Archive for the ‘Residential’ Category
Wednesday, March 10th, 2010
The rate of mortgage delinquencies - borrowers who are one payment late - fell slightly between the 3rd and 4th quarters of 2009 from 9.64 percent to 9.47 percent. According to the Mortgage Bankers Association (MBA), a fourth quarter decline is unusual — even when there is no recession — because winter and the holidays typically mean that homeowners have extra expenses.
Jay Brinkmann, the MBA’s chief economist, offered this upbeat perspective. “We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007. With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink once the rate at which these problems are resolved exceeds the rate at which new problems come in.”
Despite the good news, delinquencies nationwide are still significantly higher than in the 4th quarter of 2008, when the rate was reported at 7.88 percent. The pain is concentrated in two states. In Florida, 26 percent of homeowners are one or more months late in making their payments; 24.7 percent of Nevadans are having trouble paying their mortgages.
Tags: Department of Labor, Jay Brinkmann, mortgage delinquency, Pricewaterhousecoopers
Posted in Economics, Residential | No Comments »
Monday, March 8th, 2010
Economic indicators show that the recession is over. This is the opinion of Rick Mattoon, a senior economist and advisor in the economic research department of the Federal Reserve Bank of Chicago and a lecturer at the Kellogg School of Management at Northwestern University. Rick’s primary research focuses on issues facing the Midwest regional economy.
In a recent interview for the Alter NOW Podcasts, Mattoon warned that most people probably don’t feel like the nation is coming out of a recession because there are few signs of job creation or easier access to credit. One of the major concerns economists have is that this will be a double-dip “W-shaped” recession because once the bump from the $787 billion stimulus ends, there will be scant pent-up consumer demand for products and services to take the place of government spending.
One positive sign is an uptick in hiring by temporary employment agencies, which usually is considered to be a good harbinger of what future demand will be. Another interesting theory about this particular recession in terms of jobs is the idea that companies adjusted their employee levels much more aggressively at the beginning of this cycle. As a result, they are operating at extremely lean levels and so may hire earlier rather than later.
One problem is that there is a skills mismatch in the economy. Many people who have lost their jobs don’t possess the right skills to find employment in growth industries such as clean energy or healthcare. The challenge is training these individuals to bring their skills up to par.
Rick Mattoon: Is the Recession Over? :
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Tags: American Recovery and Reinvestment Act, Chicago, deficit, Federal Reserve Bank, GDP, Great Recession, inflation, Rick Mattoon, stimulus bill, treasury bills, wage growth
Posted in Economics, Financing, General, Green, Healthcare, Office, Residential | No Comments »
Wednesday, March 3rd, 2010
After the success of the “Cash for Clunkers” and “Cash for Caulkers” programs, the Obama administration has rolled out “Cash for Appliances”, with the goal of replacing aging washers and refrigerators with new ones that consume less energy. Funded by the $787 billion American Recovery and Reinvestment Act stimulus bill, “Cash for Appliances” is a $300 million program where consumers receive rebates for purchasing energy-efficient appliances. Eligibility requires that the appliance carry the Energy Star logo, which affirms that it meets efficiency guidelines set by the Environmental Protection Agency and the Department of Energy. The program’s goal is to conserve energy, boost retail sales and help speed the economic recovery.
Rebates are allocated by the states. New York, for example, is offering rebates that range from $75 to $105 on refrigerators, freezers and washing machines. If all three appliances are purchased together, the rebate can be as much as $555. “This program will provide a tremendous incentive for consumers all across New York to reduce their energy consumption while providing an important stimulus to our economy,” according to a statement by New York Governor David Paterson.
Retailers are pleased with the program, but think it will not be easy to predict how the program will affect sales. Home Depot spokeswoman Jean Neimi notes that “It’s tough to say, from a sales perspective, because each state has such a different program. But we’re excited the program is in place. Any opportunity to educate our customers on the benefits of energy efficiency is welcome.”
Tags: American Recovery and Reinvestment Act, Cash for Appliances, Cash for Clunkers, David Paterson, Department of Energy, Energy Star appliances, Environmental Protection Agency, Home Depot, Obama administration, stimulus bill
Posted in Healthcare, Residential | No Comments »
Monday, March 1st, 2010
Arizona, Georgia and Texas are the growth centers in terms of new residents in the last few years, according to an Associated Press analysis of Internal Revenue Service migration data. The IRS compared the states where taxpayers filed their returns from 2007 to 2008 to arrive at their conclusions.
Texas led the nation, with 62,827 new households; the largest number of families moved there from California and overseas. Georgia ranked second, with 37,559 new households, many of whom moved there primarily from Florida and New York. Arizona reported a net gain of 20,300 new households, with the majority relocating there from California and Michigan.
The IRS statistics indicate that Americans are not moving much at present, with the annual migration rate at 11.9 percent - the lowest number in decades. United States Census Bureau estimates released at the end of 2009 confirm the IRS numbers. According to the AP analysis, counties with better-educated taxpayers typically see the highest county-to-county migration gains.
“People who move tend to be younger and have lower incomes,” according to William Frey, a demographer with the Brookings Institution. “Normally, if there is a big influx of young people, that could pull down the income of an area; and if there is a big outflux of young people, that can raise income in an area.”
Tags: Arizona, Associated Press Economic Stress Index, bankruptcy, Brookings Institution, demographics, Georgia, Internal Revenue Service, Migration, recession, Texas, unemployment rate, United States Census Bureau
Posted in Development, Industrial, Office, Residential | No Comments »
Tuesday, February 23rd, 2010
New York-based photographer Gregory Holm returned to his hometown of Detroit to draw attention to the nation’s housing crisis by coating an abandoned house with a sheet of ice. Called the Detroit Ice House, the project was designed to inspire residents of a city with thousands of vacant homes and a foreclosure rate that is among the nation’s highest.
Working with Brooklyn-based architect Matthew Radune, Holm covered the two-story house - its windows broken and boarded-up — with ice that reflects the sunlight and icicles that reach from the roof almost to the ground. At first, the men used rooftop sprinklers, but those froze in the cold mid-teen temperatures. Eventually, they sprayed the house from fire hydrants via hoses.
Holm and Radune picked the house, which was about to be torn down, from Michigan’s land bank. Additionally, they agreed to pay back taxes on another foreclosed house so a Detroit woman can move into it. The Detroit Ice House will be torn down in spring and the building materials recycled.
“This gives them an opportunity to see something different in their neighborhood,” Holm said. “It’s not saying it’s going to change afterward. But it’s a gift. This has been a real test of will.”
Tags: Detroit, foreclosure, Gregory Holm, Ice House Detroit, Matthew Radune
Posted in Residential | No Comments »
Tuesday, February 16th, 2010
Congressman Barney Frank (D-MA) wants to scrap Fannie Mae and Freddie Mac in favor of an entirely new mortgage-financing system. According to Frank, Chairman of the House Financial Services Committee and who previously supported the programs, “The committee will be recommending abolishing Fannie Mae and Freddie Mac in their current forms and coming up with a whole new system of housing finance.”
Fannie Mae and Freddie Mac, which back a majority of the nation’s home loans, buy mortgages from lenders, insure them against default and supply new money to create new loans. Thanks to growing losses on these loans that threatened the health of Fannie Mae and Freddie Mac, the federal government took control of the programs in September 2008. Since their seizure, Fannie and Freddie have been run by regulators and kept alive by $110.6 billion in taxpayer money. Frank says that Congress needs to decide what to do with Fannie’s and Freddie’s remaining shareholders, as well as investors in the companies’ $5.4 trillion in mortgage bonds and $1.7 trillion in unsecured corporate debt.
Fannie Mae and Freddie Mac profit by financing mortgage-asset purchases with low-cost debt and on guarantees of home-loan securities they create out of loans from lenders. They currently own or guarantee more than $5 trillion in U.S. residential debt, and were responsible for as much as 75 percent of the new mortgages made in 2009.
“We’re going to look at the whole question of housing finance,” Frank said. “Sorting out the function of promoting liquidity in the market, and also the secondary market in general but then also doing some kind of subsidy for affordability.”
Fannie/Freddie were caught in the eye of the subprime meltdown. In February of 2007, the residential mortgage-backed securities market crashed with sales plummeting 90 percent. While reform is needed, Fannie and Freddie operate like a public option - by making home ownership more affordable and creating competition to commercial banks. A positive step is the Deed for Lease program. After foreclosure - at 57,000 homes in the first half of 2009 - the new program allows owners to lease their homes and avoid foreclosure.
Artificially creating/guaranteeing a market for home loans has lost billions. Hopefully, whatever entity replaces Fannie and Freddie will be prohibited from contributing to congressional campaigns and PAC’s.
Tags: Barney Frank, congress, Deed for Lease program, Fannie Mae, Freddie Mac, House Financial Services Committee, house of representatives, Massachusetts, mortgages, PBS News Hour, Timothy Geithner
Posted in Development, Economics, Financing, Residential | No Comments »
Wednesday, February 10th, 2010
Chicago existing home sales soared by 33 percent in December, although the statistics were flat for the year, according to research by the Illinois Association of Realtors. The average home sale price fell approximately 18.3 percent to $196,000 when compared with 2008. During 2009, a total of 69,290 Chicago-area homes were sold, a 0.2 percent slide when compared with 2008. That does show improvement over 2008, when home sales fell nearly 26 percent compared with 2007.
A total of 5,742 metropolitan Chicago homes sold in December, compared with 4,320 during the same month of 2008. “In 2009, we saw demand primarily for lower-priced homes from first-time buyers in addition to short sales and sales of foreclosed homes,” said Mike Onorato, president of the association and broker-owner of Onorato Real Estate in Coal City. “There is opportunity now for the move-up buyer to take advantage of the tax credit that ends April 30 and lower mortgage interest rates, which many analysts expected to rise by mid-year.”
Last year, home sales in the city of Chicago fell 7.4 percent to 19,401, compared with 20,946 in 2008. City sales in December rose 39.8 percent in December to 1,768 units compared with 1,265 in December a year ago. Median home prices in the city fell 22.4 percent to $225,000, compared with $290,000 one year ago.
Tags: Chicago home sales, collar counties, foreclosed homes, Illinois Association of Realtors, mortgage interest rates, Onorato Real Estate, short sales
Posted in Development, Economics, Residential | No Comments »
Tuesday, February 9th, 2010
Foreclosure is mutually destructive for all parties and something should be done about it. That’s the opinion of Jafer Hasnain, Managing Principal of Lifeline Assets, the first large-scale institutional investment fund targeted toward acquiring single-family homes that are in financial distress. The firm’s business model aligns the interests of distressed homeowners, banks, investors and American taxpayers. Lifeline Assets is a socially responsible fund that plans to invest more than $1 billion in distressed homes through short sales.
In a recent interview for the Alter NOW Podcasts, Hasnain said that the real problem shaking the economy is on the residential side. At present, the $15 trillion American mortgage market is seeing 1.4 percent of loans in foreclosure, with another nine percent past due. Hasnain, who had a front-row seat when the Resolution Trust Corporation spent $125 billion to relieve financial institutions of their distressed real estate in the 1990s, is providing a private sector solution to the housing crisis that relieves the taxpayers of that burden.
Hasnain has built one of the first institutional-scale single-family residential investment funds in the United States and created a price discovery mechanism that is an objective and sensible way to learn how much to pay for a house whose mortgage is in distress. This way, a family in a home that has gone in default agrees to stay in the house, pay rent and maintain the property until they have the financial ability to re-purchase their home. Lifeline Assets’ offer to purchase each house is contingent on the resident’s willingness to continue living there.
Jafer Hasnain on Foreclosure Crisis:
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Tags: distressed residential real estate, foreclosures, Jafer Hasnain, Lifeline Assets, Resolution Trust Corporation, short sales
Posted in Economics, Financing, Residential | No Comments »
Thursday, February 4th, 2010
Capital is flowing out of the Middle East and being invested in real estate across the globe, according to Nicholas Maclean, Managing Director, CB Richard Ellis, Middle East. “The outflow of capital from the Middle East to be invested into real estate properties worldwide has been higher than the influx of global capital into real estate properties in the Middle East. The UAE, in particular, has been looking to diversify its investments and part of the reason has been the lack of transparency within this region.”
Europe and the Far East have received the lion’s share of Middle East investment, with India and China perceived as strong growth markets. Additionally, United Arab Emirates capital is being infused into Abu Dhabi’s office and hospitality sectors. “Capital spent as FDI into real estate within the Gulf Cooperation Council represents only 11 percent of the total. Cross-border activity in the world has exceeded 50 percent and so we have a great opportunity to be the recipient of more investment,” Maclean said.
In terms of where the Middle East is placing its investment dollars globally, “London, Paris and Germany have been the largest recipients in Europe while Hong Kong, Singapore and Australia saw the largest inflows in the regions in the Far East. Knowledge and liquidity have been the key driving forces for the Middle East investors transferring capital to these areas. Institutional investors from the Middle East are investing in commercial developments in these markets while individual investors are looking at residential properties in the UK,” Maclean said.
To learn more about the Middle East and its real estate market, listen to Rochdi Younsi, director in the Middle East and Africa practice of Eurasia Group, analyze the major players in real estate and the new investment opportunities in the Middle East.
Twitter copy:
Tags: Abu Dhabi, CB Richard Ellis Middle East, Dubai, Gulf Cooperation Council, Jumeirah, Middle East, Offshore real estate funds, Saudi Arabia, Sheikh Zayed Road, United Arab Emirates, Zawya
Posted in Development, Economics, Office, Residential | No Comments »
Thursday, January 28th, 2010
London has overtaken Washington, D.C., as the preferred city for commercial real estate investment, primarily because investors believe that prices have bottomed out and the time to get into that market is now. The British capital has overtaken the previous favorites of Washington, D.C., and New York, according to a survey conducted by the Association of Foreign Investors in Real Estate (AFIRE).
“London currently offers investors the advantage of a ‘re-priced’ market,” says James Fetgatter, AFIRE’s CEO. “The re-pricing began sooner than it did in other cities.” London’s score is 31 points higher than the perennial favorite Washington, D.C., and 40 points ahead of New York City. A year ago, London occupied second place, ranking four points behind Washington. The survey of the association’s approximately 200 members was taken in the fourth quarter of 2009 and represents ownership of more than $842 billion of commercial real estate. Of that, $304 billion is invested in the United States.
London, along with the rest of the United Kingdom, has rebounded with investment rising 56 percent from the first to the second half of 2009. Property values rose 2.4 percent in November, the largest monthly increase in 15 years. Savills, the real estate advisory firm, is predicting London will eclipse New York as the fastest growing global financial center.
Despite London’s success, the United States is still preferred as the “most stable and secure real estate investment environment,” according to 44 percent of survey respondents. This is the first time the United States ranked below 50 percent in the survey. It ranked 53 percent in 2008 and 57 percent in 2007. Germany occupies second place with 21 percent. In terms of price appreciation, the United States ranks first, followed by the United Kingdom and China.
The preferred property for investment is multifamily residential, followed by office, industrial, retail and hotel.
Tags: Boston, China, financial crisis, Germany, London, Los Angeles, New York, Real Estate Roundtable, San Francisco, United Kingdom, United States, Washington DC
Posted in Industrial, Office, Residential | No Comments »