Keystone Pacific To Manage
Colinas' 923 Homes, Condos
LAGUNA NIGUEL, Calif. – Keystone Pacific Property Management Inc. has grabbed oversight for the 923-unit Colinas de Capistrano, a mix of single-family and condominium homes straddling six neighborhoods in Orange County.
Keystone Pacific's district manager Sheri Conner will manage the master-planned development. Colinas de Capistrano's neighborhoods are Sparrow Hill, Villa de Cerise, Vista del Cerro, Bridgeport Terrace, Rolling Hills and Villa Mira. The 26-year-old management company of Irvine, Calif., has a portfolio of more than 48,000 residential units
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Toolkit Details Renters'
Foreclosure Rights
WASHINGTON, D.C. – The National Low Income Housing Coalition and National Housing Law Project have launched an online toolkit for renters facing foreclosure-related evictions.
The toolkit includes copies of recently passed legislations establishing new rights to tenants of foreclosed properties. It also includes sample letters that tenants can use to send to landlords, judges and public housing agencies as well as a webinar for an in-depth explanation of the new law.
"Under the law, these blameless victims of the foreclosure crisis are now protected,” said Sheila Crowley, NLIHC president. "The toolkit provides tenants and their advocates with the information necessary to protect families from being evicted unlawfully."
The revisions are part of SB 896, adopted in mid-May. The gist of the law allows renters to stay in the home for 90 days after the foreclosure or through the term of their lease unless the property has been sold to an intended occupier. Housing voucher holders also got additional protection with the new law.
According to NLIHC, 40 percent of foreclosures involve renters. Prior to the legislation, renters in most states got little or no notice to vacate.
"This law constitutes a key piece of the neighborhood stabilization puzzle. It will help protect the market value of foreclosed properties while it mitigates the trauma of forced relocation on families," said Dave Rammler, NHLP attorney and director of government relations. "These materials will help ensure that tenants, courts and the real estate community are aware of the law and that tenants' rights are upheld."
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Housing Expert Rolling Out
Advisory, Investment Group
ATLANTA – With socially responsible investing as its mantra, APD Solutions LLC is being rolled out by Asset Property Disposition Inc. and Waterfall Asset Management. At the helm is the former Freddie Mac national director of expanding markets.
Vaughn D. Irons will act as APDS' CEO. Headquartered in Atlanta, APDS is rolling out offices in Chicago, Dallas, Jacksonville, Fla., and San Francisco. The New York-based Waterfall's billion-dollar investment portfolio and its acumen in affordable housing finance are underwriting capital market support to provide resources to penetrate key markets and seed the client base. APDS' role is to provide neighborhood planning and strategic guidance for collaboration on offerings.
APDS is being rolled out to address needs of local governments and housing community activists in their efforts to jump-start and revitalize communities hardest hit by massive foreclosures and the depressed economy. "The current housing industry crisis has created the residual negative effect of eroding support for housing programs in targeted markets and under-served households," Irons said. "There needs to be an ongoing commitment to providing working families a safe path to responsible housing choices."
Among the new group's goals is providing strategic counsel and real estate expertise to governments and groups with allocations from the federally funded Neighborhood Stabilization Program. APDS' turn-key platform targets institutional investors, banks and community stakeholders too.
Jesse Wiles, president of the Jacksonville-based APD, likened the present scenario to the savings and loan crisis of the 1990s. "We are seeing similar actions taken by the federal government now, as we did by the FDIC and RTC during that time," Wiles said, adding the new team is "uniquely positioned to navigate those communities and investors with the greatest need to stabilize communities and grow."
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Zetabid Returns to Phoenix
To Auction 155 Properties
PHOENIX – A portfolio of 155 bank-owned single-family homes, condos, townhouses and multifamily properties will be auctioned June 27 at the Sheraton Phoenix Downtown Hotel.
The auction house is Zetabid, which has hung sale tags of $25,000 to $500,000 on the mix. The auction includes 58 homes in Phoenix, six in Buckeye, five in Casa Grande, four in Chandler, five in Gilbert, 20 in Glendale, nine in Mesa, four in Queen Creek, eight in Scottsdale and five in Tolleson. The package does include properties in other cities in the metro.
"The Phoenix market for residential properties is very active because prices appear to have bottomed," said Bob Bellack, Zetabid's chairman. "Many investors and owner-occupants realize that the great bargains in the marketplace will not last indefinitely."
The auction is Zetabid's second in Phoenix. Since the February auction, Bellack said "the local market for bank-owned properties has strengthened significantly." He said the highest demand is homes under $100,000, with many deals closing at or over the asking price. "The emerging recovery in the lower end of the residential market is a trend Zetabid is seeing consistently across the country," he said.
Property tours are being held Saturday and again June 20 from noon to 4 p.m. Appointments also are available.
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$500 Million Fund Circling
Distressed Residential
RANCHO SANTA MARGARITA, Calif. – Redwood Real Estate Partners LLC, armed with a acquisition goal of $500 million, has launched Occasio Distress Residential Fund to seize opportunities coast to coast and border to border in the U.S.
To lead the initiative, Redwood Real Estate Partners has hired 20-year veteran John Duden. Occasio ResCap's business model is to manage the acquisition process and handle the risk analysis, pricing, underwriting and liquidation of distressed assets.
"We are in the midst of a very challenging market and recognize that liquidity is scarce," said Carl Chang, founder and CEO of the privately owned investment firm based in Rancho Santa Margarita, Calif. "We launched Occasio ResCap to provide an effective exit strategy to sellers of residential real estate assets looking for liquidity while offering the certainty, integrity and experience for which Redwood is known."
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Fifield Brings In Finish-Up
Crew for Vegas High Rise
LAS VEGAS – In a new strategic alliance, the Fifield Cos. and Valley Residential Services are teaming on the sales and marketing of the Allure Las Vegas, a 41-story condominium high rise.
"As a leading closer in the luxury high-rise market, we're seeing continued interest in Allure,” said Alan Schachtman, Fifield's senior vice president and principal. "VRS will continue to build upon our momentum as well as introduce some exciting new initiatives to our potential buyers."
The Allure, located at 200 W. Sahara Ave., has 427 units with 15 floor plans in a mix of studios, one-, two- and three-bedroom condos. Units range from 671 sf to 4,400 sf, with pricing starting below $200,000. The amenity package includes a signature concierge service.
Chicago-based Fifield Cos. developed the Allure in a joint venture with CB Richard Ellis Strategic Partners, ASF Realty and ADF Inc. Fifield has 10 more projects, valued at $1.4 billion, under development in the U.S.
Serving as CEO for Valley Residential Services, Marty Burger also is the president and CEO of Artisan Real Estate Ventures, which he founded in 2006 after a 20-year career in real estate. John Tippins a well-known investment sale broker in the Las Vegas market, has closed more than $1 billion in real estate transactions throughout his career and $400 million of acquisitions since 2005. The marketing team includes Sarah Prinsloo as sales director and Brittany Morse as leasing director.
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Realtor.com Signs Deal with The Realty Alliance
LOS ANGELES – The Realty Alliance (TRA) has reached a major marketing agreement with Realtor.com, the largest homes for sale web site.
“The Realty Alliance members using Realtor.com now have an easier, more integrated method to successfully increase the number of potential clients viewing their listings and offer greater opportunities to engage with local sales associates,” said Craig Cheatham, president and chief executive officer of The Realty Alliance.
Based on the new agreement, TRA and Realtor.com have developed a marketing program offering participating brokers a Showcase Listing Enhancements package that displays a photo gallery of up to 25 photos, detailed neighborhood information, open house alerts, full-motion videos and virtual tours where available, multiple lead forms, and reports on consumer traffic related to each listing. This new program also offers two pilot initiatives promoting home warranty and mortgage services along-side participating brokers’ listings on Realtor.com that will help consumers learn about the full-range of services and one-stop real estate shopping benefits offered by TRA members.
“The Realty Alliance was originally created to give top brokers an opportunity to pool their resources and knowledge in a manner that creates a competitive advantage not available to other organizations,” said Dan Elsea, broker/owner of Real Estate One and long-standing member of The Realty Alliance. “As an early adopter of the Realtor.com broker marketing program, we have always known of the advantages it gives our agents and felt the time was right to share this tremendous resource in these challenging times.”
With 87 percent of all real estate consumers now searching online], TRA members and their more than 100,000 agents will now be better positioned to effectively reach the largest and most engaged online audience of potential clients on Realtor.com. In March 2009, visitors on Realtor.com spent a total of 184 million minutes on the site searching for real estate and related information.
“Realtor.com is very excited to extend our long and successful relationship with The Realty Alliance companies,” said Matthew Moore, head of Realtor.com sales and marketing. “With so many consumers searching online for homes and real estate information, we’re confident this newest program will greatly assist consumers connect with a local sales associate from a member firm of The Realty Alliance in a more substantial and meaningful way than before.”
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C-21 Getting Super Listings
On Realtor.com
Century 21 Real Estate LLC, the franchisor of the world’s largest residential real estate sales organization, and REALTOR.com, the #1 homes-for-sale site, announced an alliance to showcase every CENTURY 21 listed property on Realtor.com. The CENTURY 21 program, aptly named the “Gold Standard Partnership,” provides every CENTURY 21 broker with visibility for their listings on the nation’s most visited real estate Web site 365 days a year. The CENTURY 21 System is the only national real estate franchise to provide this significant online exposure to its System members.
The Gold Standard Partnership provides tremendous value to both buyers and sellers who work with CENTURY 21 brokers and agents. Century 21 Real Estate LLC has subsidized the cost of the program for every CENTURY 21 franchise owner. The Showcase Listing Enhancement offering includes:
· a photo gallery of up to 25 high-quality jumbo photos,
· detailed neighborhood information,
· open house alerts,
· full-motion videos and virtual tours where available,
· multiple lead forms, and
· reports on consumer traffic related to each listing.
“Through this powerful alliance with REALTOR.com, we are demonstrating our commitment to deliver enhanced value to consumers through our brokers and agents and online advertising,” said Bev Thorne, senior vice president of marketing, Century 21 Real Estate LLC. “This underscores our transition from national television advertising to national online advertising. Our business results confirm that we are generating 20 percent more leads for our agents via online advertising. The Gold Standard Partnership is part of our ongoing efforts to position our System members with a competitive advantage that enables them to deliver unparalleled value to consumers.”
According to the National Association of Realtors, 87% of buyers begin their home search on the Internet while only 3% of home buyers found their home through other forms of advertising.
As a result of this online marketing alliance, CENTURY 21 brokers and agents now have ongoing access to the many marketing benefits offered by Realtor.com to generate buyer interest and provide maximum exposure for home sellers.
“Realtor.com delivers maximum listing exposure to potential buyers and sellers at all stages of the homeownership cycle,” said, Matthew Moore, head of sales and marketing at Realtor.com. “Through this new marketing program, we enable more opportunities for local CENTURY 21 professionals to get in front of the largest audience of prospective clients, increase their pipeline of inquiries, and ultimately help more satisfied home buyers and sellers.”
Moore said that the new agreement is significant because it showcases CENTURY 21 listings on Realtor.com by prominently featuring them on a highly visible “virtual store shelf,” giving local CENTURY 21 brokers and agents a powerful online marketing presence.
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Houston Strong in New Home Sales
Houston is home to five of the nation’s top 10 communities for new-home sales in 2008, according to a new study just released by RCLCO, a leading independent real estate advisory firm which has compiled the annual list since 1994. In addition to having more top-selling communities than any other city on the list, Houston also has the only communities on the list – all developments of Newland Communities – to report positive sales gains for 2008 over 2007.
In Houston, Newland Communities’ Cinco Ranch development ranked No. 2 on the list, with 775 new-home sales for 2008, representing a 7% increase over 2007. Telfair, also by Newland Communities, had the highest percentage gain on the list – 13% – with 412 new-home sales. A third Newland Communities development, Eagle Springs, ranked No. 10 on the list with 274 new-home sales, a 2% increase.
“When we create communities, we closely consider the changing needs of homebuyers today and into the future, the impact of different family formations, and new generations moving into home ownership. I think these results show this means vibrant, sustainable communities thrive even in tough times,” said Bob McLeod, President and CEO of Newland Communities.
“Another highly positive trend for Houston – not reflected on the RCLCO report – is the fact that 2009 new-home sales for the three Newland communities on the top 10 list are on par with, or even ahead of, 2008,” said Ted Nelson, President of Newland's Central Region, which includes Texas.
In 2009 at Cinco Ranch, a 7,600-acre community located near West Houston’s thriving “Energy Corridor”, a total of 254 new homes had been sold through April 19, a 4.5% increase over the 243 homes sold in the same period in 2008. At Telfair, a 2,018-acre community southwest of downtown Houston, 2009 sales are running neck-and-neck with last year’s sales, which represented the largest percentage gain on the RCLCO list. (Telfair reported 117 new-home sales for 2009 through April 19, compared to 119 for the same period in 2008.)
"Continued strong new-home sales in Cinco Ranch, Telfair and Eagle Springs prove that during uncertain economic times, homebuyers are choosing quality homes in well-planned, well-located communities with great amenities and lifestyle built in," Nelson said. “Homebuyers seem to be viewing large-scale master-planned communities as strong investments, especially those communities with strong track records, such as Cinco Ranch, now in its 18th year of development.”
All three Newland Communities developments on the list also posted increases in the average sales price of new homes in 2008. The average sales price was up 11% in Cinco Ranch, 6% in Eagle Springs and 3% in Telfair.
TOP 10 SELLERS OF NEW HOMES
1 Mountain's Edge Focus Property Group Las Vegas 879 net sales
2 Cinco Ranch Newland Communities Houston 775
3 The Woodlands The Woodlands Development Co. Houston 750
4 Providence Focus Property Group Las Vegas 514
5 - Rancho Sahuarita Rancho Sahuarita Company Tucson 506
6 - Telfair Newland Communities Houston 412
7 Vistancia Shea Homes/Sunbelt Holdings Phoenix 399
8 Sienna Plantation The Johnson Development Corp. Houston 369
9 - Sun City Festival Pulte Homes/Del Webb Phoenix 288
10 - Eagle Springs Newland Communities Houston 274
SOURCE: RCLCO
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U.S. Housing Vacancy Continues to Climb
AUSTIN – The U.S. housing market, shouldering a record inventory overhang, ended the first quarter with owner vacancy falling to 2.7 percent and the rental pool holding firm at 10.1 percent vacancy.
The rental pool stats, though, are sure to change in the coming months as the impact from expired foreclosure moratoria works its way into the market, according to Richard F. Moody, chief economist for Austin-based Forward Capital Group. Meanwhile, the recession's impact is, as is historically the case, driving a slowdown in household formations due as families double up, younger wage earners move back with parents and immigration flows reduce.
Homeownership fell to 67.5 percent on a seasonally adjusted basis in the first quarter. Forward Capital's Moody reported an increase in the number of vacant year-round housing units – 14.1 million versus 13.8 million just four months ago. There was a decline in the number of for-sale and for-rent vacant units, but "the level remains well above the historical norm as is also the case for the homeowner vacancy rate," he said in the report.
Other noteworthy stats showed houses were staying on the market longer despite federal incentives to buy. Fifty-five percent of the for-sale units have been empty six months or more and 29 percent vacant at least one year. "It is also worth noting that at least some of the growth in the number of vacant units for rent over recent quarters has resulted from homes formerly for sale being shifted into the rental pool," Moody pointed out, citing condominiums as a prime example.
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Pulte, Centex Unveil $3.1 Billion Merger
By Connie Gore
BLOOMFIELD HILLS, Mich. – The street's buzzing this morning about a $3.1 billion merger proposal by Pulte Homes Inc. to take over Dallas-based Centex Corp. to create the nation's largest homebuilding company.
In a joint announcement, the firms' executive teams reported that boards of directors on both sides have unanimously approved the merger agreement. The stock-for-stock transaction is valued at $3.1 billion, including $1.8 billion of net debt.Merger backers said the combined company will have the strongest liquidity position in its industry -- $3.4 billion of cash based on March 31 tabulations.
Last year, the homebuilding giants delivered more than 39,000 closings, resulting in $11.6 billion of combined pro forma revenues, according to the press release. The combined company, based on today's stock performance, would boast an equity market capitalization of $4.1 billion and an enterprise value of $7.2 billion, company leaders said.
The plan puts Pulte shareholders in control of roughly 68 percent of the new company. Centex shareholders are in line to get 0.975 shares of Pulte common stock for each share of Centex. Pulte's stock closed yesterday at $10.50 per share and opened today at $13.50 per share.
"Combining these two industry leaders with proud legacies into one company puts us in an excellent position to navigate through the current housing downturn, poised to accelerate our return to profitability," said Richard J. Dugas Jr., president and CEO of the Bloomington Hills, Mich.-based Pulte.
The merger creates a 29-state, 59-market portfolio of product at all levels, including the active adult marketplace.Centex's land positions, particularly in Texas and the Carolinas, held strong appeal for Pulte. "The combination will also allow us to capitalize on the opportunities presented by the addition of Centex's land positions," Dugas added.
"We believe this is the right combination at the right time in the business cycle. By acting decisively now, we're creating unrivaled firepower to capitalize on the opportunities in homebuilding that are now becoming visible on the horizon," said Timothy Eller, chairman and CEO of Dallas-based Centex. "Moreover, our shareholders will receive an immediate premium for their shares as well as participate in the upside potential of the combined company."
Pulte and Centex held a conference call this morning for shareholders and analysts. In the release, Pulte projected the merger will yield cost reductions of nearly $250 million in overhead and $100 million of debt relief by retiring maturities of more than $1 billion before the year ends.
The post-merger executive team puts Dugas at the head as chairman, president and CEO of Pulte Inc. Eller will join the board of directors as vice chairman and act as a company consultant for two years. Pulte's eight-member board will be expanded to include four Centex members. The headquarters decision goes to Bloomington Hills, but "plans to maintain a significant presence in Dallas," the release said.
In Dallas, rumors came and went over the past two years that Centex was shopping for a buyer for all or part of the homebuilding business. Goldman, Sachs & Co. is Centex's adviser and Wachtell, Lipton, Rosen & Katz is its legal adviser. Pulte's lead financial adviser was Citi, with Banc of America Securities, Merrill Lynch and J.P. Morgan Securities Inc. rounding out the financial advisory team. Sidley Austin LLP is the legal adviser.
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Americans Planning To Buy Homes
Despite Economic Conditions
LOS ANGELES – The threat of foreclosure is a topic of concern in more than half of American households, according to a new survey by Move Inc. But the downturn and today's low mortgage rates are attracting attention from first-time homebuyers who view the current conditions as an opportunity.
While half (52%) of all Americans are concerned they or someone they know will face foreclosure in the next six to 12 months, 23% of adults plan to purchase a home in the next five years, and more than half of them (53.5%) are first time homebuyers, according to a new survey commissioned by online real estate firm Move Inc. operator of Realtor.com, the largest homes-for-sale website.
Unemployment is a driving factor causing many Americans to fear foreclosure, according to the survey. More than a quarter (27.1%) of adults feel they or someone they know may default on their mortgage due to recent unemployment (27.1%), future unemployment (29.3%) or because they owe more on their home than it’s worth (25.6%). One out of eight (15.4%) is having a hard time making mortgage payments because they’ve recently increased or because they have too much debt (18.8%).
Determined to remain in their homes, nearly three-quarters (72%) of adults reduced spending in the past year in order to make monthly mortgage or rent payments, mostly by cutting discretionary spending such as vacations, entertainment and eating out (75%), personal items such as clothing, personal care and personal luxuries (72%) and energy costs such as gasoline and utilities (71.6%). Regardless of age, most Americans are cutting spending back from some aspect of their life to pay housing costs.
Despite today’s challenging market conditions, 18.1% of adults plan to buy a home this year in order to take advantage of the $8,000 tax credit recently passed by Congress in the administration’s economic stimulus package.
“It’s not all doom and gloom. We found Americans are optimistic about homeownership despite concerns,” said Move, Inc., CEO Steve Berkowitz. “They’re doing everything they can, from reducing discretionary spending to pay their mortgages, to planning to take advantage of the administration’s new program to stop foreclosures. They’re also working with lenders to modify loans. Even more impactful are numbers that show interest in home ownership is strong as nearly a quarter of all adults plan to buy a home in the next five years.”
The Move survey found the housing downturn, now entering its third year, has created significant demand for homeownership especially among first-time homebuyers. While 5.8% plan to purchase a home in the next 12 months, 12.8% of Americans say they plan to buy a home in the next two years and 11% plan to purchase a home in two to five years.
Over half of those planning to buy in 2009 are first-time homebuyers (53.5%). By comparison, 41% of homebuyers in 2008 were first-time homebuyers, according to the National Association of Realtors[1] .
While 18.1% of homebuyers do plan to buy this year to take advantage of the $8,000 tax credit, nearly half (47.6%) said they didn’t know about the credit and 29.3% said it wasn’t large enough for them to act right now. Potential homebuyers with higher incomes are more interested in the tax credit than those in lower income brackets, as 43.4% of first-time buyers earning $50,000 or more say they plan to use the tax credit.
Potential buyers are watching real estate prices more closely today than 12 months ago. Half of all Americans (49.6%) are paying more attention to home values today than they were a year ago, especially those aged 25 to 34 (61.9%). The median age of first-time homebuyers is 30 years old[1].
“Having the wealth of information on home values available on Realtor.com makes it easy for potential buyers to research and plan their real estate purchase as they begin their search. In fact, the average buyer researches properties online for 10 months[1] before contacting a Realtor®. So quick and convenient access to information is critical, especially in today’s highly competitive environment,” said Errol Samuelson, president of Realtor.com.
"If you're basing a real estate decision on old or out-of-date information, you risk making a poor decision with potentially significant financial consequences," explains Samuelson. "Providing current and detailed information drawn directly from a local MLS, in conjunction with our 15-minute update program, educates buyers and sellers on market conditions and results in more productive conversations with Realtors.”
The Move survey uncovered changing attitudes towards owning a home. About two-thirds (62.5%) now consider their home primarily a place to live as opposed to an investment. Adults earning up to $20,000 and between $30,000 and $39,900 annually are significantly more likely to feel most strongly that a home is more of a place to live than an investment as compared to those earning $50,000 or more.
In light of the fact that homes are more affordable today, Americans said that if they could purchase more home for their dollar, bigger is definitely better. Survey results found today’s homeowners value more space by a slight margin (10%) over a list of other options, including, energy saving features (6.8%), bigger or nicer yard (6.1%), a better location (4.2%) or updated amenities (3.4%).
The overall economy is by far the most pressing issue on the domestic agenda in the opinion of Americans (51.8%) and it was the first choice of survey participants to be the top priority for both the President and Congress.
Americans believe that cracking down on mortgage fraud (56.9%), lower interest rates (51.6%) and giving first time homebuyers tax breaks as incentives to buy (43.5%) are the top three solutions that would have the most impact in stabilizing the housing market. Opinion is split over whether the government is doing enough to stabilize the housing market, with 46.2% indicating “yes” and 43.8% indicating “no.”
Texas Realtors Caution About Pending Bills
AUSTIN, Texas – The Texas Association of Realtors has unleashed a campaign to alert homeowners that several tax-impacting bills are circulating in the capitol.
"I don't think you have to tell any homeowner that now is not the time to increase the costs associated with real estate so we're very surprised to see these proposals this legislative session," said Brooke Hunt, TAR's chairwoman. "Legislation that shuts out even more Texas families from the American dream of homeownership would be incredibly short-sighted."
TAR's release, issued this morning, cites the proposed Senate bills 950 and 934 and claims "perhaps the most dangerous" is SB 942, a measure that would enable counties to enact new taxes to increase revenue for local transportation projects. Among TAR's concerns is the real estate transfer tax, which would be paid to the county within 30 days of a property transfer. Under the measure, counties can set the rate of the transfer tax.
A study by the Real Estate Center at Texas A&M University concluded the transfer tax "may create more problems than it solves," according to TAR. It cites the possible loss of $955 million in economic activity and elimination of 11,575 jobs if the transfer tax is enacted.
"Texas' resilient real estate market has helped insulate us from the worst of the economic recession," Hunt said. "To make sure that doesn't change, we need to remove obstacles to homeownership, not create even more impediments. Real estate transfer taxes are regressive, hurting low-income Texans the most, and could provide the tipping point to send our Texas economy in the direction of other, less-fortunate states."
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Home Building Topped Out
By Ralph Bivins
LAS VEGAS - The nation's housing starts hit 1.7 million annually a couple of years ago when the home building market was at its utmost. Now annual starts are trickling in at a pace of less than 500,000 per year. The nation's market may never get back to the high-octane pace of 1.7 million starts, according to the chief economist of the National Association of Home Builders.
However, despite the dark clouds over housing, the bottom may be in sight for the national housing market and the upswing could be surprising in2010. Housing starts for the nation are projected to increase 34 percent next year, says David Crowe, chief economist for the NAHB.
Crowe was among the economists speaking at the NAHB’s annual IBS convention in Las Vegas earlier this year. Attendance was down significantly at the International Builders Show – only 60,000 attendees, down from 90,000 last year.
Housing starts will decline about 30 percent in 2009 overall, Crowe predicts. But there are several reasons to expect a turnaround.
For one thing, home prices are softer. And mortgage rates are lower than they have been in 50 years.
Demographics are also lining up for builders. The huge youthful “Echo Boomer” generations, which are the children of the massive Baby Boomer generation, are now in their 20s – the prime age for first-time home buyers.
Another economist at the convention, David Berson of PMI Group, agreed: the housing market is near the bottom. In other words, brighter days are ahead.
Frank Nothaft, chief economist for Freddie Mac, said mortgage delinquencies will continue to rise this year as more people lose their jobs. "The single most important trigger event in delinquency is unemployment," he said.
The nation has lost over 3 million jobs since 2006.
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New Houston Toll Road
Delivers Optimism to Northeast Side
The expansion of the Sam Houston Tollway will open up development opportunities in northeast Houston.
The Harris County Toll Road Authority expects crews to begin work this summer on a 13-mile extension of Beltway 8 from just east of U.S 59 North to south of U.S. 90A East.
The current project timeline shows an estimated spring 2011 completion date. The $550 million project will provide three lanes in each direction when finished.
Travel from Fall Creek to major employment centers such as downtown Houston, Greenspoint and the Galleria will be enhanced due to new commuter ramps and main lanes, said Fall Creek general manager Steve Pierce.
The expansion will include entrance and exit ramps at Mesa Road and Wilson Road, both major Fall Creek thoroughfares.
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Smarter Agent Strikes
Alliance with Keller Williams Realty
Keller Williams real estate professionals now have inside access to a popular home search tool. Smarter Agent, the company that invented and patented the mobile location-aware real estate search, announced that they have become an Approved Vendor with Keller Williams.
“We are thrilled to have the reputable Keller Williams name behind us and look forward to showing the company’s brokers and agents how our technology can not only give them a competitive edge over other brokers and agents, but how we can help them provide a valuabl e search tool to existing clients while using Smarter Agent to find new clients,” said Brad Blumberg, CEO of Smarter Agent.
Homes for Sale, Smarter Agent’s flagship product, delivers accurate and up-to-the-minute property information to a prospective homebuyer’s personal cell phone. Either using GPS technology or by entering in specific search criteria such as city, community, address or zip code, consumers can instantly learn the sales price, see the number of beds and baths, read property descriptions, plot properties on an interactive map and even see photos for all of the publicly allowable properties within the MLS.
Where Homes for Sale becomes beneficial to Keller Williams brokers and agents is that Smarter Agent allows agents to privately brand the Homes for Sale mobile application. The branded application is then downloadable from an individual realtor’s personal website. With the branded version, brokers and agents can provide the application to their clients where their name, company colors and logo will appear on the home screen. Once the search is initiated, all branding is maintained throughout the search. Best of all, if a consumer is ready to tour the property the “Call to See” button will route all calls directly to the agent who branded the application, regardless of who has the listing.
The download is currently available on hundreds of cell phone models on AT&T and Sprint. The application is also available for all Blackberries (Curve, World, Pearl, Pearl Flip and Bold) and iPhones, where the download is FREE! The Storm, Windows Mobile versions and other carriers and devices, will be added in the coming months making the application available to all consumers regardless of their cell phon e carrier or device.
For more information, please contact Carrie Johnson at carrie@smarteragent.com or (856) 614-5525 or to learn more about the branded application, please visit www.SmarterAgent.com/brandinhand.
About Smarter Agent (www.smarteragent.com)
Smarter Agent combines mobile location technology, such as GPS, with information about real estate and neighborhoods around you. Smarter Agent is the inventor of the mobile location-triggered real estate search -- and has been granted four patents. By delivering location-relevant content to mobile devices, consumers can learn, interact and transact with the world around them as never before possible. Smarter Agent was named BEST GPS Application by the CTIA (Cellular Telecom Industry Association), BEST COMMERCE Application at Navteq Global GPS Challenges in the US and Europe, and has been featured as a leader in mobile innovation at Dow Jones and DEMO conferences.
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New Home Sales Up In
Newland Houston Projects
In a market where new-home sales have been generally down, Newland Communities has reported increased new-home sales in three Houston area communities for 2008.
The largest increase was seen in Telfair, a 2,018-acre community in Sugar Land, where new-home sales were up 10.7 percent for 2008, compared to 2007. A total of 412 new homes were sold in Telfair last year, compared to 372 sold in 2007. Located at U.S. 59 South and University Blvd., in the Fort Bend Independent School District, Telfair offers new homes priced from the $250,000s to over $1 million.
At Cinco Ranch, a 7,600-acre community in Katy, new-home sales were up 6 percent for 2008, with 779 new homes sold last year, compared to 732 sold in 2007. Cinco Ranch is located at Grand Parkway and Cinco Ranch Blvd., between I-10 West and the Westpark Tollway. New homes are priced from the $160,000s to over $1 million.
Eagle Springs, a 1,360-acre community in northeast Houston, reported a 1 percent sales gain. A total of 274 new homes were sold in Eagle Springs in 2008, compared to 271 sold in 2007. Located along Will Clayton Parkway, approximately 5 miles east of U.S. 59 North,
Eagle Springs features new homes priced from the $130,000s to $500,000s.
New-home prices also increased in these same Newland Communities developments in 2008, by 3 percent in Telfair, 6 percent in Eagle Springs, and 11 percent in Cinco Ranch.
In most communities, sales also remained strong in the fourth quarter, a positive portent for 2009, said Jennifer Taylor, vice president of marketing for Newland Communities.
Taylor added that several factors helped Telfair, Cinco Ranch and Eagle Springs post positive sales gains in contrast to the general market trend. “Home buyers seem to be viewing large, established master-planned communities as safe havens for their investment during these economic times, and several of our Newland communities in Houston have strong track records, such as 18 years for Cinco Ranch and eight years for Eagle Springs,” she said.
“All of these communities saw continued strong relocation sales in 2008, especially Cinco Ranch, which is located near the west Houston ‘Energy Corridor,’” Taylor said. “In addition, our communities continue to attract a healthy share local first-time and move-up buyers seeking the lifestyle offered in master-planned communities. With over 10,000 households in Cinco Ranch and nearly 2,400 in Eagle Springs, existing residents have also become major sources of new-home sales as they move up or scale down.”
Taylor added that Newland Communities expanded new-home product variety and added new amenities in all of its Houston area communities in 2008.
At Cinco Ranch, a new 2,400-acre phase was opened in mid-2008 and will ultimately provide over 5,000 new homesites through 2012. In 2008, new additions to Cinco Ranch included a Model Home Village with 31 decorated models by 13 homebuilders, and a new 70-acre recreation center featuring a 30-acre lake.
At Telfair, new products included low-maintenance patio homes, along with new neighborhoods in all price ranges, and the start of construction on a new branch of the Houston Museum of Natural Science in the community.
Eagle Springs added new neighborhoods featuring low-maintenance patio homes and luxury estate homes, along with a number of new parks.
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Smarter Agent
Smarter Agent’s Homes for Sale mobile search has launched, accessible to over 50 million AT&T and Sprint customers on 80 different cell phone models.
Over 99 percent of all mobile location-aware real estate activity is now powered by Smarter Agent. Smarter Agent is the only carrier approved, on-deck mobile search – meaning it has gone through significant security and usability testing to be chosen to be on the carrier (AT&T, Sprint) deck.
Smarter Agent delivers accurate and up-to-the-minute home sale information to a consumer’s cell phone.
If GPS is available on the consumer’s cell phone, Smarter Agent instantly turns the cell phone into a GPS-triggered real estate finder. This means with just one click, all of the local listings are immediately returned—no typing required! Should the consumer’s cell phone not contain inherent GPS, Smarter Agent also works on all non-GPS enabled devices with a simple to use interface that initiates the search.
About Smarter Agent (www.smarteragent.com)
Smarter Agent combines mobile location technology, such as GPS, with information about real estate and neighborhoods around you. Smarter Agent is the inventor of the mobile location-triggered real estate search -- and has been granted four patents. By delivering location-relevant content to mobile devices, consumers can learn, interact and transact with the world around them as never before possible. Smarter Agent was named BEST GPS Application by the CTIA (Cellular Telecom Industry Association), BEST COMMERCE Application at Navteq Global GPS Challenges in the US and Europe, and has been featured as a leader in mobile innovation at Dow Jones and DEMO conferences.
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HomeAway Buys EscapeHomes
Austin -- HomeAway, Inc., a large international network of vacation rental websites, has announced its acquisition of EscapeHomes.com, a 10-year-old online marketplace that connects buyers and sellers of second homes and resort real estate.
The acquisition means HomeAway now provides comprehensive services for second home owners for the lifecycle of their properties.
Through its vacation rental sites, including HomeAway.com, VRBO.com, Holiday-Rentals.co.uk, Abritel.fr and FeWo-direkt.de, HomeAway has already streamlined the process for homeowners to easily and affordably advertise their vacation rental properties. With EscapeHomes, HomeAway significantly expands its offerings, providing owners the tools to research and find real estate professionals who specialize in second homes and their dream vacation, investment or retirement home.
“The purchase of EscapeHomes was a natural next step for our business, making HomeAway the only company specializing in second homes throughout the entire ownership process,” says Brian Sharples, CEO of HomeAway.
Second home sales accounted for a third of existing and new home sales in 2007, according to the National Association of Realtors.
“HomeAway is excited to apply our expertise in and commitment to providing owners the best and most trusted resources to the second home real estate market,” says Sharples.
A redesign of EscapeHomes.com is currently underway. However, the site will continue to feature the popular profiles of real estate agents, detail-rich descriptions of locations, second home lifestyle advice and decision support tools.
As part of its relaunch, EscapeHomes invites real estate agents to participate in its “Open House” program to receive a free subscription to the site and immediately benefit from its exceptional search engine rankings. This limited-time offer allows agents to create a personalized agent profile and feature unlimited vacation property listings.
EscapeHomes was founded by highly-respected real estate veteran Clark Thompson. Recognizing the Internet could streamline the time-consuming and costly process of finding a second home and locating qualified agents in remote destinations, Thompson founded the company to make the search for a second home easier.
EscapeHomes is led by a team of second home and vacation rental industry veterans from HomeAway’s Austin, TX headquarters. The terms of the acquisition were not disclosed.
The HomeAway, Inc. websites connect homeowners and property managers with travelers who seek the space, value and amenities of vacation rental homes as an alternative to hotels. With more than 284,000 global listings across the sites, travelers may easily search for budget to luxury-priced vacation rentals on HomeAway.com, VRBO.com, VacationRentals.com, CyberRentals.com, A1Vacations.com, GreatRentals.com, TripHomes.com, Holiday-Rentals.co.uk, OwnersDirect.co.uk, FeWo-direkt.de and Abritel.fr. The sites also feature Reviews and the HomeAway Rent with Confidence Guarantee, which help ensure a memorable HomeAway from home® experience. HomeAway is headquartered in Austin and funded by Austin Ventures, Redpoint Ventures, American Capital, Institutional Venture Partners and Trident Capital.
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A Texas Solution:
Affordable Shelter After Natural Disasters
A design competition for Texas architects has yielded designs for affordable
homes that can be erected quickly after a natural disaster.
The idea for an affordable housing design competition grew out of the
Housing Texas meeting held in San Antonio in 2005. In the wake of
the devastation of Hurricane Rita on low income Texas communities the
design competition was directed at homes that are affordable to
low-income hurricane survivors seeking to rebuild. Housing Texas
member Tom Hatch took the lead in coordinating the design competition
with the Texas Society of Architects.
"The 'Texas Grow Home' concept represents an entirely new approach to
disaster recovery. More than two years after Hurricane Rita, tens of
thousands of Texans are still living in severely damaged homes. Their
situation proves that we need a new approach to rebuilding homes,"
said John Henneberger, co-director of the Texas Low Income Housing
Information Service. "Rather than spend up to $70,000 to house people
for months in a temporary FEMA trailer, we should use those funds to
get devastated families into a quality, permanent home."
Eighty-one teams of Texas Architects submitted designs. This
represents thousands of hours of Texas architects' time donated to
improving the way government helps low-income victims of natural
disasters. The winning designs offer disaster survivors a range of
choices from traditional to modern to straightforward to innovative,
all with attention to affordability, sustainability, and efficient
delivery following a natural disaster. Housing Texas, the Texas Low
Income Housing Information Service (TxLIHIS), Texas Society of
Architects, Texas Department of Housing & Community Affairs, Covenant
Community Capital, Chase Bank, Marquette Financial Services, the
Houston Endowment and the Foundation for Expanding Horizons sponsored
the competition and exhibition of the designs.
"TDHCA congratulates the award-winning home designs, and we applaud
the creativity these architects have shown." said Michael Gerber,
TDHCA Executive Director. "We are proud to finance the building of
these three homes, which will help several Southeast Texas families
with their recovery. We are also proud to partner with the Texas Low
Income Housing Information Service and their team to develop new
housing ideas for when a hurricane or other natural disaster
strikes."
The winning designs will be constructed in Southeast Texas by
Covenant Community Capital as prototypes, and sold with state-funded,
zero-interest mortgages to three low-income families whose homes were
destroyed by Hurricane Rita.
"Chase salutes the Texas Low Income Housing Service, the State of Texas
and these ommitted professionals for their role in this
forward-thinking project," said Linda McMahon, Chase Bank's Southwest
Region Manager for Community Development. "Grow Home will ensure that
when disaster strikes, Texas will be prepared to house families
quickly in a high-quality, affordable home."
Each home will be a total of 1,100 sf. The homes will consist
of two modules: the core module will be a minimum of 700 square feet
and contain a living area, bath and two bedrooms. The 400 square-foot
second module will contain an additional bedroom and bath. The first
module will be erected in the days immediately following a disaster
instead of a FEMA trailer, providing a new, permanent home for
families who lost their homes. The second module will give families
the opportunity to expand their post-disaster core home into
something larger as time and their finances permit. The two-bedroom
core module is designed to cost $54,000. The one-bedroom, one-bath
addition would cost $23,000.
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| Archives |
- Q&A with Thomas M. Stevens click here
- Minority Homebuyer Program click here
- Katrina to Impact Mortgage Rates, Construction Costs & Apartment Vacancy click here
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Q&A with Thomas M. Stevens
Tom Stevens of Virginia was
installed as the 2006 president
of the National Association of
Realtors at the NAR's annual
Conference and Expo in San
Francisco.
RealtyNewsReport.com Editor
Ralph Bivins interviewed him
there.
Q: Mr. Stevens, what's in store for the real estate market in 2006?
A: For the most part the real estate market around the country is still very strong. We started to see certain areas where there is a little softening. But we couldn't continue to keep at that pace we'd been going with home appreciation at 15 and 20 and 25 percent. We need to be in a little more steady market. I think we are going to be in a little bit of a correction and I think that's going to be good. It will be a steadier market with the prices not jumping as high. More people will be able to afford housing.
Q: So there will be fewer homes sold in 2006 than in the record-setting 2005?
A: If 2006 is the second best year we've had, it will still be a great real estate market.
Q: President Bush's panel on tax reform has introduced the possibility of altering the mortgage interest rate deduction. What is your opinion?
A: We are waiting to see what the White House comes out with as far as a proposal. But we think even discussion of tinkering with the deductibility of mortgage interest can really hurt the real estate market and the consumer. Some of the things we are hearing about is taking away the mortgage deduction and turning it into a tax credit. For the typical consumer out there it could be about a $30,000 difference in the value of their home. We think it is going to drive prices down.
Q: So if the mortgage deductibility were changed it would have a direct impact on housing values?
A: No question about it.
Q: A lawsuit has been filed by the U.S. Department of Justice regarding NAR policies on home listings being displayed on the Internet. Can you comment on that and what the suit could mean to the real estate industry?
A: This is a major decision that will occur as a result of the Justice Department action. It's basically going to say who owns that real estate data. Our brokers go out and work hard to create that business. We feel very good about our position.
Q: If the outcome of the lawsuit is not favorable, the NAR general counsel contends that it could lead to major real estate brokers withdrawing from the MLS. Do you view that as a possibility?
A: I think large brokers would be pulling out. They wouldn't want what they've worked for -- their inventory -- to be given away. I kind of look at it just as a grocery store. The grocery store has its inventory on its shelves and basically they are saying someone can take it and sell it themselves. That's not the way, I don't think, businesses should operate.
Q: What impact have the recent hurricanes had on the real estate market?
A: So far in those coastal areas, Baton Rouge and those nearby areas, the immediate impact has been they have sold a lot of houses. People are buying houses sight unseen because they know they are not moving back.Their homes are gone. So there has been an increase in housing sales in the coastal areas. But overall, it's going to put a squeeze on the building materials and it is going to start driving some of the prices up because building material prices will go up.
Q: We have heard about the bubble bursting in the housing markets, particularly in cities that have been vastly overheated. Are there some markets around the nation that are in for a real slowdown?
A: There will be market corrections. There always are. But there's still demand and there's not a huge inventory in most markets. There is still a shortage of inventory in certain price ranges. So we don't see a major correction. We certainly don't see a bubble bursting. We might see a little softening or a little air coming out of the balloon. Some of the markets that have had the greater appreciation they will probably correct a little more than markets that haven't seen that great appreciation. But again, it's going to get us back to a steadier market and I think that is good for the consumer.
Q: Longtime Federal Reserve Chairman Alan Greenspan will be stepping down at the end of the January and Ben Bernanke is expected to move into that position. Will this have an impact on mortgage interest rates and the real estate market?
A: Bernanke is a kind of a protege of Alan Greenspan. He has been there and he has served as one of the Federal Reserve officers. We are pretty familiar with him. His thinking is along the lines of Alan Greenspan. So we don't see a lot change there, he's very conservative. We think he is good choice.
NAR President Tom Stevens and
RealtyNewsReport Editor Ralph
Bivins meet at NAR Convention
in San Francisco for an interview.
Stevens is a Realtor in Vienna, Va.
A Realtor since 1972, Stevens is
senior vice president of NRT Inc.,
a full-service firm specializing in
residential sales and brokerage
with offices in Vienna, Va. Stevens
is a past president of the Virginia
Association of Realtors.
Stevens was installed as 2006
president of NAR at the NAR
convention in San Francisco.
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Minority Homebuyer Program
First American Title Insurance
Company announced the launch of a new diversity marketing program in Houston
designed to help increase homeownership opportunities among Houston’s
Latino, Asian American and African American
communities. This program will address the specific needs of minority
homebuyers by assisting real estate practitioners in better serving these
traditionally under-served communities.
The Houston kickoff marks the extension of First American’s Emerging Markets
Program—a comprehensive plan helping to increase home sales to Hispanic,
African-American, Asian-American and other traditionally under-served
consumer segments—into Texas. The First American Title Launches Diversity
Program in Houston Page 2-2-2 program has been highly successful in California
and has begun to take root in other key regions across the United States.
According to the U.S. Census, Hispanics, African-Americans and Asian-Americans
are the fastest growing segment of homebuyers in the nation. First American
has set the goal of
becoming the leading provider of title insurance and real estate information
services to this growth segment.
First American’s Houston diversity program will help breakdown the cultural
and financial education barriers that often arise when members of minority
communities enter the homebuying process. It is comprised of consumer-focused
outreach and educational events, specialized programs for real estate
professionals and the hiring and training of key First American staff
to better service ethnically diverse communities.
The Houston program will operate in conjunction with The First American
Corporation’s broader Emerging Markets Program, a corporate-wide commitment
launched in 2003 to promote
an increase in home sales to traditionally under-served consumer segments.
Combining multicultural sales and marketing strategies with industry alliances,
philanthropic
giving/investment and an increased commitment to management and workforce
diversity at First
American, the multiyear, multimillion dollar program is designed to help
First American capture additional market share by offering innovative
solutions to common barriers to homebuying.
Katrina to Impact Mortgage Rates,
Construction Costs & Apartment Vacancy
WASHINGTON – The direct housing
needs for evacuees of Hurricane Katrina and lower interest rates that
will soften its economic hit mean there will be long-term consequences
for housing as well as the overall economy, according to the National
Association of Realtors ® .
David Lereah, NAR’s chief economist, said shortages of building
materials, made worse by the need to rebuild in areas hit by
Katrina, will increase construction costs. “Given the
general tight inventory of homes available for sale across the country,
rebuilding in the region of the Gulf Coast will place additional pressure
on overall home prices,” Lereah said. “As displaced residents try to get
back on their feet in new locations, home sales have spiked – along with
rental demand – in regions surrounding the disaster zone.”
Existing-home sales are expected to increase 3.4 percent to 7.02 million
this year, while new-home sales are forecast to rise 6.7 percent to 1.28
million for 2005 – both would be records. Last month, the totals were
projected to be 6.98 million and 1.26 million respectively. Total housing
starts – single-family and multifamily – should grow by 4.8 percent
to 2.04 million units this year, the highest since 1973;
single-family starts are expected at a record of 1.69 million.
“Mortgage interest rates will rise more slowly as a result
of post-storm economic conditions to accommodate the losses of homes,
jobs and businesses,” Lereah said. “The lower level of borrowing costs
will provide additional lift to home sales in other regions. Demand will
continue to outstrip supply in most areas, which will keep pressure on
home prices.” Total housing, commercial and public property losses by
Katrina are in the range of $100 billion.
The 30-year fixed-rate mortgage is forecast to rise more slowly, reaching
5.9 percent in the fourth quarter, and 6.7 percent by the end of 2006.
The national median existing-home price for all housing types is projected
to rise 10.8 percent in 2005 to $205,100. With a greater concentration
of construction in lower cost areas, the median new-home price should
increase 3.8 percent to $229,300 this year before rising at a faster clip
of 6.2 percent in 2006.
It is estimated that most of the flooded homes will have to be rebuilt,
including about 80 percent of the homes in the city of New Orleans. Along
with homes that will have to be replaced along the Mississippi and Alabama
coastline, a minimum of 200,000 homes have been lost.
However, the level of new housing construction will be only 130,000 higher
than pre-Katrina projections.
“Housing construction will be insufficient to replace the number of homes
destroyed or that will have to be demolished,” NAR President Al Mansell
said. “Apartment vacancies are dwindling, and mobile homes will
help to address the jump in housing needs.”
The Louisiana Realtors ® Association has launched www.HurricaneHousing.net
. Realtor ® members and property owners alike can submit data on available
shelter in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi
and Texas, and people displaced by the hurricane can search the database
directly.
The storm’s impact will cause the economy to grow more slowly than in
earlier projections, but the economy will get a lift once rebuilding gets
under way. The U.S. gross domestic product is forecast to grow at a pace
of 2.3 percent in the third quarter and 2.7 percent in the fourth quarter,
with GDP for all of 2006 pegged at 3.8 percent.
The unemployment rate is seen to peak at 5.3 percent during the first
half of next year before declining in the second half. The Consumer Price
Index is expected to increase 3.5 percent this year, while inflation-adjusted
disposable personal income should grow by 1.4 percent. The consumer confidence
index is likely to dip to 100 early next year, and then rise to 107 by
the end of 2006.
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Property flipping is sport in some markets
Three Part Condo Series
Part 1: Condo craze: Flippers, converters and first-time buyers grab a slice
The condo market is on fire across the country, with prices appreciating faster than single-family homes in some cases. Buyers are scrambling to be the first in line, and amateur real estate investing is akin to sports and hobbies in the hottest markets. In this three-part series from Inman News , we examine the trend from the trenches, catching up with part-time investors and first-time buyers, along with an example of the type of unique conversion projects taking place.
By Glenn Roberts Jr.
Inman News
Rajpal "R.J." Singh is selling a "super luxury Trump condo" in Manhattan's Upper West Side for $1.7 million. He's also selling a West Side condo for $699,000 and renting out another condo in the Hudson Heights neighborhood. That's not his day job. Singh works in the software industry. Real estate investment is something he does on the side - he is not a licensed real estate agent.
"I happen to like new construction lately," he said. He focuses on Manhattan and Queens, and believes those markets are generally still a safe bet. The condo market has sizzled in many markets across the country, with condo-price appreciation in some cases exceeding home-price increases.
Murmurs of bubbles and busts haven't scared away condo developers from low-rise, high-rise and condo-conversion projects, though. And buyers in some markets are still scrambling to be the first in line for a condo unit in a pending project - even when that project is little more than a hole in the ground. Singh said he has seen a lot of amateur investors getting into the real estate market, a trend that seemed to catch fire in 2003.
He said the percentage of condo owners who live in their condos appears to be shrinking while the number of owners who rent out the condos is growing, which may be an indicator of this growing push by investors in the real estate market.
"I think it used to be roughly 90 percent owners, 10 percent renters - today I've seen 70 percent owners and 30 percent renters. If it goes to 60-40 or - God forbid - 50-50" he said. "Because of the stock market and mutual funds not producing much return, people are shifting that money to real estate. A lot of people need an investment vehicle and they are finding real estate as the investment vehicle for right now," he added.
And then there is the demand from those people who are simply looking for housing - "There seems to be a steady flow of people that are in need of housing, hence they are willing to pay top dollar," Singh said. Some New York markets may already be overpriced, such as the Brooklyn waterfront, he also said. Robert Holtz, of Hoboken, N.J., is selling a condo that he bought two years ago for about $419,000. He has already purchased another condo, a unit in a new development that is under construction. He's still fixing up the condo he's living in, he said, though he said he's willing to move out now if someone will give him the right price.
Then again, he said, he might consider selling the new condo instead - if he can get the right price for that one. "If I can get $559,000 without having to move into it - I don't have to sell where I'm living at now. I can put the other one on the market." Decisions, decisions.
Condo sales, as a percentage of total real estate sales, have grown from 8.8 percent in 1994 to 12.1 percent in 2004, the National Association of Realtors reported. And the rate of condo and co-op price increases has eclipsed that of single-family homes for the past several years.
The average U.S. condo price increased 16.5 percent from 2001 to 2002, 13.7 percent from 2002 to 2003 and 16.4 percent from 2003 to 2004, the association reported, while single-family home prices increased 8.8 percent from 2001 to 2002, 7.2 percent from 2002 to 2003 and 9.3 percent from 2003 to 2004.
Also, the total number of existing condo sales grew 9.7 percent in 2002, 11.3 percent in 2003 and 12.2 percent in 2004; while homes sales rose 5.1 percent in 2002, 9.6 percent, and 9.4 percent in 2004.
Holtz said he knows that the real estate market can be cyclical, and there is always some cause for alarm when prices inflate very rapidly. He cited the example of a $609,000 "pile of dirt" in Florida that ended up selling as a $740,000 real estate deal just 90 days later. That was a deal he worked on with his family.
"It's always a worry when you start talking about one-half million dollars like it's nothing," he said. "But we're not talking about a (dot-com) or an Enron or something like that." Real estate is a tangible thing, he said. "People need to live some place. They need four walls and a roof." So far, the local real estate market continues to thrive, he said. "If you price it right it sells in one day."
A first-quarter 2005 report released by Prudential Real Estate Investors, a part of Prudential Financial, though, expresses some serious caution about the condo boom. "The potential fallout from a meltdown in the condo market is unquestionably one of the biggest risks facing the real estate industry," the report states. "While we believe the excesses are fairly concentrated within a few markets, the effects of a shock would reverberate throughout the industry."
The report also states, "As housing prices soar, comparisons between the housing market today and the dot-com bubble during the late '90s tech bull market grow more frequent by the week. Although condo fever is more of a coastal phenomenon than a national epidemic and is more bubble-like in some markets than others, the warning signs are getting harder to ignore."
The report mentions media reports of properties that are sold and resold in a short period of time - in some cases in the same day. "If a condo bubble develops (or already exists) and bursts as interest rates rise, loan delinquencies could increase sharply and liquidity in the debt markets could dry up very quickly, at least until lenders can assess the impact of falling property values."
On the other hand, the report notes that a downturn in the condo market could benefit the apartment rental industry, as condo rentals are typically more expensive than apartment rentals.
Philip Conner, vice president in the Investment Research department of Prudential Real Estate Investors, said, "There are a lot of factors driving the condo market that aren't necessarily symptomatic of a bubble," such as the higher cost of single-family homes and the "urban renaissance" phenomenon of residents moving into denser housing developments in downtown areas.
But some markets, particularly in Florida, have been named as exhibiting some bubble-like characteristics, Conner said. Some warning signs of a condo slowdown are an oversupply in condo inventory and a growing gap between the ownership costs of a condo unit versus the cost of rental housing in a given market area, he added
. Michael Gasior, president and founder of American Financial Services, an investment training company, titled his March newsletter "Real Estate is Over." Gasior said that last month he saw an e-mail notice about an East Florida condo that was selling for about $850,000. "I went back through my e-mail box and saw that same condo about 90 days prior and it was $779,000. Now it's $940,000." The listing price kept escalating even though the property hadn't sold, he said. "When you see speculators enter the residential real estate market that's often a sign of the top. There's no way borrowing money is going to be easier or cheaper than it's been," he added, and condos may feel the brunt of a market slide.
Gasior noted in his newsletter that if the 30-year fixed interest rate rises about 8 percent, "the market will need to give back nearly all the gains enjoyed between 1999 and 2005 in order to stabilize the marketplace.
"The decline that would result would be more severe than the one experienced in the Northeast and Southern California between 1989 and 1994 when homes depreciated between 20 percent to 25 percent in those markets and condo prices dropped between 40 percent and 60 percent. No region of the U.S. would be immune although each area could look to 1999 market values for an idea where their respective bottom might be."
To capitalize on the frenzy for pre-construction condos in Florida, Realtor Steve Dalia of Exit Team Realty in Coral Springs, Fla., launched a Web site this year, PreConstructionProfits.com. Dalia said some condo markets in Florida "seem to be absolutely on fire" in terms of buyer demand, and most of the visitors to his Web site are from outside the area.
On the other side of the country, Mike Machado, a Realtor for Pacific Union GMAC Real Estate in San Francisco, is selling a one-bedroom, one-bathroom condo unit in a high-rise development for $689,000.
Machado said that as with other cycles, it may be too late when real estate investors and speculators realize the market is turning - people may not realize what's happening "until we all get burned." He added, "It's just like the stock market in the late 1990s. Now, we're all in real estate. Real estate's the new stock market. Which we all know can't last forever."
Visit http://www.inman.com/ for more real estate articles
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Converting
hospital to condos
Part 2: Condo craze
By Janis Mara
Inman News
Editor's note: The condo market is on fire across the country, with prices
appreciating faster than single-family homes in some cases. Buyers are
scrambling to be the first in line, and amateur real estate investing
is akin to sports and hobbies in the hottest markets. In this three-part
series, we examine the trend from the trenches, catching up with part-time
investors and first-time buyers, along with an example of the type of
unique conversion projects taking place.
In tiny Adams , Mass. , developers are converting a former hospital into
condominiums, in a sign that the national condo conversion craze is hitting
New England .
Halfway through construction, 11 of the 16 units already have sold, according
to Dave Carver, managing partner of Scarafoni Associates of North Adams.
Scarafoni is the real estate management and development company converting
the hospital.
"This is the first condo project in the town," said Carver.
Adams, which has 8,000 residents, is a sleepy community, a former mill
town in the Berkshire Hills . But apparently even Adams - and the Plunkett
Hospital , erected in 1918 - can't escape the inexorable condo conversion
trend.
"The condo craze is penetrating into Massachusetts ," Carver
acknowledged.
The news should come as no surprise. Condo converters accounted for 22
percent of apartment sales in 2004, and 45 percent of total volume in
January 2005, according to Prudential Real Estate Investors' U.S. Market
Outlook for the first quarter of 2005.
The condo market has sizzled in many markets across the country, with
condo-price appreciation in some cases exceeding home-price increases.
Murmurs of bubbles and busts haven't scared away condo developers from
low-rise, high-rise and condo-conversion projects, though. And buyers
in some markets are still scrambling to be the first in line for a condo
unit.
The former hospital in Adams has two classic red brick New England buildings,
one of which boasts a cupola and a 6-foot gold leaf weathervane. It stands
on "the best parcel of land in Adams ," according to Ronald
King, Scarafoni's project manager. Perched high on the hill, the buildings,
which total around 40,000 feet, have a striking view of downtown and the
surrounding area.
Though the exterior has been preserved, the insides have been gutted,
King said. "No remnants of the hospital remain inside," he said.
"Hospitals and houses don't have much in common." He acknowledged,
"It's somewhat difficult to fit these things into what was a hospital
and make it work properly." Overall, the "medium-difficult"
job is going well, he said.
Deemed a historic resource by Historic Massachusetts, a state advocate
for historical preservation, the hospital sat empty for nearly 20 years.
Proposals for the town-owned property went nowhere.
During that period, thieves plundered the boarded-up hospital's copper
piping and downspouts. Some even considered the neglected property to
be haunted, according to Carver and ghost spotting Web sites that reported,
"Screams can be heard along with sightings of ghosts that usually
resemble patients that may have died there." Carver, however, said,
"If there are ghosts there, they are friendly ghosts."
In 2003, Scarafoni proposed to bring the "haunted" hospital
back from the dead, with a plan to create condominiums selling for $150,000
to $250,000, targeting the "empty-nest" market of local retirees.
City officials were ecstatic. "We are quite pleased this is a positive
proposal and believe it is a realistic proposal," Faith Yando of
the Massachusetts Development Finance Agency, which handled the proposal
process, told the local paper, the Berkshire Eagle. "I'm glad it's
a local developer and one with a good reputation," Edward Driscoll,
vice chairman of the Selectmen, told the Eagle.
Work began in late 2003. Scarafoni expects to complete the job in 2006.
The hospital's 200-odd windows have been replaced with windows that, while
modern, are mullioned and resemble the old windows. The old gutters and
ironwork have been replaced, and now the interior is being rebuilt.
"We are trying to direct this to the older market," said Carver.
"A lot of the houses in town are occupied with people who raised
their families and now want to downsize.
"This keeps those people in the community and also frees up the larger
houses for young couples who plan to have families," Carver said.
The unit mix ranges from a 1,222-square-foot, one-bedroom, one-bath unit
with a deck, to a 2,823-square-foot, two-bedroom-plus-den with two baths.
All the units have garages. Unlike many condo complexes, the 16-unit property
doesn't have a common area.
The condos are priced from $150,000 to $250,000. According to King, new
houses in Adams , "which is what these essentially are," sell
for around $200,000. The smallest unit is 1,129 square feet, with one
bedroom and one bath. The largest is 2,823 square feet, with two bedrooms,
a den and a deck.
It appears that Adams residents aren't scared of the hospital's "haunted"
reputation, with 11 of the 16 units selling before construction was completed.
Indeed, King anticipates that the brick buildings crowning the hill in
the center of town will radiate a sense of community.
"Some of the people who are moving in already know each other,"
King said. "I'm sure it will become a close-knit group."
Visit www.inman.com for more real estate articles
##############################
First-time buyers flood condo market
Part 3: Condo craze
By Jessica Swesey and Glenn Roberts Jr.
Inman News
Editor's note: The condo market is on fire across the country, with prices
appreciating faster than single-family homes in some cases. Buyers are
scrambling to be the first in line, and amateur real estate investing
is akin to sports and hobbies in the hottest markets. In this three-part
series, we examine the trend from the trenches, catching up with part-time
investors and first-time buyers, along with an example of the type of
unique conversion projects taking place.
Ryan Sankey dropped the first moving box on the floor of his first-floor
condo about a month and a half ago. At 27, he's feeling good about his
decision to buy a condo in a Seattle suburb.
Sankey viewed the purchase as a way he could own real estate without having
to worry about the exterior headaches that come with owning a single-family
home. And the price was still within reach at $121,000. Houses in his
area of Everett , Wash. , sell for about $200,000 to $250,000 on average,
he said.
The condo market has sizzled in many markets across the country, with
condo-price appreciation in some cases exceeding home-price increases.
Murmurs of bubbles and busts haven't scared away condo developers from
low-rise, high-rise and condo-conversion projects, though. And buyers
in some markets are still scrambling to be first in line for a condo unit.
"The primary motivation was being able to find something decent for
less money since houses are still expensive in my market," Sankey
said.
Also, he's still within reasonable distance of his technical support job
at Microsoft in nearby Redmond . If he'd bought a house, he'd most likely
be further from his job.
Sankey figures that by keeping the interior nice, he'll build some attractive
equity by the time he's ready to move again. "I figured if I do this,
I will live here maybe two years, three. I may turn this into an investment,"
he said.
Sankey's two-bedroom condo is part of a former apartment complex that's
been converted. He said a conversion group is now finishing converting
the second to last complex.
"They basically took all the carpet out, all the detailing out, repainted
everything - all the fixtures - and basically updated it so it looked
like a brand-new interior," he said.
The Everett area is in high demand because of its proximity to Seattle
- about 30 miles, Sankey said. Many of Sankey's friends have bought condos
or are looking to buy condos. "Everyone is recognizing the fact that
its just easier to purchase...it's not that much harder than renting,
and its yours," he said.
Sankey said he's been hearing chatter that the housing market in his region
is set to cool down. "The condo market, however, seems to be more
on the rise than on the fall," he said.
Condo markets are booming nationwide, with sales and prices in this market
segment rising steadily for eight consecutive years. The median price
of condos and co-ops has increased roughly twice as fast as that of existing
single-family homes, according to Harvard's Joint Center for Housing report
for 2004.
"The market in general favors single-family, detached homes, and
when they become unaffordable, condos are the preferred alternative,"
said Leslie Appleton-Young, chief economist for the California Association
of Realtors.
The median price for condos in California rose by 24.2 percent year-over-year
from $303,060 in January 2004, to $376,300 in January 2005, according
to a recent report from the state Realtors association.
And annual price appreciation of condos surpassed that of detached homes
in all but one of the last five years in California .
Nationwide, sales of condos and co-ops went from 657,000 units sold in
2002, to 731,000 in 2003, to 820,000 units sold in 2004, according to
the National Association of Realtors. And the average U.S. condo price
increased 16.4 percent from 2003 to 2004, while single-family home prices
increased 9.3 percent during that same period.
Appleton-Young said condos are a welcomed addition to the California housing
stock, particularly in the coastal areas where the supply of homes for
sale is low.
"We really do see condominiums come to life when the single-family,
detached alternative is too expensive," she said. The median price
of a single-family home in California reached $485,700 in January.
Indeed, price and location were among the top reasons recent condo buyers
gave Inman News for buying this type of housing rather than a single-family
home.
Simon Horwith, chief information officer for AboutWeb, recently purchased
a condo in the Logan Circle area of Washington , D.C. Horwith and his
wife are first-time buyers.
"The deciding factor in purchasing a condo versus a house was the
fact that my wife and I wanted to live in the city as opposed to the suburbs,"
Horwith said. "We like to go out to bars and clubs, little shops
and coffee shops, and we like to walk."
Horwith said the condo market was competitive. The seller of the condo
he eventually purchased received many bids - including Horwith's - in
the first weekend of the sale. "Without an escalation clause and
willingness to pay above the asking price, we wouldn't have got the condo,"
he said.
The Horwiths also had to compromise a little on location to get in on
the condo market. The couple started looking for condos in the Dupont
Circle area of D.C., but opted for a larger unit for about the same price
at the nearby Logan Circle neighborhood. Horwith said they were able to
purchase a two-bedroom, two-bathroom condo for the same price they would've
paid for a small one-bedroom just a few blocks away.
Iris Garica, a Bronx , N.Y., resident, turned to the condo market because
she is priced out of the single-family market. Garcia said condo prices
in the area have been a wake-up call for her, and she has expanded her
search to a four-state area that includes Connecticut , New Jersey , New
York and Pennsylvania .
"You can't find a two-bedroom condo for $92,000. They all start at
$120,000 and up. Some of them are about $300,000," she said. "The
prices are ridiculous. I figured I would be able to buy something and
I really haven't been able to."
Visit www.inman.com for more real estate articles
........................................
Houston Home Builders Hit
Record Sales in 2004
Houston builders sold almost
40,000 new homes in 2004, up 11 percent from 2003. With strong job growth
in play, the city's housing industry is poised for an impressive 2005,
says economist and housing expert Mike Inselmann of Metrostudy.
For the first time in years, Houston rang in the new year with some momentum,
said Inselmann. “The local economy is expanding at a sustainable rate
and the labor force is showing signs of significant growth. Local business
owners are reaping the benefits of productivity and technological gains,
energy prices are high and rig counts are at the highest level in 18 years.
These factors combine to form what should be a very exciting 2005.”
Houston’s job market set the groundwork for a solid recovery and is now
growing at a healthy rate, said Inselmann. “With a gain of 34,900 jobs
in 2004, Houston has come full circle — from booming employment in the
mid- to late 1990s, to a recession in 2002 and 2003, and then back to
healthy job growth in 2004. Total employment reached 2.143 million, a
new high-water mark for the Houston labor force.”
This increased productivity should translate into higher wages and greater
worker demand in 2005. For the housing industry, that means greater employment
combined with Houston’s burgeoning population, which should offset the
initial measured increased in interest rates, ensuring the potential of
another solid year, said Inselmann.
Continuing to thrive, the Houston housing market set a year-end record
of 40,599 new home starts during 2004. “However, it appears the meteoric
growth of the past few years is reaching a plateau,” said Inselmann. Signs
of the market peaking are in the numbers: The annual growth rate for 2004
was 7.0 percent, the lowest percentage growth rate since 1999. Metrostudy
recorded 8,473 starts during the fourth quarter of 2004, a 4.1 percent
decrease compared to the fourth quarter of 2003. The fourth quarter of
2004 was only the fifth quarter in the past 10 years in which quarterly
starts declined.
.............................................
HUD's Jackson Aims
at RESPA Reform
WASHINGTON - Housing and Urban Development Secretary Alphonso Jackson has outlined HUD's timetable to develop modern mortgage rules that regulate how American consumers buy and refinance homes. The Department's roadmap for reforming the regulatory requirements of the Real Estate Settlement Procedures Act (RESPA) will include three informal meetings in July and August with consumer organizations and industry representatives. To read HUD's formal announcement of these roundtables, visit HUD's website .
In addition to these Washington roundtable discussions, the Small Business Administration and HUD will co-sponsor meetings in Los Angeles, Chicago and Fort Worth to listen to the unique concerns of smaller real estate and settlement service providers with an interest in RESPA reform.
"Simplifying and improving the way consumers buy and refinance homes in this country will drive our campaign along this road to reform," said Jackson. "There is universal agreement that current regulations can and should be improved to allow even more families to share in the American Dream."
Beginning next month, the Department will host three roundtables with members of industry and consumer organizations (July 14, July 28, and August 18). Participation in these sessions is by invitation and is focused on those individuals and groups that offered an analysis of HUD's 2002 RESPA reform proposals or offered alternative reforms for HUD's consideration. The purpose of these sessions is to stimulate a meaningful exchange of ideas among participants over the substance of new RESPA reform proposals, not to reach consensus through negotiation.
Jackson added, "I understand that with so many competing interests, it will be difficult to make everyone happy. But I promise that before we put pen to paper, we will carefully consider the input from consumers and industry alike. I want to repeat my cardinal rule for RESPA reform: I am more concerned with doing this right, than doing it fast."
Today, buying a home is too complicated, confusing and costly. Each year, Americans spend approximately $55 billion on closing costs they don't fully understand. For most other purchases a consumer makes, the bottom line price is clear and firm. Over the last three decades the mortgage industry has experienced substantial and dynamic change while HUD's disclosure requirements have remained essentially the same.
RESPA became law in 1974 to provide consumers with advance disclosures of settlement charges and to prohibit illegal kickbacks and excessive fees in the homebuying process. Nevertheless, consumers complain that when they reach the closing table, they don't understand the charges and often pay more than they anticipated. In addition, homebuyers are severely limited in shopping for settlement services that could significantly lower the cost of homeownership.
Homeownership is at record levels with increasing numbers of families either purchasing their first home or taking advantage of low interest rates to refinance their existing home mortgages. Yet downpayments and closing costs remain the greatest obstacles confronting potential homebuyers. Creating a simpler, more transparent and less expensive homebuying process will allow even more families to purchase a home or refinance their existing mortgage terms. For more information about reforming the mortgage settlement process, visit HUD's new website devoted to providing the latest information on RESPA reform .
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov .
...........................................
Houston's Existing Home Sales Hit
Annual Record
Houston's existing home sales were up 10 percent in 2004 with 72,015 homes
sold, compared to 65,423 sales in 2003, according to the Houston
Association of Realtors.
It represented the best year
ever for Houston real estate. New annual records were set for total dollar
volume of transactions, number of properties sold and average sales price.
More than 72,000 properties, or an average of 6,000 per month, changed
hands through the MLS during 2004, which was an increase of 10.1 percent
versus last year. The Houston housing market outpaced the overall 2004
national average increase in existing home sales of 8.9 percent, according
to estimates by the National Association of REALTORS. Additionally, more
than $12 billion worth of property, or an average of $1 billion per month,
was transacted in the Houston area in 2004, which was an increase of 7.6
percent from 2003 levels.
“This has been the best year in Houston that residential real estate has
ever seen and current economic indicators project 2005 to be just as strong,”
said Toni Nelson, HAR Chair and a Division Vice President
for Coldwell Banker United, REALTORS. "We are fortunate to live in a city
that has experienced stable growth over a number of years with no economic
indicators that point to either a boom or a bust, as in some areas of
the country. We can have confidence in the retention of our homes’ values.”
While the overall median price of single-family homes reached $138,000
in December, which was an increase of 1.5 percent compared to the prior
year, the median price for existing homes in 2004 was up 4.5 percent versus
the previous 12 months. These figures signal sustained pricing strength
in Houston, particularly in the home resale market. The median is a typical
market price where half of the homes sold for more and half sold for less
that that figure.
Houston’s current median price of $138,000 is 26.7 percent less than the
national median price, which reached $188,200 in November, according to
statistics released by the National Association of REALTORS®. These data
continue to show the tremendous value and lower cost of living afforded
to Houstonians.
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