Sunday, July 30, 2006

As Valley home market cools, emotions heat up

Good article from the Arizona Republic describing "real emotions" not just stats...

"Home prices have become a touchy subject. Builders are discounting speculative homes, and resale prices are flat, or down, in a lot of neighborhoods. Buyers are submitting lowball offers. Even some sellers and their agents are having trouble agreeing how much similar homes in the same neighborhood are worth. Two houses on the same north Valley street, similar in size and age, are for sale. One lists for $749,000 and the other for $775,000. A third house came on the market on the same street a few doors from the other two. The new listing was similar to the others in size and age but priced at $659,000. Reaction: outrage."The neighbors were really mad," said Thomas Stornelli, principal of Global Network of Homes in Scottsdale. "They knocked on the door and asked, 'What are you thinking?' For a lot of people, their home equity is their bank. It's like taking money out of someone's bank, their retirement account. People (future buyers) are going to use that house as a comp, even if it doesn't have the same upgrades. It's going to leave a mark."The owners of the least- expensive home were equally upset. They were in the midst of a corporate relocation and wanted to sell quickly. Suddenly, angry neighbors were confronting them. One night, someone tore down their for-sale sign. "

A woman walked into Barry's Realty Executives office about nine weeks ago, sat down and began crying. She said she bought two houses last year, fixed them up and quickly sold them, making a $50,000 profit on each.She was a novice investor, but it all looked easy. She took her profits, threw in some extra money and bought five more houses. She spent money fixing them up, but when she put the houses on the market, she realized she had bought at the peak, Barry said."Her eyes just started to well up, and she just started bawling," Barry said. "She said she couldn't sell them for what she bought them for. She said her monthly payments were about $20,000."Barry suggested turning them into rentals. She told him she couldn't get enough rent to make it worthwhile. "She was expecting to flip them," he said. "The market flipped her. She was devastated. People have forgotten that houses are not a liquid asset. They never were meant to be."

Developers Nix or Delay Condo Projects

More signs that real estate and in particular the condo sector is in a funk....

"In South Florida, canceled condo developments include 1390 Brickell Bay and ICE in Miami, Fort Lauderdale's The Waves Las Olas, and Promenade in Palm Beach County. WCI Communities Inc., a luxury home builder based in Bonita Springs, Fla., said in June that new orders for its high-rise condominiums fell by 84 percent in the second quarter. The company will now go forward with only three to five condo projects in 2006, down from as many as 15 to 17, mostly in Florida"

"The sweet spot of the market is probably $250,000 to $700,000," Domb said. "That's what the majority of the population can afford. Many condos are priced higher. That's part of the problem."

Wednesday, July 26, 2006

the BLVD

Here are some pictures of the model displayed at the Boulevard condos sales office. Developer is Wood partners who is also working on the downtown 33 story "Six Ten" - site of the Maas Bros dept store.

Sunday, July 16, 2006

Channel District taking shape

Article in TBO talking about the "second wave" projects at Channelside (Ventana, the Place, the Towers and Grand Central). All are expected to open in 2007 but Grand Central is looking at moving people in by end of year. What I found interesting was that Ventana was ONLY 75% sold. Surely, I thought it would've been 100% by now.

Tuesday, July 11, 2006

Novare's Formula

Article talks about what Novare did for Midtown, Atlanta and how they plan to transform downtown Tampa.

Saturday, July 08, 2006

Novare/Intown announce Mosaic

Don't have a current rendering yet but here is the pic from my previous post:

  • 388 units
  • Franklin St between Polk and Cass
  • sales expected to begin Q4

PMI vs PiggyBack

Looks like PMI insurance may become the norm once again - and less people will be able to creatively finance 'more house' - now that the S&P "has upped the ante for lenders who seek to fund piggyback deals through capital market financings".

From the Baltimore Sun:
Wall Street is sounding the alarm on one of the most popular ways to buy a house in many high-cost areas around the country - so-called "piggyback" programs that mesh simultaneously closed first-lien mortgages and second-lien credit lines or mortgages.
As of July 1, the most influential ratings agency in the mortgage arena, Standard & Poor's Corp., has upped the ante for lenders who seek to fund piggyback deals through capital market financings. The move is likely to raise interest rates and fees for some homebuyers this summer, mortgage experts say, and could reduce the volume and availability of piggyback programs overall. The reason for the change, according to Standard & Poor's credit analyst Kyle Beauchamp, is that an exhaustive study of the performance of piggyback loans found them anywhere from 43 percent to 50 percent more likely to go into default than comparable stand-alone first-lien purchase transactions. Piggyback plans were developed as a creative response to soaring home prices and borrowers' desires to stretch their down-payment cash while avoiding private mortgage insurance premiums (PMI).

In traditional financings, a borrower with less than a 20 percent down payment typically must pay for mortgage insurance.
In piggyback arrangements, by contrast, the borrower takes out a traditional mortgage for 80 percent of the property value, but simultaneously obtains a second lien for a portion or all of the balance - with no PMI payments.
Banks and other lenders offer a wide variety of piggyback options. For example, an "80-20" piggyback would require a zero down payment - an 80 percent standard first mortgage and a credit line or second mortgage covering the 20 percent balance. An "80-10-10" would involve a 10 percent down payment; an "80-15-5" just 5 percent down.
With their low cash requirements and often-generous credit standards, piggybacks have been wildly popular among home purchasers during the past several years.

Standard & Poor's policy change effectively requires lenders selling piggyback loans into secondary mortgage market bond pools to purchase substantial additional credit enhancements - added protection for bond investors against the higher expected default rates.
One reason for the higher defaults: Though the interest rate on the first-lien mortgage may be fixed, many of the second liens in piggybacks have been floating-rate home equity credit lines. They are tied to short-term interest rate movements, especially the prime rate, and are exposed to frequent payment increases as short-term rates rise.
A second reason for the defaults: Significant numbers of piggybacks have been made to buyers who were financially stretched to begin with and had marginal credit scores. In Standard & Poor's analysis of nearly 640,000 piggyback transactions, borrowers with FICO scores below 660 were 50 percent more likely to become delinquent than a traditional single-lien mortgage borrower with the identical credit score.
More ominous still for the piggyback market: Federal financial regulators are expected to issue new guidelines for lenders within the next few months that will force them to throttle back on piggybacks, payment-option loans and interest-only loans to borrowers with marginal credit scores and incomes.

Friday, July 07, 2006

Here comes the Buyer's Market

Article in the NY Times talks about the turn that we have made in real estate. We've all seen it coming for months and can no longer ignore it. In the story the couple from Westchster Co are asking themselves the question that I'm sure has crossed the minds of many sellers in the Tampa Metro "Do we lower the price, or do we take it off the market altogether and wait? And what about our plans for the new house?"

WITH black clouds hanging over the Westchester County housing market for the first time since 1999, Michael and Kara Lyons are caught in a bind: they are sellers in a buyer's market and buyers at the same time.
Their two-bedroom co-op in northwest Yonkers overlooking the Hudson River has been on the market, listed at $250,000, for five months. A year and a half ago, in a booming real estate market, the condo would probably have been snatched up quickly, perhaps after a bidding war.
So, like many other sellers in a decidedly weaker residential market, Mr. Lyons said, he and his wife are wondering: "Do we lower the price, or do we take it off the market altogether and wait? And what about our plans for the new house?"
With the inventory of condominiums, co-ops, free-standing houses and two-to-five-unit buildings rising, many properties are staying on the market for extended periods of time.
"Especially if you're pushing the top end of market, you're probably going to have to sit for a while, unless of course, you're willing to price your property aggressively," said J. P. Endres, owner of David Endres Real Estate and president of the Westchester County Board of Realtors.

Monday, July 03, 2006

Fingerprints needed from real estate agents

TB Business Journal- People working in real estate in Florida need to make a new kind of impression -- actually, a rolled one.
Electronic fingerprinting is now mandatory for all aspiring real estate professionals in Florida, according to the state's Department of Business and Professional Regulation.
Effective July 1, anyone applying for a real estate agent, broker or appraiser license must provide electronic fingerprints. The state has contracted with an electronic fingerprint vendor, which is offering 15 sites across the state, including Tampa and St. Petersburg.
Electronic fingerprinting is designed to reduce the chance of illegible fingerprints or missing information on the fingerprint card.
Applicants' fingerprints will be scanned and submitted to the Florida Department of Law Enforcement and the FBI. The electronic process will take two to three days, compared to the three to six weeks with the paper copy method.