Archive for the ‘Residential’ Category
Tuesday, May 18th, 2010
The latest numbers on housing starts, new home sales and rising prices indicate that the residential recovery is for real. Because the housing crash was a primary cause of the Great Recession, word that the sector is rebounding is good news. Housing permits and starts have increased in the last several months, and new house sales increased in March.
Even though the Case-Shiller home price index showed mixed numbers for January and February, there was better news found in a recent government report on the producer price index for single-family residential construction through March. This measure of the average change in the cost of materials for new home construction has risen three percent since last summer. Economists are interested in the producer price index because it is a critical factor in the pricing of existing homes. Inflation hawks may claim that this statistic is a portent of rising prices in the general economy.
According to Casey B. Mulligan, an economist at the University of Chicago, a little inflation is not a bad thing for housing. “It’s quite possible that inflation-adjusted housing prices will not significantly increase, but even if a housing price increase resulted merely from general inflation, it would be welcome because anything that raises housing prices can help alleviate the extraordinary prevalence of foreclosures that derives largely from the fact that debt-strapped homeowners can no longer sell their homes for enough to cover their mortgage,” Mulligan said.
Tags: Case-Shiller home price index, Casey B Mulligan, Economist, Great Recession, housing crash, inflation, producer price index, residential market, Standard & Poors 500, University of Chicago
Posted in Economics, Residential | No Comments »
Monday, May 17th, 2010
Ten years after Mayor Richard M. Daley ordered a roof garden planted on top of Chicago’s City Hall, the city has 500 green roofs downtown and scattered throughout its neighborhoods. According to Department of Environment spokesman Larry Merritt, green roofs cover approximately seven million SF, although that represents less than one-tenth of one percent of Chicago’s 500,000 buildings.
City Hall’s roof garden, for example, has more than 100 plant species, including native prairie grasses. The Willis Tower is now sporting a partial green roof, located on the 90th floor, that is tied down with steel ropes to protect it against the wind. One of the city’s few green roofs that is open to the public tops the 555 West Monroe Street building that serves as PepsiCo’s headquarters. Writing in the Chicago Tribune, Pulitzer Prize-winning architecture critic Blair Kamin describes PepsiCo’s green roof as having “a swath of grass, tables and chairs, and four twirling wind turbines that are handsome enough to be kinetic sculpture. This green roof isn’t an energy-saving toupee. It’s integrated into the daily life of the city and the people.”
On the city’s Far North Side, an organic farm tops the Uncommon Ground restaurant at 1401 West Devon. According to Kamin, the farm is “totally in sync with the restaurant and its embrace of the ‘locavore’ philosophy of locally produced food.” Another green roof - visible from the CTA’s Red Line - tops an Aldi supermarket at 4450 North Broadway. Kamin isn’t so impressed by this green roof, noting “It resembles a postage stamp. Green roofs, it shows, can comply with the law without adding much beauty to the cityscape.”
Tags: Aldi, Blair Kamin, Chicago, Chicago Tribune, City Hall, Department of the Environment, Earth Day, Green roofs, Green Roofs for Healthy Cities, LEED standards, Mayor Richard M Daley, PepsiCo, Pulitzer Prize, U.S. Green Building Council, Uncommon Ground, Willis Tower
Posted in Green, Healthcare, Industrial, Office, Residential | No Comments »
Thursday, May 6th, 2010
A 43-story residential tower in south London’s Elephant & Castle neighborhood will receive eight percent of its power from three wind turbines installed at the top of the structure. The Strata Tower - nicknamed the Electric Razor - is being developed by Brookfield Europe and eventually will be home to 1,000 residents.
The Strata is a £13 million milestone in the £1.5 billion project to revitalize the Elephant and Castle area. The Strata’s 408 studio, one-, two- and three-bedroom apartments range from £230,000 to £2.5 million, with the first residents expected to move in this summer. As well as generating an estimated 50MWh annually, the turbines will earn approximately £16,000-£17,000 per year through the British government’s new feed-in-tariff, a payment per kilowatt-hour for electricity generated by a renewable resource.
Each turbine has 15 blades with a 9m-diameter rotor plane. The wind turbines - which will meet energy demand for 33 two-bedroom apartments - were chosen because they had the best potential, given the building’s height and shape. Although other buildings have wind turbines mounted on their roofs, the Strata Tower is the first to incorporate them into the original design.
Tags: Brookfield Europe, Electirc Razor, Elephant & Castle, Feed-in-tariff, London, southwark, Strata Tower, wind turbines
Posted in Development, Economics, General, Green, Healthcare, Industrial, Residential, Student Housing | No Comments »
Tuesday, April 20th, 2010
Bank of America (BofA) is taking steps to write down mortgage principal owed by thousands of underwater homeowners in what has been termed “the mortgage industry’s boldest move yet” to resolve the nation’s foreclosure problem. Bank of America can well afford the initiative.
According to Betsy Graseck, a Morgan Stanley analyst, the ultimate cost of principal reductions is “immaterial” because the majority of the $10 billion pool of loans that are eligible for the write-downs are no longer carried on Bank of America’s balance sheet. BofA holds just $1.5 to $2 billion of eligible loans and has already reserved against expected losses on these mortgages. The loans are among the most exotic and risky subprime products that were available during the housing boom. One is the Option ARM, which originated with an extremely low interest rate and resets at a significantly higher level after a few years. The rest of the eligible loans - inherited by BofA through its 2007 acquisition of Countrywide Financial - are already securitized and investor owned.
Although the move is giving BofA valuable free publicity, it results from a settlement between the attorney generals of several states and the bank. Even though some investors complained it wasn’t fair for BofA to agree to the modifications since they were not assuming the majority of the losses, the AGs refused to give up. BofA is trying to placate the investors by assuring that the modification amounts will be reduced if house prices recover in the next few years. Additionally, the BofA program is being called a archetype for other lenders.
Tags: Bank of America, foreclosure, housing boom, Morgan Stanley, option ARM, underwater mortgages
Posted in Economics, Financing, Residential | No Comments »
Monday, April 5th, 2010
The Obama administration has announced a new initiative to assist troubled homeowners by helping them refinance with government-backed mortgages that cut monthly payments. The program would also temporarily reduce payments for unemployed borrowers who are actively job hunting. The government is encouraging lenders to write down the value of loans for borrowers participating in modification programs. Officials expect this and other in-place federal programs to help between three and four million distressed homeowners over the next several years. A Treasury Department statement said the initiatives are designed to “balance the need to help responsible homeowners struggling to stay in their homes, with the recognition that we cannot and should not help everyone.”
The thrust of the new initiative, which likely will cause some controversy, is that the government - through the Federal Housing Administration (FHA) - will help owners who are underwater or owe more than their house is worth to refinance. Estimates are that 11 million households or 20 percent of all mortgage-holders, are underwater. Many of these homeowners refinanced during the housing boom and took cash, putting them at risk when prices fell. The homeowners will have to eat some of their losses, but will be in better shape than families who had no option but foreclosure. By insuring the new loan against the risk of default, the FHA gives the borrower a good reason to make payments instead of abandoning the house.
The program’s success depends on investors’ eagerness to participate. Over the last three years, the FHA has expanded its mortgage guarantee program to help homeowners cope with the housing crisis. Today, the FHA guarantees more than six million borrowers, many of whom made small downpayments and currently are underwater. Approximately $14 billion in TARP funds will fund the project.
Tags: congress, Department of the Treasury, distressed homeowners, Federal Housing Administration, foreclosure, mortage modifications, Office of Thrift Supervision, President Barack Obama, TARP, underwater mortgages
Posted in Economics, Financing, General, Residential, Student Housing | No Comments »
Tuesday, March 30th, 2010
Families looking to refinance their mortgages don’t face quite the uphill battle that Jon and Laura Hagar have in their search for the right lender. That’s because the Hagars’ house in rural Hot Sulphur Springs, CO, is made of 17,000 old tires. The Hagars’ 2,700 SF house is built of stacked tire bales - five-foot-wide blocks of compressed tires - that form the exterior walls. The gaps between are filled with cans, bottles, plastic plates and other junk. The trash is covered with concrete, clay and stucco, while the south-facing windows capture light, heat and mountain views. “We lovingly call it the trash house,” Laura Hagar said of the house her family moved into at the end of 2008.
The Hagars’ dilemma represents a niche mortgage market for houses constructed of earth, tires, concrete and trash by environmentalists who want to conserve energy and re-use materials that might otherwise end up in landfills. The problem is that the housing bust has made banks reluctant to finance these houses because it is difficult to study sales of comparable homes when deciding how much to lend.
The Hagars received a $240,000 line of credit from Red Rocks Credit Union to finance the house’s construction. At the time, a credit appraiser - though unable to find a comparable house among recent sales - valued the Hagars’ house at $500,000, in line with a listing for a straw-bale house in the area. With interest rates currently at historic lows, the Hagars are trying to refinance their house with a long-term, fixed-rate mortgage. Their loan officer responded via email, “I think we have really hit a brick wall here.” Because lenders can’t value the property, they cannot give the Hagars the mortgage they want.
The Hagars’ credit union hasn’t given up yet and is looking at the secondary mortgage market. The house is so unique that the mortgage might not be attractive to investors, which means the credit union would have to keep the loan on its own books. With regulators looking at the health of small financial institutions, Red Rocks prefers to make loans than can be sold easily to raise cash.
Tags: Environmentalists, housing bust, landfills, long term fixed-rate mortgage, Niche mortgage market, Red Rocks Credit Union, refinancing, tire bales
Posted in Residential | No Comments »
Monday, March 29th, 2010
The Congressional Budget Office has determined that the Troubled Asset Relief Program (TARP) will cost the government $109 billion - just 16 percent of the $700 billion set aside to rescue the nation from the great recession. Insurance giant AIG and the auto industry are TARP’s largest beneficiaries.
The federal government bought $40 billion in AIG preferred stock and created a $30 billion line of credit for the firm. Earlier CBO estimates that AIG would cost the government $9 billion; since AIG hasn’t paid the Treasury Department the quarterly dividend it owes, the CBO increased its projected loss to $36 billion or more than half of the bailout cost. The CBO estimates that TARP will lose $34 billion from its bailout of Chrysler and General Motors.
TARP’s mortgage modification program is estimated to use less than $20 billion, less than half of the $50 billion set aside to help people stay in their homes. The CBO says that fewer people will participate in the program than anticipated. When President Barack Obama announced the program in February of 2009, he said that as many as four million homeowners could reduce their monthly payments to no more than 31 percent of their pre-tax incomes. At the end of February, only 170,000 distressed homeowners had taken advantage of the mortgage modification program.
Tags: AIG, auto industry, Chrysler, Congressional Budget Office, General Motors, Great Recession, President Barack Obama, TARP, Treasury Department
Posted in Economics, Financing, General, Residential | No Comments »
Monday, March 22nd, 2010
Two massive earthquakes in a single month - an 8.8 trembler in Chile and a 7.0 quake in Haiti - have raised the question of whether engineers can design buildings that don’t crumble when the earth’s tectonic plates crash against one another. Although the simple answer is that the technology exists to make buildings almost earthquake-proof, the cost of rebuilding sprawling cities that are hundreds of years old would be prohibitively expensive.
“Most disasters are created by human beings. It’s how we build and where we build that creates the hazard, the disaster,” said Michael Armstrong, senior vice president of the International Code Council, a non-profit organization that develops building codes. “Earthquakes, hurricanes, fires, floods are going to occur, but there are ways in terms of where we build and how we build that can reduce the impact.”
Essentially, the technology that prevents buildings from collapsing during earthquakes works by making buildings stronger or more flexible so they sway and slide rather than crumble. For nearly three decades, engineers have constructed skyscrapers that float on systems of ball bearings, springs and padded cylinders. Because these buildings don’t sit directly on the earth, they are protected from some earthquakes. During a major earthquake they may sway a few feet in synch with the tremor.
Mehmet Celebi, a senior research civil engineer with the U.S. Geological Survey, pointed to a striking example where buildings constructed with base isolation performed exceptionally in earthquakes while others did not. Base isolation is a collection of structural elements which should substantially decouple a superstructure from its substructure resting on a shaking ground, thus protecting a building’s structural integrity. He cited a University of Southern California hospital in Los Angeles that came through the 1994 Northridge earthquake with no damage. A nearby hospital that did not incorporate the same technology suffered significant damage.
Tags: Chile, earthquake, earthquake-resistant technology, Haiti, International Code Council, Mehmet Celebi, Michael Armstrong, Northridge earthquake, tectonic plates, University of California at Berkeley, US Geological Survey
Posted in Development, Office, Residential | No Comments »
Thursday, March 18th, 2010
Despite the Snowmageddon that crippled Washington, D.C. and much of the East Coast during February, the economy continued to grow at a modest rate. This is the opinion of the Federal Reserve’s newly issued Beige Book report - officially known as the “Summary of Commentary on Current Economics Conditions by Federal Reserve District” — which is published monthly.
In terms of commercial real estate, the Beige Book notes that activity is still limited. “Most Districts characterized commercial real estate and construction activity as weak or having declined further, but some Districts noted slight stabilization and a few signs of modest improvement.” The Beige Book also noted that the snowy February kept prospective house hunters home in some parts of the nation. According to the report, “Residential real estate markets improved in a number of Districts, although several Districts noted that activity softened or remained weak partly due to extreme winter weather.”
On the jobs scene, the Beige Book reports that “the pace of layoffs slowed in most Districts, but hiring plans still remained generally soft.”
Tags: Beige Book, East Coast, Federal Reserve, MasterCard Advisors, Reserve District, snowmageddon, Washington DC
Posted in Economics, Financing, General, Green, Healthcare, Industrial, Office, Residential | No Comments »
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 »