Entries from February 2007 ↓

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The Real Estate Bloggers had a nice write up in the Fifth Annual List Issue in the print version of Realtor Magazine. Thanks to the whole crew over there for including us in the roundup of 5 Real Estate Blogs To Visit!

The Real Estate Bloggers (www.therealestatebloggers.com)

Sales volume in California was down in January 2007 12.6 percent while home prices rose 1.9 percent. These numbers may sound dry, but they tell one hell of a story. Prognosticators have been expecting housing prices to drop significantly in the state as the speculators left the market.

Instead what we see is pricing holding firm while volume remains tepid. That is allowing the market to move sideways while income catches up to housing prices and not the wholesale slaughter for those who bought in the past 2 years.

The median price of a home in the state rose just 1.9 percent to $559,640 in January from $549,460 in January 2006, according to the California Association of Realtors. Sales volume fell 12.6 percent.
Prices in the Bay Area mirrored the statewide trend, creeping up 1.7 percent to $719,320 for an existing, single-family home, the group found. That result differs from those in a report released earlier this month by DataQuick Information Systems, which found the median price of an Bay Area existing, single-family home unchanged at $640,000.
The association, the industry’s trade group, excludes data from Sonoma and Napa counties when calculating the region’s median home price, while DataQuick’s analysis includes all nine Bay Area counties. DataQuick also calculates its data by analyzing information on sales from county records while the Realtor group looks only at sales reported by members of its association. via insideBayArea.com

Earlier this month we talked about the benefits of buying into the student housing market, and now Marketplace has an interview on the benefits of owning off campus housing as a investor and landlord.

I still think this a good local investment if you are hands on and willing to get dirty. College students in some ways are hard on properties, but you will typically get paid and with the university budget crisis and high growth in students, demand is high.

SCOTT JAGOW: This morning, we’ll get the latest numbers on existing home sales. Probably yet another sign about the cooling housing market. Buying up a bunch of homes or several apartment buildings may no longer seem like a sure-fire investment. But we’re here to tell you about a place in the real estate market that’s fairly certain to pay off. Here’s Alex Cohen:

SANDY POPE: This is considered a loft, even though it has a separate bedroom, so when you come in your front door you’ve got your storage . . .
ALEX COHEN: Realtor Sandy Pope shows off a condo in Austin, Texas. This unit lists for $200,000 dollars even though it’s only 750 square feet.

But it’s perfect for students. It comes with a high-speed Internet connection, there’s a pizza place on the ground floor, a bus stop right outside and the University of Texas campus is just a few blocks away.  via Marketplace

Listen to the Interview (via Realplayer)

UPDATE: Today I recieved an email from Bo Newell, who is with Mountain Area Realty, concerning the legal action. When I first read the story, my impression was that the case was over a developers right to give a real estate firm the ability to market their homes. Instead, this is what Bo Newell sent me:

“This suit has nothing to do with a developer selling their own property.  This is a suit about an exclusive agreement between a Resort with no property to sell making an exclusive horizontal agreement with a real estate company to sell resale properties at the exclusion of all other realtors to have an office or even place any marketing materials in the resort. This sounds to me like a classic restraint of trade.”

Thanks for the heads up, Bo, it is always better to get the story correct.

Original Story:

It has been a long tradition of developers dealing with a primary brokerage on their properties to manage the sales effort of new development. But an outside the fence brokerage is claiming that the title “official real estate company of Wintergreen Resort” is an antitrust violation of the 1890 Sherman Act and also the Virginia Anti Trust Act.

In my eyes this is a frivilious suit, but I may be missing something. The other real estate companies can sell inside the property, they just can not use the official tag and have a sales office inside the gates. This is a typical arrangement that is replicated across the country.

If for some crazy reason the suit is successful, what does this do to the method developers use to sell their new homes across the country? What would it do to your local market?

Wintergreen Resort and Roy Wheeler Realty joined Sept. 1 to form Wintergreen Resort Premier Properties, which has the exclusive rights to advertise as the “official real estate company of Wintergreen Resort,” operate an office on resort property and distribute marketing materials there. Other real estate firms can sell property at Wintergreen Resort, but not with the preferred treatment of Wintergreen Resort Premier Properties.
The exclusive dealing contract has given Wintergreen Resort Premier Properties a “dominant position” in the home sales market at the resort, driven out at least three competitors and left Mountain Area Realty with only a portion of the sales it normally would receive, Mountain Area Realty’s attorney said.
Wintergreen Resort Premier Properties “is charging sellers 6 percent commissions,” said Allen Foster, attorney for Mountain Area Realty. “Mountain Area Realty was charging 5 to 51/2 percent. So we know consumers are being harmed.”
The lawsuit accuses Wintergreen Resort of violations under the 1890 Sherman Antitrust Act, the Virginia Antitrust Act and the Consumer Protection Act, as well as conspiracy and fraud. The $6 million in damages represents lost commissions, Mr. Foster said. via The Washington Times

Living in a community that is growing rapidly I have seen how difficult it is to sell a church. Typically what happens is the parish grows beyond the capacity of the original church and there is not enough land for the church to build onto it. The parish then builds their dream church at another location and tries to sell the old church to pay for part of the expansion.

But finding a buyer for a church can be very difficult. The combination of zoning restrictions, neighborhood approvals, and functional space requirements often precludes use by other organizations or businesses in the space. So the only possible buyer is a smaller church looking to expand. And then some of the parishioners may be very picky on who goes into the space. I remember going to the Limelight in New York City years ago, a night club in a converted church, and I am sure that the Diocese did not plan on that use for an old church.

If you are offered the opportunity to sell a church, move slowly and carefully into the relationship. Find out what the stumbling blocks on potential buyers are, if the parish is willing to sell so the property can be demolished and rebuilt, and what restrictions they will put on potential buyers. It will be a hard sell to begin with and if the churches leadership is not being accommodating and logical, it can be a very difficult sale for you.

Leigh Nurre faces one of the toughest transactions in real estate: selling a property designed for one purpose and of interest to only a sliver of the market.

Nurre is among hundreds of U.S. real estate agents and brokers marketing older churches as traditional mainline congregations decline, people move to the suburbs and churches increasingly become all-week lifestyle centers that need more room. Nurre and others make telephone calls to new, renting congregations that may or may not have money to buy. They advertise on commercial real estate sites under “special purpose” designations. And they get exploratory calls from developers and others floating ideas for other uses, from funeral homes to private schools.

Nothing about the process is easy. Most older churches are designed solely for services and can require rezoning for alternate uses. Residential areas accustomed to a low-impact religious neighbor can be fussy about busier uses. Seller congregations can even balk at buyer proposals they find offensive. Churches also are expensive and fledgling congregations often lack the necessary large down payments on sites often listed for more than $1 million. via sacbee.com.

One of the regions of the country that saw the biggest run up in real estate prices over the past 5 years was Baltimore. So when the slowdown occurred, most were expecting carnage in the city. But as the Baltimore Sun reports, real estate prices can not be quantified by a geographic region such as a metropolitan marketplace.

While some sections of the city and surrounding areas have lost value, there are pockets that saw over 20 percent increases last year. Is this surprising, maybe is you are thinking the sky is falling. However,  those that watch markets work know that buying and selling real estate know that moving over a couple of streets can change the characteristics of the marketplace.

So buying a home in a part of town that has appreciated greatly may not make a whole lot of financial sense right now, but look around and you may find a part of town that is gentrifying or is transforming and tremendous profits may be out there for you.

Areas with declines were generally expensive, with homes costing $500,000 on average, while many of the fast-appreciating communities were more affordable, according to a Sun analysis of home sales data that offers the first detailed look at the post-housing-boom landscape. Half of the region’s 10 most costly ZIP codes in 2005 saw a drop in average price last year, from Monkton in Baltimore County to Davidsonville in Anne Arundel.

Local real estate agents say they believe the market is on an upswing after months of sluggishness. January seemed to bear that out, with sales rising for the first time in more than a year just before the all-important spring season. But even last year, average prices increased at least 10 percent in a third of Baltimore’s suburban communities — and in a remarkable three-quarters of city neighborhoods.

Prices in half of the city’s neighborhoods, in fact, jumped at least 20 percent.

“That just confirms what I see and what I hear,” said Joseph T. “Jody” Landers III, executive vice president of the Greater Baltimore Board of Realtors. “We see pockets where there have been some slight declines … but you continue to see some strong gains. … You also have to put that into some historic context: For two decades, there was no price appreciation in many of these neighborhoods.” via baltimoresun.com

Well, the Baby Boomers are no longer babies, in fact the human bubble of births is now turning to their retirement years. For those interested in housing and real estate, the need for quality senior housing is going to expand significantly in the coming years.

In the past, financing for senior housing was hard to get for developers, but at a recent convention for the Mortgage Bankers Association, that was the topic of the day. And money is flowing into the sector at an amazing rate.

The growing senior population represents an opportunity for commercial lenders, she said. Until recently, senior housing was viewed as a niche market best left to specialists. Today “you have the parents of the boomers, who are in their 80s, and they are among the biggest users of senior housing,” Scott said. “This is a market that is skyrocketing.”
Curt P. Schaller, director of real estate originations for Merrill Lynch Capital Healthcare Finance, said the senior housing business is changing, even though many lenders have been slow to recognize it.
“A lot of people don’t realize how big the senior sector is,” he said. “Senior housing is looked at as an ugly stepchild. It is a significant player. Valuations are through the roof. Occupancies are up.”
Angela Mago, senior vice president and national manager for KeyBank Real Estate Capita, said there is plenty of capital available for senior housing loans. New types of products are emerging, such as for-sale homes sold in tandem with assisted-living units. “You are going to see multiple levels of care.”
Mortgage bankers were urged to do their homework before loaning money for senior housing. James J. Piecznski, co-president for health care and specialty finance at CapitalSource, a commercial finance firm, said his company looks for “good quality operators.” via SignOnSanDiego.com

 News of a 14 million dollar loss rocked the price of NovaStar Financials stock yesterday. The market recognized the exposure to sub prime loans that are in a delinquent status or in foreclosure. The number of these loans is expected to rise  in the  near term as housing prices have remained stable and the ARMs are resetting at a higher rate.

Shares of NovaStar Financial, which makes loans to people with weak credit, fell almost 43 percent yesterday after the company announced a surprise loss of $14.4 million for the fourth quarter and told investors that it might not make enough money to pay dividends for the next four years.
The announcement, which highlighted the fact that more home loans made last year were delinquent than mortgages from 2005 and earlier, echoed reports issued earlier this month by New Century Financial and HSBC Finance, the American mortgage division of the global banking giant.
Though each lender is suffering from a variety of individual ills, rising default rates among loans made to people with spotty, or subprime, credit appear to be the central problem for the industry.
A major indicator of the trouble in the subprime market is the early-payment default rate, which measures the portion of borrowers who fall behind on their house payments within the first few months of taking a loan. via the  New York Times

The Blackstone Groups acquisition of Equity Office Properties Trust closed without issue and the property management firm is now in the process of flipping the  properties to reduce the debt the 39 billion dollar deal created. The  red hot commercial market is only happy to comply and over 18.5 billion dollars in properties have been sold so far with more on the way.

The New York private-equity firm has raised $18.5 billion in asset sales, including eight buildings that were sold in New York for $7 billion to Macklowe Properties simultaneously with the merger closing Feb 9.  Blackstone has also sold or agreed to sell Equity Office properties in Los Angeles and Orange County, Calif.; Portland, Ore.; San Diego; Seattle; and Washington. Competition is expected to be fierce for the buildings in Boston and Austin, Texas, as well as Chicago.

Blackstone bought Equity Office, previously the nation’s largest office landlord, for $39 billion, including debt, in the second-largest leveraged buyout in U.S. history. The transaction put an exclamation point on the continued demand for office real estate among private investors based on the belief that there is room for improvement in the office market.

This week, Blackstone is expected to announce another $3.5 billion in sales, according to one person familiar with the matter. Such swift sales are a reflection of Blackstone’s determination to reduce the debt load on its prize as quickly as possible, especially given the relatively low yields on many properties. Blackstone’s strategy is to sell a cross section of its new portfolio, which includes the highest-quality properties as well as those that are less desirable.via the RealEstateJournal

The newest list for best cities to seek employment in has come out and the  results are pretty good for last years top 10. Only 3 dropped out since last year, Bethesda, MD, Richmond, VA, and Oklahoma City, OK. The new additions to the top 10 cities for jobs in 2007 are Salt Lake City, Honolulu, and Fort Lauderdale.

When looking to buy or sell real estate, the job market is one of the best attributes to marketing a community.

1. Raleigh-Cary, NC
2. Phoenix-Mesa-Scottsdale, AZ
3. Jacksonville, FL
4. Orlando-Kissimmee, FL
5. Washington-Arlington-Alexandria, DC-VA-MD-WV
6. Salt Lake City, UT
7. Honolulu, HI
8. Las Vegas-Paradise, NV
9. Fort Lauderdale-Pompano Beach-Deerfield Beach, FL
10. Virginia Beach-Norfolk-Newport News, VA-NC

via  Forbes.com