New-home slowdown is good news

WASHINGTON – Dec. 19, 2007 – You’d think the chief economist for the National Association of Home Builders would be alarmed that the pace of new-home construction in November dropped to the lowest level in more than 14 years, according to a Dec. 18 Commerce Dept. report.

But David Seiders, the NAHB’s chief economist, says he’s somewhat pleased. Builders cannot reduce their inventories of unsold homes unless they cut production, particularly in light of weak demand and rising competition from existing-home sellers, he said.

“The builders are behaving appropriately at this point,” Seiders said. “I would have liked to see the production decline start earlier than it did. But since the beginning of 2007, production has been falling rapidly.”

Builders suspend projects

Foreclosures drop 10 percent in November

WASHINGTON – Dec. 19, 2007 – A surprising new report suggests that U.S. home foreclosures actually declined 10 percent in November despite signs that the housing slowdown is worsening in much of the nation.

In November, there were 201,950 foreclosure filings – default notices, auction sale notices, and bank repossessions – down 10 percent from October, the first double-digit monthly decrease since April, 2006, Irvine [Calif.]-based RealtyTrac said Dec. 19. But the foreclosures are up nearly 68 percent from November 2006. The U.S. foreclosure rate is about one filing for every 617 households.

“This could indicate that foreclosure activity has topped out for the year,” RealtyTrac Chief Executive Officer James Saccacio said in a prepared statement. But “the true test of whether this ceiling will hold will come at the beginning of next year when we anticipate that a seasonal surge in foreclosure filings and another possible wave of resetting mortgages could place further pressure on the housing market.”

Alot Going On in the Real-Estate Industry!!!

The 2008 world outlook by region

SHANGHAI, China (AP) – Dec. 17, 2007 – Asia’s dynamic economic growth is expected to slow modestly in 2008 as its biggest economies grapple with emerging problems, from inflation in China to appreciating currencies in India and Japan.

The expected slowdown in the U.S. economy – a vital export market – and higher oil prices also cloud Asia’s outlook.

In China, worries persist that the economy is overheating. Inflation hit a peak of 6.5 percent this year, while real estate and stock prices also have soared, posing a challenge to policymakers whose options are limited by China’s continued controls on the currency and capital markets.


FHA loan expansion heading to a vote

WASHINGTON – Dec. 14, 2007 – Hundreds of thousands of minority and moderate-income home buyers would become eligible to get low-rate, low-down-payment mortgages insured by the federal government under an agreement struck yesterday in the Senate.

The measure, which had been held up by a lone senator, Republican Tom Coburn of Oklahoma, is expected to get a full floor vote today or Monday. It would greatly expand the Federal Housing Administration’s mortgage insurance program that helps people with questionable credit get low-interest home loans.

The delay of the bill drew the ire of the Bush administration and House lawmakers on both sides of the aisle, as the pressure increased on the federal government to address the worsening mortgage crisis. The House passed its version in September, 348 to 72.

The legislation aims to draw people away from subprime loans, which offer low “teaser” rates that can jump as high as 11 percent after two or three years. By the summer of 2010, about 600,000 people with such loans are expected to lose their homes because they will not be able to make the higher monthly payments.

FHA Commissioner Brian Montgomery said his agency’s program could “fill the void” as the subprime market continues to unravel.

“A lot of people who went the subprime route should have come to FHA,” Montgomery said. “Sadly, some of them are coming to us now after” their interest rates have reset.


Two attorneys general probe Countrywide

LOS ANGELES – Dec. 14, 2007 – Attorneys general in California and Illinois are investigating the lending practices of Countrywide Financial Corp., the nation’s largest mortgage lender, officials said Thursday.

The Illinois attorney general launched a probe into the lender’s business practices and may expand the investigation to examine how homeowners were approved for mortgages with payments they were unable to afford.

“We’re looking at why people who appear to us to not be able to afford the loans they’re in are in these loans and how Countrywide contributed to that,” said Deborah Hagan, chief of the attorney general’s consumer protection division.

A California probe is also under way, a state official familiar with the attorney general’s investigation into mortgage lending practices said late Thursday on condition of anonymity, citing the confidential nature of the investigation.

In a statement, the Calabasas-based company said it was cooperating with Illinois’ investigation and declined further comment. A spokesman didn’t immediately return an after-hours call inquiring about the California probe.

New York Times

Business

Fed Joins Other Banks to Add Cash

By FLOYD NORRIS and VIKAS BAJAJ

Published: December 12, 2007

Central banks in Europe and North America moved to increase the amount of money they could lend to banks in an attempt to ease the credit squeeze.

Good News!

NAR: Worst is over – existing-home sales to trend up in 2008

WASHINGTON – Dec. 11, 2007 – Existing-home sales are projected to trend up in 2008, with pending home sales showing a slight near-term rise, according to the latest forecast by the National Association of Realtors® (NAR). However, a recovery for new-home sales is unlikely before 2009.

Lawrence Yun, NAR chief economist, says the worst part of the credit crunch has already worked its way through the data. “The unusual mortgage disruptions that peaked in August were clearly seen in lower home sales that were finalized in September and October, so the market was underperforming,” he says. “Now that mortgage conditions have improved, some postponed activity should turn up in existing-home sales over the next couple of months, and I expect sales at fairly stable to slightly higher levels.”

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in October, increased 0.6 percent to an index of 87.2 from an upwardly revised reading of 86.7 in September. It was the second consecutive monthly gain, but still 18.4 percent below the October 2006 index of 106.8. “The broad trend over the coming year will be a gradual rise in existing-home sales, but because sales are exceptionally low in the final months of 2007, total sales for 2008 will be only modestly higher than 2007,” Yun says.


Fed expected to cut interest rates again

WASHINGTON – Dec. 11, 2007 – Faced with a spreading mortgage crisis, the Federal Reserve is expected to cut interest rates today for a third straight time and hint that even more rate cuts could be forthcoming.

That is the view of private economists, who believe that Fed Chairman Ben Bernanke clearly signaled this outcome in a speech last month in which he said that the latest bout of financial market turbulence raised greater risks for the economy.

Most economists are expecting a quarter-point cut in the federal funds rate at Tuesday’s meeting, which will be the Fed’s last rate-setting discussion this year. That would push the federal funds rate down 4.25 percent and send banks’ prime lending rate, the benchmark for millions of consumer and business loans, down to 7.25 percent, the lowest level in two years.

Renters Will Pay for Better Management!!

WHAT DO RENTERS REALLY WANT … AND WILL THEY PAY FOR IT?

Earlier this year the research giant J.D. Power & Associates undertook an opinion survey in four different US cities to find out which factors were considered most important by renters in choosing where to live. They asked respondents to rate five factors in order of importance: amenities; condition of unit at move-in; rent/value; safety/security; sense of community, and service staff. The results, released in September, showed that the factor ranking highest was a sense of community in the apartment complex. The pollsters also asked people to mention an apartment owner or manager they thought did a good job of providing the factors they looked for. That’s the part that interested us, because it gave us a chance to use the RealFacts database to see if residents would pay extra rent for good management:

We compared the average rent for all two-bedroom/two-bath units in each MSA with the average rent for those units at apartment communities in the portfolio of the companies that were highest ranked for their management by respondents in the Power survey. Here are the results.


Las Vegas: Camden, $994 vs $957 for the MSA
Denver: Legacy Partners, $1,087 vs $1,029 for the MSA
Orlando: ZOM, $1,101 vs $991 for the MSA
San Jose: Irvine Company, $2,328 vs $1,881 for the MSA.


So we see that good management can indeed rewards the managers. The differential in rents between the best managers and the MSA average ranges from a minimum of about $40 a month in Las Vegas, $60 a month in Denver, to more than $100 a month in Orlando to an astounding $450 per month in San Jose. When you multiply the increased rent per unit times an average unit size of 200 to 300 units, and then multiply that figure by 12 months in a year, the additional income could easily add up to more than a million dollars a year --- a powerful incentive to be a good manager of rental property.

Caroline S. Latham
CEO
RealFacts

Lenders angle for borrowers who occupy niche markets

Lew Sichelman |United feature syndicate

December 9, 2007

WASHINGTON - Despite the meltdown in the subprime-mortgage sector, lenders continue to devise new and unusual ways -- or dust off little-known products -- to finance borrowers who fit into numerous market niches.

NEWS!

UF survey: Florida’s real estate report mixed

GAINESVILLE, Fla. – Dec. 7, 2007 – All is not gloom and doom with Florida real estate, according to the latest University of Florida study, which finds a positive outlook for commercial properties despite the bad news in the housing market.

“There is more than one world of real estate, and while you can paint a very grim picture of single-family housing and condos, rental and commercial property look on balance to be healthy and normal even though they are not as rosy as they were a year ago,” said Wayne Archer, director of UF’s Bergstrom Center for Real Estate Studies.



Crist joins with Trump to raise money for property tax amendment

NEW YORK (AP) – Dec. 7, 2007 – Donald Trump, who pays $1 million a year on a single Palm Beach County mansion, helped Gov. Charlie Crist raise money Thursday for a ballot question that could cap all property taxes while providing cuts for most homeowners.

“The press just told me I pay over $1 million a year on one house in real estate taxes in Florida. I didn’t even know. I said, ‘Really? I pay that much?’“ Trump told a crowd of about 40 while standing next to Crist in a Trump Tower office. “Hopefully that sucker will come down a little bit.”

Tax Tips!

Tax tips for real estate developers and investors

CHICAGO – Dec. 6, 2007 – As 2007 comes to an end and planning for 2008 begins, real estate developers and investors should consider some tax tips that could save money for companies in the long run:

1. Properly account for lease income. You may be accounting for your lease income for tax purposes based on the cash received or on the terms of the lease agreement. However, a Code section specifically addressing leases may require the income to be accounted for differently.

2. Determine if you are a dealer or an investor. Do you know your status as either a dealer or an investor for tax purposes? Proper planning up front will ensure the desired treatment upon disposition of the property.

3. Allocate land cost to your benefit. To defer income upon the sale of parcels from a tract of land purchased, proper allocation of the cost among the various parcels must be done. The IRS requires that the cost be “equitably apportioned.” But how? There are several methods available that should be considered when allocating cost.

4. Color your building green. Including solar and other alternative energy property in a new building can generate tax credits. A new owner can deduct up to $1.80 per square foot of the cost of an energy efficient commercial building instead of depreciating it over 39 years.

5. Take full advantage of depreciation. Has your company recently undertaken new construction projects, expansions or renovations? Substantial long-term savings could result from a cost segregation study, which categorizes your assets into the appropriate and most tax-advantaged depreciable lives.

“To learn how these tax tips may apply to your real estate business, please contact your tax advisor,” said Jerry Williford, tax senior manager in Grant Thornton LLP’s real estate industry practice.

Homes features that are buyer turnoffs

WASHINGTON – Dec. 5, 2007 – Old homes can be quaint, but there’s a difference between old and outdated. Unless homeowners periodically invest in upgrades, their homes will fall so far below the standards of current buyers that they become obsolete and hard to sell.


Credit score primer: What buyers need to know to get a loan

DALLAS – Dec. 5, 2007 – In the wake of the credit crisis, lenders have become much pickier about whom they lend to. Here are some basic facts that will help potential borrowers understand what they face.

Wednesday, December 5, 2007 - 9:53 AM EST
Google forms partnership with state officials
Orlando Business Journal

In an effort that apparently will not provide any additional costs to taxpayers, Florida state officials are announcing a new collaboration with Google Inc. to create new search engine features for those looking for government services online.

Exterior Remodeling Pays Off...

Outside remodeling projects pay off, Realtors report

WASHINGTON – Dec. 4, 2007 – Many buyers judge a house by its exterior, or so it seems from the results of the 2007 Remodeling Cost vs. Value Report. Three of the four projects with the highest national percentage of costs recouped this year were exterior upgrades, according to the report, which was produced by Hanley Wood, LLC, in cooperation with the National Association of Realtors’ (NAR) Realtor Magazine.

The study found the most profitable project on the national level was upscale siding replacement, recouping 88 percent of costs upon resale. Wood deck additions and wood window replacements also returned 85 percent and 81 percent, respectively. On a national average, the only interior project to return more than 80 percent of remodeling costs this year was a minor kitchen remodel, returning 83 percent of project costs at resale.

FROZEN RATES?

Bush administration: Agreement near on effort to freeze mortgage rates


WASHINGTON (AP) – Dec. 3, 2007 – Treasury Secretary Henry Paulson said Monday he is confident there will soon be an agreement to help thousands of American homeowners avoid mortgage defaults by temporarily freezing their interest rates.

Paulson told a national housing conference that this effort involved a “pragmatic response” to current realities as the U.S. economy goes through the worst housing slump in more than two decades. The number of homeowners struggling to meet higher payments because their initial introductory rates are resetting is currently soaring.

Paulson and other top Treasury officials have been holding talks with major players in the mortgage industry over the past several weeks to hammer out an agreement that would freeze the lower introductory rates to keep them from resetting to higher levels for a period of years.