficiency. As part of a long-planned $550 million renovation of the Empire State Building in recent years, Mr. Malkin spent about $100 million to improve the efficiency of the Empire State Building's windows, systems and other infrastructure.

Now he's hoping the investment in efficiency—which he says will save $4.4 million a year in energy but cost only $13.2 million more than the renovation would have otherwise cost—will, along with the attendant publicity, help him lease space in the 79-year-old skyscraper. Success is by no means assured. In one of the worst office markets in decades, about 25% of the Empire State Building's 2.8 million square feet is up for lease. "This is about money and this is about energy," Mr. Malkin says. "The better-credit tenants are focused on this issue of energy efficiency from a bottom-line, profits-and-loss perspective."

Mr. Malkin's vocal stance comes as building owners are increasingly using environmental features to attract tenants. Features like solar panels, low- flush toilets, rainwater recycling, state-of-the-art windows are being touted as ways to save energy—and money—as well as to do the right thing for the planet. Brokers say the push is catching on with tenants.

Mr. Malkin is wading into a debate about a high-profile ranking program devised by the U.S. Green Building Council that gives buildings grades—like platinum, gold and silver—for how environmentally friendly they are. Mr. Malkin says the program—known as LEED for Leadership in Energy and Environmental Design—in its version for existing buildings gives too much weight to non-energy features, like bike racks, and not enough to building elements that cut down on energy usage, like smart lighting systems.

The Empire State Building would qualify for a gold LEED certificate, Mr. Malkin says, adding that he hasn't decided whether he wants to pursue it. He says the skyscraper would qualify for a higher platinum grade if he had spent $4.5 million to put plants on its set-backs. "Green building practices have become divorced from energy efficiency," Mr. Malkin said at the Urban Land Institute panel.

The council responds that much of the program's value comes in getting as many landlords as possible interested in improving the environment. "Making it a discussion simply about energy I think is shortsighted," said Al Skodowski, an executive at commercial-property-services firm Transwestern and a Green Building Council board member. "The focus has to be, how do we make the program so that everybody can participate in it?" Mr. Malkin's positions also put him at odds with many of his colleagues in the real-estate business. He advocates more government oversight of building energy use. Other landlords are wary of more government involvement.

"We certainly would prefer voluntary standards," said Dennis Oklak, chief executive of Duke Realty Corp., a publicly traded real estate company, and co-chairman of the sustainability policy committee of industry group Real Estate Roundtable. "It's going to be really very, very difficult to put a one-size-fits-all proposition out there to make it mandatory to achieve certain levels in buildings."

Mr. Malkin, president of Malkin Holdings LLC, is the son of Peter Malkin and the grandson of Lawrence Wien who worked closely with the late real-estate mogul Harry Helmsley. Much of the Malkin family's real-estate empire consists of stakes in the pre-World War II office buildings they purchased during that era. After Mr. Helmsley's death in 1997, his widow, Leona Helmsley, for years fought with Peter Malkin and others over control of the Empire State Building. Mrs. Helmsley died in 2007 and the skyscraper is now managed by Anthony Malkin. Mr. Malkin says he now plans to implement a similar energy-efficiency program in the remaining 7.25 million square feet of office space he manages in the New York area.

CREA lowers housing forecast again

2010-08-15T21:59:00.000-07:00

The number of resale homes sold in Canada is forecast to hit 459,600 in 2010, a 1.2 per cent decline from 2009.In its latest housing forecast Friday, the Canadian Real Estate Association said weaker sales activity in the key spring homebuying season in Canada's four most populous provinces prompted the downgrade.

"The jump in national sales activity earlier this year likely borrowed from the future," CREA president George Pahud said. And expected interest rate increases to come will do nothing to stoke the real estate fire that burned brightly during the tail end of the recession. Sales are projected to drop even further, by 7.3 per cent, to 426,100 units in 2011.

The national average home price is forecast to rise 3.5 per cent in 2010 to $331,600, with increases in all provinces. The national average price is then forecast to ease by 0.9 per cent to $328,600 in 2011. The agency already lowered its 2010 sales forecast at the start of June. At that time, the agency was expecting 490,600 units to be sold this year.

Morgan Stanley Raises Property in China Stocks Portfolio, Expects Rebound

2010-08-14T22:33:00.000-07:00

Morgan Stanley is adding to the weighting of property stocks in its China model portfolio, saying that a further volume recovery in the nation’s housing market is “imminent.” The brokerage added China Overseas Land & Investment Ltd. to the model and increased its position in China Resources Land Ltd., according to a report by analysts led by Jerry Lou. A recent increase in residential rents point to pent-up purchase demand, while a greater supply volume in the second half may drive “deeper” price cuts, the analysts wrote.

“From what we observe in the few developers that have been bold enough to cut prices early, their sales volumes have been very impressive,” the analysts wrote. “Further volume recovery in the Chinese property market is imminent and we should increase our ‘overweight’ position.” The 17 developers traded on the MSCI China Real Estate Index have dropped an average 12 percent this year after the government introduced curbs ranging from a ban on third-home mortgages to higher down-payments for second homes. The MSCI China Index has retreated 4.5 percent in 2010.

Home prices in 70 major Chinese cities rose 10.3 percent in July, the slowest pace in six months, the statistics bureau’s newspaper, China Information News, reported on Aug. 10. The value of sales fell 19.3 percent from a year earlier, while transactions by floor area shrank 29 percent from the previous month. ‘Overly Bearish’ Investors are “overly bearish” on China’s property stocks, according to Frank Shi, a Hong Kong-based investment director at Prudential Asset Management. The negative sentiment on Chinese real estate means there may be investment opportunities in the industry, he said.

“The risk for a property bubble in China is much, much lower,” Shi told reporters in Singapore on Aug. 13. Morgan Stanley added a 2 percentage point weighting in China Overseas Land to its China model portfolio. The Hong Kong- listed developer controlled by China’s construction ministry said on Aug. 10 property sales rose 21 percent in July from a year earlier. The brokerage also increased its weighting of China Resources Land by 2 percentage points to 4 percent, according to the report. It trimmed the weighting in China Petroleum & Chemical Corp. and removed China Pharmaceutical Group Ltd.

“Our model portfolio now has even higher beta, with our most heavily weighted industries being properties, banks, steel and construction materials,” said the analysts, referring to a measure of risk. “We are bullish on the outlook for Chinese equities.”

The worst bet in real estate today: Construction loans

2010-08-14T22:06:00.000-07:00

The biggest bank killer around isn't some exotic derivative investment concocted by Wall Street's financial alchemists. It's the plain old construction loan, Main Street banks' bread and butter for decades.

Deutsche Bank has called them "without doubt, the riskiest commercial real estate loan product." The Congressional Oversight Panel, a financial watchdog, has warned that construction loans have deteriorated faster and inflicted bigger losses on banks than any other real estate loans.

And the worst may be yet to come. Banks, adopting a desperation strategy known as "extend and pretend" or "delay and pray," have been reluctant to admit defeat, repossess half-completed housing developments and strip malls — and dump them on a depressed market at a big loss. "There probably are many loans out there that are in worse shape than reflected on lenders' books," says Chicago construction lawyer Joshua Glazov.

Real Estate Bubble not expected in Thailand, but caution urged for developers

2010-08-13T21:55:00.000-07:00

Although a real estate bubble is not seen as a problem in Thailand, it would take at least 11 months for condominium developers and up to three years for single houses to clear their current stocks, according to the Agency for Real Estate Affairs (AREA).The severity of the global financial crisis also saw the government introduce additional sweeteners for buyers — a 300,000-baht income tax deduction for any buyers of a new home that was transferred within 2009. At the same time, mortgage interest that could be deducted from taxable earnings was increased to 100,000 baht from 50,000 and has now become a permanent tax benefit.|

Property market in Thailand remained in a strong position thanks to good sales in the first quarter which were not only driven by the incentives. The stock market is risky to invest in, while buying gold for investment has limitations. The recovering economy is re-building consumer confidence while homebuyers’ purchasing power is also strong, he said. Development of the mass transit network in Bangkok was another boost for the market. Politics has had little impact on condominium sales but it has dampened investment and the industrial, commercial and tourism sectors.|

The mid to high-end segment boomed this year in Thailand as demand was wide and remained strong. The high-end will recover in the third or fourth quarter. But supply in this segment is very limited due to scarcity of land for new developments. Around 80% of the new launch in this segment was taken up. New supply in the high-end segment, now quoted at 150,000 to 200,000 baht a square metre, will be provided by developers with a strong financial status, experienced teams and products that match demand.

Pennsylvania Real Estate selling power centers

2010-08-13T21:47:00.000-07:00

Pennsylvania Real Estate Investment Trust said Monday it has agreed to sell stakes in several power centers to Cedar Shopping Centers Inc. for $168 million. Under terms of the deal, the real estate investment trust agreed to sell its full stake in five power centers for $134 million. The power centers amount to 936,000 square feet of space. Three are located in Pennsylvania, and the other two are in Virginia and New Jersey.

Pennsylvania Real Estate said it will use part of the proceeds to pay down about $40 million in mortgage debt secured by three of the properties and about $57 million to release two properties securing the company's 2010 credit line. The REIT also agreed to sell half of its stake in two additional power centers in Pennsylvania to Cedar for about $34 million. Those power centers have a combined space of 821,000 square feet.

The transactions are expected to close by the end of this year or early next year, depending on the property. Pennsylvania Real Estate shares added 7 cents to $11.30 in afternoon trading.

Boardwalk REIT's second-quarter earnings up 57 per cent following asset sales

2010-08-12T21:33:00.000-07:00

Boardwalk Real Estate Investment Trust (TSX:BEI.UN) says its second-quarter net income increased 57 per cent even as funds from operations slipped. The Calgary-based property manager said Thursday it earned $23.5 million compared to $15.0 million a year earlier after selling non-core assets "at very attractive prices."

Funds from operations, a measure of operating performance for public real estate companies, were $34.6 million or 66 cents per unit, compared to $36.8 million or 70 cents per unit in the second quarter of 2009. The company said economic fundamentals in Western Canada remain strong, with growth in gross domestic product, wages, employment and migration. Meanwhile, it said fundamentals in Ontario and Quebec "continue on a positive trend" although both provinces saw employment levels drop in July.

Boardwalk revised its 2010 outlook slightly lower to reflect the loss of income from properties that were sold at the end of last year and this year. It now expects funds from operations per unit of $2.40 to $2.55, down five cents from its previous guidance. The REIT also announced Thursday that it will issue a special distribution of 50 cents per unit, payable on Sept. 15.

Boardwalk owns and operates more than 230 apartment buildings in British Columbia, Alberta, Saskatchewan, Ontario and Quebec. Units in the REIT, which reported its results after markets closed, added 24 cents to $41.24 Thursday on the Toronto Stock Exchange.

Indiabulls Real Estate Swings To Profit In Q1 On Consolidated Basis

2010-08-12T21:30:00.000-07:00

Indiabulls Real Estate announced that the company reported a net profit after minority interest of Rs.20.55 crore as against a net loss of Rs.24.33 crore in the year ago quarter. Total income increased to Rs. 192.23 crore from Rs.49.24 crore in the corresponding quarter last year.

On a standalone basis, the company's net profit after extraordinary items for the first quarter ended June 30, 2010 declined to Rs.2.98 crore from Rs.5.96 crore in the same quarter last year. Total income decreased to Rs.6.80 crore from Rs.34.79 crore in the year ago quarter.

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There’s no place like home

2010-08-11T21:57:00.000-07:00

French institutional investors have long been big players in their domestic real estate market. Despite there being a gradual move towards international diversification, the global downturn has set minds firmly on the core French market at the moment. It is a recent trend that has been played throughout Europe, but in France institutional investors have one of the most attractive and liquid markets in Europe. “Their market has behaved relatively well compared to many other European markets,” says Mahdi Mokrane, head of research and strategy at AEW Europe.

“However, they are keenly aware that international diversification had helped their stocks and bonds portfolios, had probably helped their private equity portfolios, and could potentially help their real estate exposure.” If the French market is an attractive proposition to institutional investors, equally, Mokrane says, greater international investment is being prevented by a desire for liquidity and control of investments – two things less associated with international real estate funds – and an aversion to high levels of leverage – an aspect now synonymous with a breed of funds during the recent past.

Another issue is Solvency II. The French institutional universe is dominated by insurance companies given the small proportion of pension funds compared with other European countries. New regulations which come into effect in 2012, but continue to be subject to alteration, could have significant repercussions on the investment strategies of insurance companies and thus their appetite for real estate.

Insurance companies will need to hold different levels of capital reserves for all of their investments depending on the risks, with more reserve capital for equities and less for bonds. Direct real estate is somewhere in between and requires enough capital to cover a 25% investment loss. Listed real estate investments are counted as equities, while investments using leverage will incur greater capital costs.

Pascal Aujoux, head of transactions at AXA Real Estate Investment Managers France, says the regulations look to be “more or less neutral” on real estate, although the full ramifications of the ever-changing rules is uncertain. “If you say that, in the first instance, bonds are going to be privileged due to the Solvency II ratios, then real estate might make sense because it is negatively correlated to bonds and it therefore reduces your capital requirements if you add real estate to a bond portfolio,” he adds. “Bonds might represent 80% of the total assets, so it does make sense to diversify and reduce the risk by adding real estate to your portfolio if you are an insurance company.”

Insurance companies with high allocations to real estate could possibly find they need to reduce their weighting as a result of Solvency II. That said, many are below target allocations and are likely, therefore, to be net-buyers or real estate, despite the incoming regulations. Generali France, the French subsidiary of Italian group Generali, has €1.5-2bn to spend on French real estate over the next three years, according to Philippe Depoux, head of Generali France Immobilier. Depoux says both he and the Generali group are positive on the French market from a global perspective.

Depoux agrees that nothing certain can be concluded about Solvency II, but he does believe it will have fairly positive implications for core, non-leveraged real estate investments. However, the regulation is likely to dampen interest from insurance companies for listed real estate, which will be treated like equities, and even international funds that use leverage will be less. Generali France’s real estate portfolio has a 10% weighting to French SIICs, the country’s equivalent of REITs. As well as a desire to have more control over the underlying real estate, Generali France will not be making more SIIC investments.

In terms of the direct French market, which is where French institutions are most comfortable, most have a strong appetite for assets in segments of the market that are perceived as most liquid, namely, core offices in central Paris. However, widespread interest in this sub-sector and a lack of product coming onto the market has led yields to compress significantly.

“They have the conviction that mid-sized offices in the central Paris market is a relatively liquid sub-section of their real estate exposure, and more liquid than other segments, such as large shopping centres, large office towers, logistics platforms or hotels,” Mokrane says. This desire for liquid assets is based on the experience of institutions which struggled during the downturn to sell other types of assets when looking to free up equity. “It is fresh in the memory and these institutions want to have a part of their investment in what is perceived as the most liquid segments. That is what they are looking for, but there is actually a lack of product in those markets, which has actually sharpened yields in those specific markets,” Mokrane says.

Offices account for just over 50% of Generali France’s real estate portfolio, and Depoux says the portfolio is well diversified across the sectors. For future investments, Generali France is looking at prime offices with secure, long leases, and particularly those with sustainable credentials (or the capacity to make the more sustainable). “This means focusing on the Paris area and more mature markets,” Depoux says.

Perhaps more surprisingly, Generali France is also looking for “risky developments”, because the organisation has a strong conviction that the office market will face a scarcity of modern green space in 2013, given the halt in new construction in recent months and years. “It’s probably time to look at those types of assets when the market is not very hungry to take them and developers are a little bit desperate to sell.”

French institutional investors sold out of residential investments over the past 15 years, but the stability of the asset class during the downturn has prompted some to think again about this policy. “Investors that held substantial proportions of residential within their portfolios have seen how resilient that asset class is. So there is increased interest for residential,” Mokrane says. However, he also says it can be a challenge to access the residential sector, so interest has not necessarily translated into investment.

“We are considering re-entering this market,” Depoux says, but this is predicated on capital values coming down. “Prices are too high at the moment but we are considering reinvesting in that market. We are considering this in terms of demographics and structural evolution in France. We will face scarcity of residential for rent in the next decade.”

Foreclosure filings slow in July

2010-08-11T21:45:00.000-07:00

TAMPA - Lenders continue to file fewer new foreclosure suits against Tampa Bay-area homeowners, but they aren't letting up on taking houses back. Overall activity is also down. There were 6,031 filings — default notices, scheduled auctions and bank repossessions — in a four-county Tampa metropolitian area in July, according to Calif.-based RealtyTrac. That's down 11 percent from the same month a year ago and down 10 percent from June. Meanwhile, a separate report Wednesday showed a spike in area home sales — something that's needed to work off the large inventory of distressed homes.

The bright spot in the foreclosure report is that initial filings decreased. Lenders filed 2,973 foreclosure lawsuits in July, down from 4,765 during the same month a year ago. July's number also is down slightly from the 3,005 lawsuits filed in June. But even though the initial foreclosure actions are slowing, more area homeowners had to give up their houses in July. There were 945 bank repossessions, compared with 779 a year ago.

The monthly comparison varies. In June, lenders took back 1,117 homes, up from 886 in May and 787 in April. The Tampa area, which includes Hillsborough, Pinellas, Pasco and Hernando counties, mirrored Florida, where overall foreclosure activity decreased. There were 51,557 filings in July in the Sunshine State. That's down 9 percent from a year ago. There was practically no change from the previous month. Homeowners across the nation continue to lose homes despite government efforts to halt foreclosures. Part of the reason, RealtyTrac points out, is that some temporary foreclosure modifications have failed.

"Declines in default notices, which were down on a year-over-year basis for the sixth straight month in July, have been offset by near-record levels of bank repossessions, which increased on a year-over-year basis for the eighth straight month," said James J. Saccacio, chief executive officer of RealtyTrac. Properties in foreclosure continue to appear to be luring buyers into the real estate market. Existing home sales in the Tampa metropolitan area rose 29 percent during the second quarter, and prices were stagnant, according to a report released Wednesday by the Florida Realtors association. There were 9,109 sales, up from 7,057 during the same period last year. Even more striking is the median sales price in the Tampa-St. Petersburg-Clearwater area. It barely moved.

The median sales price in the second quarter was $135,700, nearly the same as a year ago, when the median was $135,200. The median is the price at which half sold for more and half sold for less. The quarterly sales price is a bit lower than June's, though. The median sales price then was $138,400. Sales also jumped in the state as a whole. Florida's sales rose 21 percent in second quarter compared with the same period last year.

Buyout firms target M. Stanley real estate fund-FT

2010-08-10T21:34:00.000-07:00

U.S. private equity firms have approached Morgan Stanley (MS.N) about buying a stake in its struggling real estate fund management business, the Financial Times said on Tuesday, citing people familiar with the matter.

KKR and Co (KKR.N) and TPG, which both lack substantial property operations, have expressed tentative interest in the Morgan Stanley Real Estate Fund, while Colony Capital, which has been adding property exposure, has also approached the bank, the newspaper said. Potential suitors are proposing low valuations because MSREF's recent $8.8 billion fund is unlikely to return fees or profits, the newspaper said. There could also be resistance from existing MSREF investors who might simply want to get their money back, the newspaper said. The parties either declined to comment or did not immediately return calls seeking comment.

China's industrial growth slows, inflation jumps

2010-08-10T21:28:00.000-07:00

China's industrial growth slowed further in July as Beijing clamped down on a credit boom, fueling expectations it will ease monetary policy to shore up its economic expansion. Inflation spiked to its highest level this year as summer flooding wrecked crops but analysts said the increase will likely prove temporary. The government data Wednesday added to signs China's boom is cooling and fed expectations Beijing needs to reverse course after imposing lending curbs this year to prevent a bubble in stock and real estate prices. "This tells us economic growth is continuing to slow," said economist Zhu Jianfang of Citic Securities in Beijing. "If they don't make changes, the economy will see a danger of further sliding."

Economic growth slowed from a blistering 11.9 percent in the first three months of the year to 10.3 percent in the second quarter as Beijing rolled back its stimulus after China rebounded quickly from the global slump. Chinese leaders say they want to steer growth to a more sustainable level, but the slowdown was sharper than many analysts expected. A further fall in Chinese growth could have global repercussions if it hurts demand for U.S. and European factory equipment, industrial components from Asian economies and iron ore and other raw materials from Australia, Brazil and elsewhere.

July growth in factory output slowed for a fifth month to 13.4 percent over a year earlier, its lowest level this year. Retail sales and investment in factories and other fixed assets also slowed. The consumer price index, or CPI, rose 3.3 percent over a year earlier, its fastest rate this year as summer flooding wrecked crops and disrupted shipping. The jump was driven by a 6.8 percent surge in food costs. But analysts expect inflation to fade quickly. "July's CPI reading is likely to mark the high point for the year," said Tom Orlik, an analyst for Stone & McCarthy Research Associates, in a report. "With price pressures set to fade, the government will be free to focus on supporting growth."

A statistics bureau spokesman said the declines in economic indicators for July were "not big" and could be positive for official efforts to improve China's economic efficiency. He gave no sign the government plans to change policy. "The fall in economic indexes is mainly a result of the government's active macro-controls," said the spokesman, Sheng Laiyun, at a news conference. "Appropriate declines in economic growth are helpful to prevent overheating, and also are good for accelerating economic structural changes." Beijing wants to reduce reliance on exports and investment to drive growth by boosting domestic consumer spending and developing technology and service industries. But millions of jobs still depend on export-driven manufacturing and construction.

Private sector economists have lowered forecasts of China's growth this year due to the credit curbs but say it easily should meet the government's target of 8 percent. The slowdown could complicate moves by Beijing to allow China's currency, the yuan, to rise in value. China said in June it would allow a more flexible exchange rate after holding the yuan steady against the dollar since late 2008. But as demand at home weakens, officials will face pressure from exporters and their allies in government to avoid any steps that might make Chinese goods more expensive abroad.

Growth in spending on factories, real estate and other fixed assets in the first seven months of the year fell to 24.9 percent, down from 25.5 percent for the first half, the National Bureau of Statistics reported. Retail sales rose 17.9 percent, down from 18.2 percent growth for the first half of the year. Demand for steel, cement and other building materials has faded as Beijing winds down its 4 trillion yuan ($586 billion) stimulus, which pumped money into the economy through higher spending on building public works. An array of other indicators from manufacturing orders to auto sales also show growth steadily declining.

July housing prices held steady from June levels in a sign the government's lending curbs were working. But that easing has come at the cost of a slump in sales and construction. The curbs have sharply cut bank lending. The central bank reported Wednesday that total lending by China's banks fell to 532.8 billion yuan ($78.7 billion), down nearly 12 percent from June's 603.4 billion.

Banks last year lent a record 9.6 billion yuan ($1.4 trillion), or an average of 800 billion yuan per month, under orders to support Beijing's stimulus. Also in July, growth in exports fell to 38.1 percent from June's 43.9 percent. Australian miners and other companies that have enjoyed a windfall from Chinese demand have warned that their sales growth will slow. Manufacturing also is under pressure from a government mandate to improve energy efficiency. The government this week ordered 2,087 steel and cement mills and other factories that are deemed too wasteful to close by the end of September.

Far From the Poor, Real Estate Woes Nip at Lake Forest

2010-08-09T21:26:00.000-07:00

With apologies to the fictional town of Lake Wobegon, the real-life Chicago suburb of Lake Forest is a place where it sometimes seems that all the women drive S.U.V.’s, all the men are C.E.O.’s and all the children have above-average S.A.T.’s.The per-capita income for Lake Forest residents is $77,000. There is a road named Rockefeller. And if you are fortunate enough to live within this leafy redoubt of old wealth and new, the rest of the world and its troubles can seem very far removed. But the national tidal wave of foreclosures that has swamped large parts of the metropolitan area’s housing market, mainly in low-income neighborhoods, is now starting to lap at the unspoiled shores of this community on Lake Michigan.

“In the first half of 2010, the largest increases in new foreclosures occurred in the region’s middle- and higher-income communities,” according to a report this month by the Woodstock Institute, which tracks housing trends in the region. DuPage County was hardest hit in the Chicago metropolitan area, with a 74.8 percent increase in new filings in the first six months of 2010; Lake County, home to Lake Forest, was second, with a 64.9 percent jump. But in Lake Forest, the increase in the number of foreclosures was a jarring 78.9 percent.

An examination of real estate transactions in Lake Forest through the end of July found that of the 127 houses sold this year, 18 of them, or 14 percent, were either in foreclosure or were transferred on so-called short sales — that is, when the selling price falls short of the amount owed on the mortgage. What is happening in Lake Forest is part of a larger trend, said Geoff Smith, the vice president of Woodstock Institute. “The numbers are tapering off in the low- to moderate-income communities because these foreclosures were mainly driven by subprime loans, which for the most part have been cycled through the system,” Mr. Smith said.

Now the crisis is scything through the region’s middle- and high-income communities, where most of the foreclosures are tied to prime loans made in the last two to three years, he said. If the subprime debacle was triggered mainly by lenders offering gimmicky mortgages to poor people who could not afford them, this new phase of the crisis is the result of more mundane economic factors: a lingering recession, high unemployment and a weak housing market.

The majority of the foreclosures still involve single-family homes, but condominiums are beginning to make up a larger share of the filings. In north and northwest Cook County, condominiums now represent 30 percent and 44 percent, respectively, of the new foreclosures — a jump of 76 percent over last year, according to the Woodstock Institute’s data. In one northwest Cook County community — unidentified in the report — there were 98 foreclosure filings from a single development.

The numbers in Lake Forest are comparatively small — 34 foreclosures this year compared with 11,103 in Chicago, according to the institute’s tally — but the impact has been especially nerve-racking. Two years ago, the words “foreclosure” and “short sale” did not exist in the local real estate lexicon, said Dick Christoph Jr., a Realtor with Coldwell Banker in Lake Forest. Available records indicate that the average asking price for foreclosed houses in Lake Forest in the first six months of this year was $860,000. There were more foreclosed properties valued at more than $1 million than there were under $500,000.

How did this come to pass in Lake Forest, where people are not only wealthy, but also like to think of themselves as wise in the ways of money? The culprits, real estate experts say, are interest-only and no-down-payment loans, which were popular with high earners who saw the housing bubble as a way to enhance their wealth. From the mid-1990s until the bubble burst two years ago, it was virtually impossible to lose money in real estate in Lake Forest. “You’d ask someone how they were doing, and they’d say, ‘Oh, I made $100,000, $200,000 this year, but my house went up $200,000,’ ” Mr. Christoph said. “So they started spending like they were earning $400,000 a year. In reality, they were living above their means.”

Demand For Real Estate In Moscow Falling Prices

2010-08-08T20:49:00.000-07:00

Commercial real estate prices in Moscow for the first half of 2010 fell by 35 percent, while demand rose to 40 percent for the pre-crisis indicators. Average cost per square meter of commercial real estate in the first half of 2010 exceeded 4 thousand dollars.The biggest demand is still used for offices. In comparison with the pre-crisis period prices for commercial property fell by 35 percent amid rising demand. Interest in commercial real estate in the first half of 2010 grew by 40 percent.

Significantly reduced entered office space. The average rental rate of office real estate in Moscow in the first half of 2010 amounted to $ 660 per year per square meter facility at Class A rental rates for Class B + is kept at 420 U.S. dollars in central Moscow. Outside of Moscow – $ 350. Cost per square meter warehouse of class A and B in Moscow amounted to an average $ 110 and $ 95 respectively. About $ 48 to the cost falls on utilities. Buy an object of class A and B can be for 0,9-1,5 thousand dollars per square meter.

Property values weaken, sales dip

2010-08-08T20:46:00.000-07:00

Property values continued to weaken last month, with the number of sales sinking to near their lows in 2008 at the height of the recession. Values were 4.1% above those of July 2009, compared with a 5.2% decline in the previous month, according to QV. Property values have declined 0.8% since March. "We are now seeing more of a "do-nothing" sentiment," QV.co.nz Research Director Jonno Ingerson.

"An increasing number of people appear to be shelving plans to buy houses and are instead focussing on reducing debt. Of those potential buyers that remain active, some are finding it difficult to secure lending from banks, while others feel they are in the driving seat, have time to do their research, and only make sharp offers." The QV data follows Real Estate Institute figures showing the volume of residential property sales fell to the second-lowest volume in a June month in the past decade.

Weighing on demand, banks have tightened lending criteria, high unemployment has prodded more households to reduce debt rather than spend and net migration is tapering off. Added to that, the government ended some tax breaks for property in the May Budget and the central bank has resumed raising interest rates. "The lack of buyer demand, combined with an increasing supply of unsold houses is causing values to gradually drop," Ingerson said. "Some of the home owners and potential buyers we have spoken to remain concerned about potential interest rate rises and job security."

He said market activity is likely to remain slow over the coming months and there is a risk the traditional spring uptick in sales turns out to be a fizzer. The average sales price increased to $407,191 from $404,715, reflecting relatively fewer lower value properties selling over recent months. Auckland area values rose 6.9% from a year earlier, down from the 7.9% gain in the previous month. Wellington area values are 3.2% above last year, down from the 5.4% in the previous month. Christchurch values were 4.6% above last year, little changed from the previous month. Dunedin values rose 3.7%, down from the 5.8% reported last month.

Missouri's 'King of Bling' admits defrauding real estate investors

2010-08-07T05:56:00.000-07:00

A southwest Missouri man has pleaded guilty to defrauding investors of as much as $1 million in a real estate scheme. The U.S. attorney's office said Friday that 50-year-old John Michael Sheehan — who called himself the "King of Bling" on a website — faces up to 30 years in prison for the scheme. The Springfield man pleaded guilty earlier this week to conspiracy charges dating from 2005 to 2006.

Prosecutors said Sheehan solicited investments to buy, rehab and sell single-family homes, promising to split the proceeds with investors. His website promised quick returns of up to 18 percent within a year on a minimum investment of $15,000.

Sheehan admitted keeping the money for himself instead of buying properties. A sentencing date will be set later.

Calgary ripe for real estate fraud

2010-08-07T05:45:00.000-07:00

Economics and lax banking regulations have made Calgary a hotbed for mortgage fraud, says a forensic accountant and former Mountie. Affluence, economic booms and a loophole unique to Alberta where mortgages can be assumed without bank qualification have made the city an attractive place for crooks to spin real estate scams, said Greg Draper. "Calgary and Alberta has certainly been prime grounds for mortgage fraud," said Draper of the firm Meyers Norris Penny which does forensic audits for law enforcement.

His comments come on the heels of the bust of an alleged $12 million mortgage scam in the city involving 22 properties and a similar $70 million scheme focusing largely on Calgary uncovered earlier this year that stung the Bank of Montreal. A hot economy, said Draper, makes it easier for mortgage fraudsters to get their feet in the door."The housing price boom created a lot of opportunities...prices could be inflated quite rapidly without drawing a lot of attention," he said.

And the relative affluence of Calgary naturally attracts organized criminals while ensuring a larger pool of more eager buyers to be victimized, said Draper.City police won't say Calgary's singled out by mortgage crooks, saying it's a problem that spans the country. But Sgt. Michelle Hanley of the commercial crime unit said they're seeing an increasing number of mortgage fraud reports, adding the phenomenon threatens to "inundate" investigators. Draper said his own business has recently been handling more scam cases that usually involve commercial properties.

Alberta's relaxed mortgage regulations, he said, expedites commerce but also make the system more vulnerable to abuse. If banks were to voluntarily tighten it up, customers "will just go somewhere else," he added. He said so-called "straw man" buyers who agree to assume fraudulent mortgages in their name with a promise of $5,000 from scammers are committing fraud and should know the deal is too good to be true.

"By being stuck with the mortgage, they may be tipped into bankruptcy for a little bit of easy money," said Draper. In the latest alleged scheme, police have charged Calgarians Ali El-Sayed, 31 and Christos Fotopoulis, 28 with numerous counts of fraud over $5.000.

They're still seeking Calgarian Russell Kilba, 34.

Bharat mill fetches record '1,505 cr

2010-08-06T21:24:00.000-07:00

Indiabulls Real Estate picked up its fourth National Textiles Corporation (NTC) property in Mumbai after it won the bid for the over-eight-acre Bharat Textiles Mills land near Worli Naka for Rs 1,505 crore on Friday. At twice the reserve price (Rs 750 crore) fixed by NTC, the deal works out to about Rs 188 crore per acre.

Interestingly, just a day earlier, a source in Indiabulls had told TOI that the company would not bid "aggressively" for this property because of its poor frontage. On Friday, it seemed to have changed its mind and went the whole hog for this prime land—sources believe this was in anticipation of getting a parking FSI of 4 from the state government. Incidentally, this is the highest price that a defunct mill property in Mumbai has fetched to date.

The company, which is into real estate, power and financial services, last week won another NTC mill—the 2.3-acre Poddar Mills at Worli Naka—for Rs 474 crore as against its minimum price of Rs 250 crore.

Indiabulls has been creating ripples in Mumbai's property market since itentered the real estate business five years ago when it bought NTC's Jupiter Mills for Rs 276 crore and Elphinstone Mills for Rs 441 crore.

The e-auction for Bharat Mills, which commenced on Wednesday, saw a neck-to-neck bidding between Indiabulls and the Lodha Group during the final hours. Lodha stopped bidding at Rs 1,503 crore while the third highest bidder, Peninsula Land (Piramal), did not stretch itself beyond Rs 1,409 crore.

"In the last one hour, the bids shot up by over Rs 150 crore, from Rs 1,350 crore to Rs 1,505 crore," NTC chairman K Ramachandran Pillai told this newspaper on Friday night.

"We are glad to have emerged as the successful bidder in the very closely contested auction of Bharat Mills. All large real estate players were participating till the last bid. Both Bharat and Poddar Mills will enable us to continue on our journey of delivering the best and classiest products in Mumbai," said Vipul Bansal, CEO, Indiabulls Real Estate.

Sources said Indiabulls quoted this high price because it was "confident" that the state government would allow it to utilise parking FSI on this land. According to the government policy, if a developer sets up a multi-storey public parking tower on a portion of its land and hands it over free of cost to the BMC, it is entitled to get FSI as high as 4 in the free sale component.

"Indiabulls will be able to get a development potential of 20 lakh sq ft if parking FSI is approved. The question is, does this locality need public parking at a time when the government has already sanctioned over 25,000 parking slots in the Worli-Parel-Sewri belt?" the sources observed.

According to real estate experts, with parking FSI Indiabulls may have paid just around Rs 13,000 a sq ft for the land, taking into account the future construction cost. "Most likely, it will be a residential project which will sell for over Rs 25,000 a sq ft," they said.

Knight Frank (India) chairman Pranay Vakil said, "The project won't be viable without parking FSI. But, with it, a prospective buyer can still hope to get a flat here for around Rs 25,000 a sq ft. This means a 3 BHK will cost Rs 5 crore. This is still expensive, but that appears to be the market today."

This was the seventh NTC mill to be sold in Mumbai, fetching the corporation Rs 4,000 crore. In fact, its eight property, Finlay Mills, has been mired in legal wrangles after NTC rejected Lodha's of Rs 710 crore last year. Lodha went to court, which directed NTC to reconsider the developer's offer.

REIT vs direct real estate investment

2010-08-06T21:20:00.000-07:00

INVESTING in real estate can be tricky.

For a start, those who intend to make a quick buck by “flipping” property within a few months will find that it is risky, especially in a property market less buoyant than in Hong Kong or Singapore.

The alternative is hard work, that is, managing residential properties (and absorbing all the hidden costs that come along with it) as long term investments, receiving rent and selling them off for a capital gain or profit.

Another factor that may deter investors from real estate is the difficulty in raising enough capital to purchase a particular property.

So, should you consider putting your money in a real estate investment trust (REIT) instead?

Granted, a REIT does not comprise residential property, but if it is profit you are interested in, it may be an option.

REITs originated in the United States in the 1960s, but it wasn’t until 2005 that Axis REIT became the first property trust to be listed on Bursa Malaysia.

In Malaysia, there are now 14 REITs to choose from on the Main Market, offering investors a choice to own stakes in commercial, industrial, plantation and office real estate.

Aside from being more liquid than investing in real estate, one of the reasons why REITs are more appealing than investing in actual real estate is because of its high yield.

Gross dividend yield in the FTSE Bursa Malaysia index is about 2.9%, while the average yield for a REIT in Malaysia is about 8%.

REITs yield higher returns because commercial real estate generates a huge amount of cash flow from rentals.

If one invests in real estate though, it may be hard to charge the most preferred rental rate, even if the property had been purchased for a hefty price, simply due to market forces.

As for REIT prices on the stock market, they generally tend to be “low risk” because their prices are sustained by the yield factor, hence the volatility element is reduced.

Even so, REITs are not immune to economic difficulties.

REITs such as AmFirst, Hektar, UOA and Axis hit their lowest point in the middle of the financial crisis in 2008 but have since recovered to their pre-crisis prices, if not better.

Part of their recovery, says an analyst, is due to good management, good investor relations and a proven track record when it comes to acquisitions.

Still, one critic of REITs says it is probably more worthwhile to purchase stocks of established companies if they want to play safe.

Advocates of the property trust point to the fact that REITs are a different investment class altogether, choosing to view them as an investment that bridges the gap between a fixed deposit and the stock market.

One drawback of REITs is their inability to benefit from capital gain, unlike real estate.

But with REITs, returns may be secured with less risk which make them a nice way to take advantage of the big booms in the real estate market.

Investors can do without taking on the risk of mortgage payments, unscrupulous tenants and rising tax rates.

However, less risk obviously comes with less reward.

Good capital appreciation is still the main factor driving demand for landed residential properties.

Since 2008, there has been an annual compounded growth rate of 10% for capital appreciation in residential hotspots such as Petaling Jaya, Taman Tun Dr. Ismail and Mont Kiara.

A home can go up in value ten-fold given the right market conditions, which would give one a hefty sum of money right into his or her pocket - this won’t happen with any REIT.

Ultimately, for someone who wants to have more control of their assets and is willing to improve their value, investing in residential real estate can be a good choice.

For someone looking for passive real estate investment, with the added benefits of portfolio diversification and liquidity, a REIT is a good option to consider.

Think of them as allowing investors to be exposed to the real estate market without having to fork out as much capital.

Alternatively, REITs could be purchased as part of a balanced portfolio, until one has enough capital to enter the real estate market.