National Realty News

I don’t know about you but I hate tornadoes. Seriously.

So it does not warm my heart to realize I live between the 2nd worst and the 9th worst cities in the country for tornado activity. Ugh…

Give me a hurricane any day of the week. You know you are going to get clobbered with a hurricane but you have time to prepare. But a tornado is like a doberman. You know there is a chance he will turn on you, but you are never sure when or how it will get you.

That being said, here are the

Top 10 Cities For Tornado Activity

RANK

CITY

ACF (%)

DISTURBED LAND AREA (ACRES)

1

Little Rock, AR

0.02453

197

2

Atlanta, GA

0.02369

191

3

Indianapolis, IN

0.01852

149

4

Birmingham, AL

0.01748

141

5

Macon, GA

0.01683

135

6

Jackson, MS

0.01360

109

7

Shreveport, LA

0.01169

  94

8

Montgomery, AL

0.01016

  82

9

Columbus, GA

0.00901

  72

10

Columbia, SC

0.00889

  71

via Raycom Weather

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Top 10 Cities For Tornado Activity

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A sign that the big banks are focusing on core fundamentals and not esoteric investments happened today. Citigroup is selling their Citi Property Investors division to Apollo Management. The reasons for the sale are 2 fold. One, these investments are tanking. They are not performing and are a drag to the company. Better to divest them while the company is underwater and still has government investments in it.

The other reason is that big pappy, the federal government and 27% owner of the company, told them to get rid of assets. And when big pappy speaks, you listen. Of course, this subverts our whole economic system when the political arm directly injects itself into the business of business. But, who cares anymore, right?

All I do know is the timing was right for Apollo to buy. Even if the market still goes down, all the factors in the deal point to a bad deal being made by Citigroup. They were told to sell an asset, they did, and they have cover if the deal is bad.

Such is life in the new America…

The inclusion of Citi Property Investors to Apollo’s portfolio will more than triple the private equity firm’s real estate assets, the agency said. City Property Investors’ portfolio includes 65 investments in 26 countries with a net asset value of $3.5 billion, according to the agency. Apollo signed a letter of intent and the deal may take as long as three months to close, the agency said.

The U.S. government stepped in to prop up Citigroup at the height of the financial crisis in October 2008 when officials at the U.S. Treasury feared the bank’s crumbling financial condition could destabilize financial markets worldwide.

On March 4, Citigroup Chief Executive Vikram Pandit told a congressional panel that he had sold off many proprietary trading businesses, including the Phibro energy trading unit, and was focused on trading services for clients. via Reuters

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

CitiGroup Selling Real Estate Division to Apollo

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Another week, another tepid swing of the bat by the White House to fix the housing crisis before the midterm elections.

If you are short of time this is as succinct an analysis as I could offer on the new Federal Short Sale Program offered by the White House to fix the foreclosure problems plaguing the country.

The trillion dollar foreclosure program will not be fixed by any band-aid or government program. The notion that we can fix systemic problems that took years to create overnight by a program or two is crazy, but it seems that Washington thinks this is the way to do it. All this does is perpetuate the problem and draw it out.

Here is the analysis by the NY Times:

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. The frustrated owner is now contemplating foreclosure.

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

Now let’s be serious for a brief moment and look at this situation realistically. A bank that is seeing a short sale and is upside down on the offer by $101,000 is now going to throw manpower it does not have to earn an extra $1,000?

Have these folks on Washington not waited on the phone for Bank of America’s mortgage guys to answer? You have to be kidding me.

The difference between reality on the streets and the ideology in Washington is getting further and further apart. And the sad thing is, if Washington had kept out of the process we would have had a market by now. The short term pain would have been greater but there would be hope for the future.

Now all we have is death by a thousand paper cuts.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

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Do my eyes deceive me? Is America slowly climbing out of the debt cycle that has come close to choking it in recent years. (ed. For everyone but the government it has…) The American consumer is shying away from home equity loans and cash out refinancing on their mortgages and are now bringing money to the table when they are refinancing their mortgages.

The deleveraging of America is happening right before our eyes and for some it is welcome news. Of course, there is a consequence to this, the money that was coming out was keeping our economy humming. Think about it for a second. If money is being saved it is not being spent creating jobs and buy “stuff”.

But the irrational purchasing during the past decade may have kept employment high and businesses humming, it was still an artificial bump. The consumers bringing money to the table to refinancing their mortgages is a great example. They will be able to save on costs like Private Mortgage Insurance and have the opportunity to qualify for lower mortgage rates.

The savings on these cost will provide a more disposable income for families, income that will not be predicated on debt that must be re-payed down the line.

America is wising up…

Now the pendulum in consumer psychology appears to be swinging toward reduction of household debt — whether on credit cards or mortgages.

In Freddie Mac’s latest quarterly survey of refinancings, 33% of homeowners put cash into the deal to lower their mortgage balances, the highest percentage ever. By contrast, only 27% of refinancers took cash out — the lowest percentage on record.

Why shift money from savings into your house? Nothaft says a small percentage of refinancers — including himself and his wife — traditionally have preferred to lower their mortgage balances whenever possible.

There are at least two key rationales for doing so, Nothaft says. No. 1: If interest rates are low and you’re getting minuscule returns on your bank savings or money market funds, paying down your home loan may well provide you a better return on your investment. via the LA Times

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Cash-In Refinancing Gaining in Popularity

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There is concern that the residential real estate market could be facing the dreaded double dip. To those who are not stock market mavens this essentially means that the short recovery we have seen will be followed by another downturn.

The idea was brought up by Brian Taylor of the hedge fund Pine River. And it does align with my observations.

We had a slight uptick in the market in the 4th quarter of the year. This coincided with tremendous incentives offered by the Federal Government for new home buyers. Essentially the government subsidized the upturn not the marketplace.

Now that the effects of the government subsidy have run their course, the market is back in control. And the market does not have confidence we have hit a true bottom. Nervous buyers and sellers do not create a great deal of confidence and lower prices are typically the result.

My bet is with the Pine River team. This year will be one of nerves and concern until the marketplace sees the strong potential of profits.

Hedge fund firm Pine River, which makes big bets on housing, is bracing for a double dip in that market, its chief executive officer said on Tuesday.

“There are still issues in the housing markets and it would not surprise us to see the recovery turn down,” Brian Taylor, who founded the $1.6 billion hedge fund eight years ago, said at the Reuters Private Equity and Hedge Funds Summit in New York.via Reuters

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Does Residential Real Estate Market Face a Double Dip?

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If the Oracle of Omaha, Warren Buffet, is correct the residential real estate market will rebound in 2011. Buffet, in his letter to Berkshire Hathaway stockholders, thinks that the demand curve will turn at that state and the residential markets will start to improve.

I am sure this news is not what real estate agents are hoping to hear, I tend to agree. The housing market still has way too much overhang from foreclosures and short sales for buyers to have confidence investing in homes. Add to that a nervous economy, it would be foolish to think that all will be okay this summer.

So real estate agents,  tighten that belt and continue to build your systems this year so you are ready for 2011.

“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote Saturday in his annual letter to the shareholders of his Berkshire Hathaway. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits. Indeed, many families that couldn’t afford to buy an appropriate home a few years ago now find it well within their means.”

Record foreclosures flooded a U.S. real estate market already glutted with unsold property, causing housing starts to fall.

“People thought it was good news a few years back when housing starts — the supply side of the picture — were running about 2 million annually,” wrote Buffett, 79, chairman and CEO of Omaha-based Berkshire. “But household formations — the demand side — only amounted to about 1.2 million.”

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Warren Buffet Predicts Real Estate Rebound — In 2011

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Do these people have a clue?

Are they trying to destroy the market?

Is there nothing that the government thinks that they can not fix?

(No, this is not an old Batman sitcom introduction, I am being dead serious.)

The Obama administration is looking to stop all foreclosures until they go through a review by the Home Affordable Modification Program. That is right, he is willing to destroy the mortgage market to protect a few and employee thousands of bureaucrats.

Guys, government is not always the answer. The markets need to find a footing, not be forever beholden to some faceless bureaucrat. I am dead serious here.

There is a cost everytime the government gets involved. If the housing market does not know the rules it can not correct. It will be stuck until investors and homebuyers have some confidence. All velocity will cease, as we see now with the lowest new home sales in 50 years this January.

Foreclosures are part of the fix. Sure it is a painful fix, but it is a necessary one. The markets need a foundation.

Our present governmental officials think they are the foundation.

They are sadly mistaken.

The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan.

“It is one of the many ideas under consideration in the administration’s ongoing housing stabilization efforts,” Treasury spokeswoman Meg Reilly said in an e-mail. “This proposal has not been approved and there are no immediate planned announcements on the issue.”

She confirmed the authenticity of the document, which hasn’t been made public.  via Bloomberg.com.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Obama Looks To Stop ALL Foreclosures Without Government Review

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I guess the stimulus extension is not doing it’s job…

Ugh.

The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who had expected sales would rise about 5 percent over December’s pace. via the AJC

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

New Home Sales Drop 11.2 Percent In January

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A combination of weather and low demand has led to a 13 year low in demand for mortgage applications according to The Mortgage Bankers Association. Demand for mortgages has not been this low since 1997.

Hopefully the market slowdown is a statistical blip due to the harsh winter that so much of the country has been dealing with. Unfortunately the uncertainty of the market and economy has all of us scoreboard watching. The demand for new mortgages is the canary in the coal mine for the real estate industry.

If mortgage applications drop typically closing are not on the horizon.

A continued drop in demand for purchase loans, a tentative early indicator of home sales, would not bode well for the hard-hit U.S. housing market, which remains highly vulnerable to setbacks and heavily reliant on government intervention.

The Mortgage Bankers Association reported an 8.5 percent decline in its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended February 19.

The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 1.6 percent.

The MBA’s seasonally adjusted purchase index fell 7.3 percent, the lowest level since May 1997.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Demand Hits 13 Year Low For Mortgage Applications

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Short sales of residential real estate, homes typically worth less than the bank is owned, are rising dramatically as a percentage of all real estate transactions. The Federal tax incentive had kept the numbers lower through November but it seems those buyers are now out of the marketplace.

With the overhang of mortgages not being paid on and borrowers upside down I do expect to see more and more news along these lines in the coming months.

Short sales have jumped from about 10 percent of distressed property sales during most of last year to 15.9 percent of home purchase transactions in January.

By contrast damaged real estate owned or bank owned properties accounted for only 13.4 percent and move-in ready bank-owned accounted for 13.8 percent of all sales, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions.

As recently as November of 2009, short sales accounted for 12.4 percent of the home purchase market, behind move-in ready REO at 12.6 percent and nearly even with damaged REO transactions at 12.3 percent. via UPI

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Large Increase in Short Sales For January 2010

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If you are looking for a new home there is a very good chance you are thinking of more than your immediate family. A report from Coldwell Banker shows that 37 percent of new home buyers are looking for a larger home to support multiple generations.

With the economy in rough patch and families not sure of what the future will bring having the extra space to have Mom or Dad move in to help with the bills or give a place for the kids to return if they are out of work is more and more important.

Let’s face it, people are scared. Even if they are confident in their future and are looking to make a move up, they are still worried about their families. If you are selling real estate, especially the larger homes, a great question to ask potential buyers is “Would having some extra space for a family member to move in be of interest?”

If 37 percent of Coldwell Banker agents are seeing this then selling the larger homes in your area may just become a little bit easier.

Thirty-seven percent of the company’s real estate agents polled in January said that in the past year, buyers were increasingly shopping for homes that fit more than one generation. Almost 70 percent of the agents said they expect economic conditions will drive still greater demand for this type of housing over the next year.

“More buyers are pooling investments, considering bringing mom and dad into it,” said Diann Patton, a Coldwell Banker real estate consumer specialist based in Grass Valley, California, in an interview with Reuters.

Buyers were primarily driven by financial concerns when deciding to combine generations in a household, the survey found. Health concerns were the second most common reason and strong family bonds a distant third. via Reuters

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Buyers Looking To Buys Houses To Fit More Than One Generation

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A Moscow, Ohio man, Terry Hoskins, was losing his $350,000 home to foreclosure over a $160,000 debt. After a long fight with the bank, including the bank rejecting a $170,000 sale, he had enough.

So he bulldozed the home. Crushed it. Destroyed it.

Hoskins said he’d gotten a $170,000 offer from someone to pay off the house, but the bank refused, saying they could get more from selling it in foreclosure. Hoskins told News 5’s Courtis Fuller that he issued the bank an ultimatum.

“I’ll tear it down before I let you take it,” Hoskins told them. And that’s exactly what Hoskins did.

The Moscow man used a bulldozer two weeks ago to level the home he’d built, and the sprawling country home is now rubble, buried under a coating of snow.
“As far as what the bank is going to get, I plan on giving them back what was on this hill exactly (as) it was,” Hoskins said. “I brought it out of the ground and I plan on putting it back in the ground.”
Hoskins’ business in Amelia is scheduled to go up for auction on March 2, and he told Fuller he’s considering leveling that building, too.
RiverHills Bank declined to comment on the situation, but Hoskins said his actions were intended to send a message.
“Well, to probably make banks think twice before they try to take someone’s home, and if they are going to take it wrongly, the end result will be them tearing their house down like I did mine,” Hoskins said. via WLWT.com

What is interesting to me is of course the radical action taken by the homeowner. I am not sure of the legality of it, but the emotion sure does hit a cord with a frustrated population.

The banks have been negligent in managing the foreclosure and short sale processes in the past few years. Too many homeowners are living at the whim of an anonymous banker not sure when they will move out and lose their home or if the bank will allow them to sell at a discounted price in a reasonable time frame.

The one thing that does bug me is the bank not letting a sale for more than the mortgage go through thinking they could make a bigger profit off of Hoskin’s misfortune. There are no winners in this situation, but it is an object lesson for everyone to learn from.

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Man Bulldozes Home Before Foreclosure Sale

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Now it is no surprise where my politics lean if you read this site regularly, but I promise you I would cast just as much skepticism if a Republican President acted the same way.

President Obama is coming to Las Vegas for the day and is going to fix the housing crisis. With his sycophantic media in tow, our glorious leader has announced that he found an extra 1.5 billion dollars lying around that he will use to fix the housing problem once and for all.

So all of you poor souls living though a foreclosure or facing on, never fear, your president will make it all go away.

Here is how an honest conversation between our President and a Las Vegas resident would go.

Wait you ask, how will you do that?

I am glad you asked. He will give the money to the local housing bureaucracies to use to staff up and analyze your problems. Then after long and careful consideration they will create a maze of forms and interviews to determine who is going to be helped.

But how will that help me, I could lose my house any day now?

Silly people, it is not there to help the individual, it is there to give hope. Right now in the 5 states that will be getting this money, Arizona, California, Florida, Michigan and your beloved Nevada, I have politicians that dearly need my support. If I do not do something for them soon, they will vote against Cap and Trade and Healthcare reform.

So, sure you may lose your house. But think of it as you taking it on the chin for the greater good. I need those politicians.

So you are telling me this is just a political stunt to curry favor and it will not make a difference to those of us suffering?

Well, I would not say it that way. Instead, it would be better to think of it as a foundation for hope and change. Through optimism this program might change how the nation thinks about the problem and it will all get better. I promise.

—

And that folks is all that is going on today. A trillion dollar problem that has a 1.5 billion dollar fix for the media to digest and report. They need something to tell us amidst the bad news.

Obama’s move, detailed by aides in advance of his town hall here Friday, is the latest by a White House determined to show it is helping families rebound from a deep recession. The downturn is taking an election-year toll on Obama’s party as voter frustration builds.
Obama was to announce that housing finance agencies in the five hardest-hit states in the housing crisis will receive $1.5 billion to help spur local solutions to the problem. Those five are Arizona, California, Florida, Michigan and Nevada.
The policy wrinkle comes during a two-day Western trip with different agendas for the president. He will be back in town-hall mode, a venue that aides say allows him to connect with people and distance himself from the messy process of Washington governing.
The president is also out to help vulnerable senators protect their seats and, in turn, gain as much legislative leverage as he can. via myway

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Relief or Pandering – Obama Comes To Vegas To Help With Housing Crisis

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File this one under the heading “That’s The Ticket”, because it will be very hard for me to believe that the Federal Reserve will just dump nearly 1.5 trillion dollars in housing debt.

Yet that is the word coming out of meetings at the Fed. They are setting a long term goal of getting out of the mortgage finance business they fell into when they bought up the loans at Freddie Mac and Fannie Mae.

But they are foolish to think that that much debt will be absorbed by the marketplace unless they take a huge hit. And although they can print the money to take the hit (more madness) they will not find happy buyers of bad paper.

This is the problem with the long term failure of easy money. We have too many homes owned by too many people who can not afford them in an economy that is too fragile. Instead of taking our lumps quickly and painfully and resetting the marketplace, we are slowly unwinding it.

• We have too many empty homes right now.
• We have too many people living in homes not paying a mortgage waiting for the foreclosure notice.
• We have too many foreclosures that are pending because bankers are overwhelmed or want to manage their losses and prolong the agony.

We have no firm footing in real estate folks.

There is no reason for the Federal Reserve to be in the mortgage business. However, that train has left the station. They made the decision to slow down the pain, save the banks, and protect the economy. Understandable.

But, there is still the mess after the storm. We have too many people not knowing when the foreclosure notice is coming, too many people uncertain of what tomorrow will bring, and too many people just plain scared.

The Federal Reserve is stuck with the housing debt until we have answers and people are moving forward. Until then the Federal Reserve will just have to be the biggest housing lender in the country.

Central bankers are planning to eventually remove $1.43 trillion of housing debt from the balance sheet after critics such as Stanford University economist John Taylor accused them of straying beyond monetary policy. Philadelphia Fed President Charles Plosser said yesterday that the Fed’s purchases of housing debt expose it to demands from politicians to support other industries.
Some of the Fed’s emergency actions “blurred the line between monetary policy and fiscal policy, thereby increasing the risk to the Fed’s independence,” Plosser said in a speech. “These policies have veered toward deciding how public money should be allocated across firms and sectors of the economy.”
Policy makers agreed that it “will eventually be appropriate” to “return to holding only securities issued by the U.S. Treasury,” according to minutes of their January 26-27 meeting released yesterday.

Update:

Greg Swann takes a slightly different look on the topic but comes to the same basic conclusion. We are all on welfare now: “The government’s assistance in the housing market now is less about giving us a soft landing than it is about having us furiously flap our arms to stay aloft.”

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Federal Reserve Sets Goal To Get Out Of Mortgage Financing

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These days the news is not all doom and gloom in the residential real estate markets. Housing starts showed improvement in the most recent report with new home construction inching up.

And folks, inching up is the best news we can here. We don’t need a just add water recovery in the housing markets. While it would be nice for the checkbooks and our own mortgage payments, adding more housing inventory at a rapid pace would just blow up the market again.

I am in favor of a long and balanced recovery.

We’re in a slow and steady progress phase of the housing recovery,” said Aaron Smith, a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, who forecast new-home construction would increase to a 590,000 pace. “The trend will be upward, but it’s going to be a bumpy path higher.”
Estimates for January starts in the Bloomberg survey of 77 economists ranged from 530,000 to 700,000. The government revised December’s reading to a 575,000 pace from the 557,000 previously estimated.
A separate report today from the Federal Reserve showed industrial production climbed 0.9 percent in January, more than anticipated, following a 0.7 percent increase the prior month. via Business Week

Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.

Slow and Steady Progress In The Housing Recovery

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While local governments are seeing their sales taxes receipts decline they are now being faced with a double whammy. Homeowners are starting to see a realistic decline in their property tax bills.

And not a moment too soon.

The Seattle region is lowering the assessed value to realistic levels and it is saving the taxpayers some serious money as we see in the excerpt below. Because housing sales are so slow they are being forced to included foreclosures in the assessment calculations.

Of course, that is a level of madness only government can get away from. Imagine the appraiser who discounts the foreclosures that blanket a neighborhood when creating an appraisal for a bank?

But, as someone who distrusts government and how they try to get into our pockets, the lowering of taxes is a wonderful thing for overburdened homeowners. If we have to live with declining property values we deserve to pay an honest and fair tax on our homes, not an inflated assessment so the government can keep themselves bloated.

During the years of rising real-estate prices, the assessor’s office based its appraisals on property sales from the previous two to three years, a method intended to insulate official valuations from speculative price increases.

That method didn’t succeed in reflecting the market’s sharp drop-off. Early last year, the assessor’s office, following advice from the International Association of Assessing Officers, began taking into account some types of home sales that were previously dismissed as anomalies that didn’t reflect the market.

Because there were so few traditional home sales, the assessor for the first time in years factored in prices from foreclosure sales, purchases by one bank from another, and sales made by homeowners for a price smaller than their mortgage balance. That dropped assessed valuations 15 percent below what they otherwise would have been, Prins said. via the Seattle Times

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Assessors Forced To Reflect Real Housing Market in Property Taxes

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Looking at Realogy’s announcement this morning on their 2009 results makes me think that they should send a gift basket to the White House. The First Time Homebuyers Credit was the lifeline they needed.

With a rough year overall, the company lost 262 million dollars, the 4th quarter was strong posting an 18 percent increase in transactions. Pricing was still down for the 4th quarter as most of the homes were sold under the First Time Homebuyers Credit, but any port in the storm is one that the struggling franchise system can grab onto.

In the fourth quarter, Realogy’s core business drivers showed significant improvement, particularly home sale unit transactions, which increased 18% year-over-year at the Realogy Franchise Group (RFG) and 20% at NRT, the Company’s owned brokerage unit. These improvements were due to a combination of relatively weak fourth quarter 2008 activity and an influx of transaction volume in 2009, spurred by the original November 30 expiration of government tax credits for first-time buyers. The average home sale price declined in the fourth quarter by 5% at RFG and 3% at NRT. The fourth quarter 2009 average home sale price stabilized compared to more significant declines reported in the first three quarters due to fewer REO sales and increased home sales in the high end markets we serve.

On a full-year basis, RFG and NRT transaction sides decreased 1 percent and remained flat, respectively. RFG’s average home sale price decreased 11 percent during the full year 2009 while NRT’s average home sale price declined 18 percent. Average home sale price declines in 2009, particularly at NRT, were driven early in the year by a shift in mix of transactions away from higher priced homes and a greater level of distressed home sales. via Marketwatch

What interests me going forward is the meme floating around the real estate world that branding is less and less important for homebuyers as the internet is providing a more effective way to vet real estate agents than the associated brand.

According to a study from the National Association of Realtors excellently analyzed by Michael McClure of Professional One Franchising, we find that only 3 percent of home buyers and sellers chose their agent based upon the brand. For the Realogy stable of franchises this has to be some very scary news. Why pay all that overhead if it is not going to drive customers in the door…

Tags: Realogy

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Realogy Posts Strong 4th Quarter on Weak 2009 Numbers

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It looks like the commercial real estate market is finding the bottom and starting to consolidate. Simon Property Group has made an offer to absorb General Growth Properties for 10 billion dollars.

General Growth is a major mall operator owning such showcase properties as Faneuil Hall in Boston and The South Street Seaport in New York. They got buried under a 25 billion dollar debt burden as they expanded into the teeth of the downturn. The late 2008 bankruptcy looks like it has worked as the debt is now at a much more reasonable 7 billion dollars.

Simon Properties move makes me think that we may be seeing a baseline of mall and shopping center markets where investors will truly understand the debt loads that shopping centers can carry going forward.

Simon Property Group Inc (SPG), the largest U.S. real estate investment trust, made Tuesday what it called a $10 billion offer for the bankrupt General Growth Properties Inc that would pay creditors back in full and end one of the largest U.S. bankruptcies on record.

Simon said it would offer $6 per General Growth share, or roughly $1.9 billion, plus a stake in property assets it valued at about $3 per share.

The offer would provide a 100 percent cash recovery of par value plus accrued interest and dividends to all General Growth creditors, an amount which totals about $7 billion. via Fox Business

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Simon Property Looking To Buy Bankrupt General Growth

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There is a historic fire station in downtown Charlotte, North Carolina that the owners wants to tear down and sell the raw land to a developer. It is designated as an historic landmark but the owner has followed the procedures to circumvent the historic designation.

Now here is the interesting part for real estate enthusiasts.

The Historic Landmark Commission’s chairman, Bill Hobbs, said his group stands by its current offer, which he said is based on a recent appraisal. The commission uses public money in a revolving fund to buy historic properties, which they then try to resell with preservation convents to protect the buildings’ futures.

“It would be a reckless use of public funds to use the revolving fund to acquire this property at the inflated price that Mr. Stark needs for a bailout of his investment position, given the current real estate market,” Hobbs said. “I think it would be a tragedy for the city of Charlotte if Mr. Stark chooses to tear it down. It’s a real treasure.” via the Charlotte Observer

The preservation group feels they made a worthy offer for the value of the building. Yet the owner knows that the actual value of the land is greater than the value of the building. And there is an overriding rule in effect for the deal.

The owner of the land only has to sell it at a price he or she is comfortable with.

The preservationists are failing to recognize that the land is more valuable without the building, but all they can see is the value of the building.

Instead of preserving the historic fire station that is their goal, they are low-balling the owner of the property by their failure to understand the raw land is what has the value. The building is lowering the value of the land by the historic designation.

Think of it this way. Big powerful developer in town is not going to take on the wrath of the community by destroying a landmark building to buy it at 1 million dollars. Instead they let another small businessman to tear it down and then buy it for 1.5 million dollars. They know that the cost to their reputation would be more than the 500,000 dollar difference in price they are paying. By allowing the small business person to take the public relations hit they are spared the bad press. In the end, everyone wins.

Except the community because the preservationists FAILURE to understand basic business…

 

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Historic Fire Station Raises Interesting Questions In Charlotte

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The total commissions paid to real estate agents dropped in 2009 6.2 percent. This reflects the slowing home sales across the country as the commission percentage paid to agents actually rose from 5.26 percent to 5.29 percent.

Another factor that influenced the lower commissions was the price of homes sales. The federal government had the first time homebuyers program in effect during much of 2009. This subsidy motivated first time buyers to enter the market, but it also lowered the average price per home sold.

And we all know the math, lower home price x commission percentage = lower commissions for the same amount of work.

Let’s hope 2010 shows some more velocity in the higher ends of the markets so agents will be able to earn a better living.

The dollar value of agents’ commissions skidded to its lowest level in seven years in 2009, according to recent studies by a real estate consulting firm and the Bloomberg news service. RealTrends, based in Littleton, Colo., and Bloomberg came to similar conclusions that through November, sales commissions totaled $40.6 billion, a drop of 6.2 percent from the year before. via The Baltimore Sun

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Real Estate Commissions Drop 6.2 Percent in 2009

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