MIAMI -- Benjamin Kaskel, a would-be first-time home buyer, hasn't been sleeping much lately.
He and his wife Samira have to move out of their rented home - and they want to find a house to buy. By Friday.
That's when the sun sets on a discount for the proverbial American dream, an $8,000 tax credit to first-time home buyers who have a contract signed by Friday and close by June 30. Repeat home buyers can claim a $6,500 credit under the same deadline.
"We have to act quickly," said Kaskel, 31, a guitar teacher. "And so we definitely haven't been resting a lot."
Neither have real estate agents, who have been working long past dark and fielding middle-of-the-night e-mails from buyers desperate to get their share of the billions of dollars that have been doled out nationwide.
"I feel like there's a big clock," said agent Lisa Dority, who has been working with a couple for the past two weeks to find the perfect home in time for the deadline. "Tick, tick."
No one can say how much of the recent increases in home sales can be traced to the credit, but everyone agrees there has been some effect. Likewise, it's hard to predict what will happen once the credit disappears.
Analysts say the credit has, at the least, prompted potential buyers to make their move earlier than they might have otherwise.
"Did we stimulate overall demand or did we just move it around? We don't know yet," said William Hardin, professor of finance and real estate at Florida International University. "We know we've had a lot of first-time home buyers in the market. We know that that's helped. The question is: Is anybody left?"
The National Association of Realtors projects that 2 million buyers will qualify for the credit in 2009 and another 900,000 in 2010. Another 1.5 million are anticipated to qualify for the $6,500 credit for repeat home buyers.
Spokesman Walter Molony said sales are expected to drop in July after the credit expires, but the association still expects levels to be above the previous year's as the market continues to balance out.
Already extended once, the credit has been dangled in some form since 2008 as an incentive to prop up the nation's deflated real estate market.
Combined with low interest rates and a glut of low-priced property on the market, the incentive seems to be doing its job.
Existing home sales in Miami-Dade jumped 17 percent in March compared to the previous year; in Broward, sales were up 8 percent. Prices are still creeping down as analysts predict a tumultuous real estate landscape is starting to stabilize. With one in 46 homes in South Florida in some stage of foreclosure, deals abound.
The Internal Revenue Service says that in tax returns processed through late February, 128,517 filers in Florida had qualified for more than $936 million in credits on homes bought in 2008 and 2009. Nationwide, nearly 1.8 million returns had claimed almost $12.7 billion.
A 2008 version of the credit was essentially a $7,500 loan. By 2009, that turned into a credit of 10 percent of the purchase price of the home up to $8,000. The deadline was extended last year to April 30.
Ellen Tremper, sales manager at Century 21 Tenace Realty in Coral Springs, Fla., said the office has been busy for the last few months. She said she wasn't sure how much of that could be linked to the credit.
"Part of me is a little nervous as to see what happens after April 30," she said. "That'll really be the telltale everything."
In the meantime, says agent Zoila Zamora-Cruz, "I'm like crazy looking for properties."
Zamora-Cruz said this week that she had four or five people searching for homes by Friday.
Her clients Jose Gutierrez and Blanca Norda got in on time; they are scheduled to close on their $107,000 Kendall, Fla.-area home Friday.
Gutierrez, 46, said they have been waiting for the right time to buy, since the couple and their two kids moved from Cuba in 2002.
"That's the American dream when you get over here, to own a house," he said. The tax credit, plus lower prices and an affordable mortgage made 2010 the best time for the family to buy.
"There's a moment for everything," Gutierrez said. "The opportunity, you have to wait for it."
Good properties that are priced right - around $200,000 - are "like gold right now," said Anthony Askowitz, a broker and owner of two Re/Max offices.
Askowitz showed the Kaskels a home listed for $299,000 in Kendall Thursday. He brought a contract along just in case.
After seeing the home, the couple signed an offer for more than the asking price. The seller verbally accepted late Thursday. All that's left to do is get the contract in hand.
"I feel great about it," Benjamin Kaskel said. "It's just very stressful. A lot to do all at once."
Source: http://www.miamiherald.com/2010/04/29/1605369/as-home-tax-break-expires-mad.html
By HANNAH SAMPSON
McClatchy Newspapers
The Criscitos has been selling South Florida luxury and commercial real estate for over a decade and has sold over $1 billion dollars of property. They work as a multi-lingual team speaking english, Spanish, Italian and Portuguese. They carved out a niche as a leading boutique real estate company with two distinct divisions -residential and commercial- both personally overseeing by Marcela and Anthony Criscito.
Friday, April 30, 2010
Thursday, April 29, 2010
Florida Home Sales Increase for the 19th Straight Month
Florida’s existing home sales rose in March, which means that sales activity has increased in the year-to-year comparison for 19 months, according to the latest housing data released by Florida Realtors.
Existing home sales increased 24 percent last month with a total of 16,294 homes sold statewide compared to 13,090 homes sold in March 2009 (see chart above). Statewide existing home sales last month increased 37 percent over statewide sales activity in February (11,890 homes sold). Also noteworthy: While March’s statewide existing-home median price of $137,000 was down from the same time a year ago, it was 4.3 percent higher than February’s statewide existing-home median price of $131,350.
MP: These recent sales data for Florida paint a much more positive picture of the Florida real estate market than the Case-Shiller home price data released yesterday, which showed annual price declines through February 2010 of -7.7% for Miami and -9.8% for Tampa. For March 2010, the statewide median price decline was only -3% versus March 2009, and the other key variable - home sales - was up by 24% since last March.
Assuming the median home price is not too different than the mean home price, the total housing sales volume increased from about $1.85 billion in March 2009 to about $2.23 billion in March 2010, for a 20.5% increase. If we measured housing market activity like we measured vehicle sales - in unit sales, without regard to price - we would conclude that the Florida housing market is booming, with 19 consecutive monthly increases compared to the same month in the previous year, and a whopping 24% increase from March of last year. And if we measured housing activity like we measure retail sales (total sales volume), we would also conclude that the Florida housing market is doing quite well, with something like a 20% increase in sales volume (assuming the median home price is an accurate estimate of the mean home price).
Isn't that a possible limitation of the Case-Shiller Home Price Index as a measure of the real estate market - it only looks at one of the key housing indicators, price, and completely ignores the other key variable, units sold; and therefore also fails to measure housing sales volume?
Monday, April 26, 2010
Home-sale surge a sign of recovery
Driven by drop-dead prices on foreclosures and short sales and a looming deadline for federal tax credits, home and condo sales in South Florida shot up in March, brightening the outlook that this year may herald a real estate recovery.
At the same time, wealthy buyers who have waited on the sidelines as the market tumbled are now jumping in. Those investors are opting to put their cash into property rather than risk it in the still-volatile stock market, real estate agents say.
``What we are seeing is that prices have dropped 40 to 50 percent since the height of the market, which has made attaining a home much more affordable,'' said Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach.
In Miami-Dade County, sales of existing homes rose 17 percent in March compared to the same month last year, and median prices declined 4 percent to $197,500, according to figures released Thursday by the trade group Florida Realtors.
At the same time, condominium sales jumped 58 percent to 835 sales, while median prices fell 8 percent to $138,800.
Figures for Broward County trailed Miami-Dade's, with existing home sales up 8 percent in March, and median prices falling 3 percent to $214,000, compared to the same month last year.
March condo sales jumped by 46 percent to 1,140 in Broward, while median condo prices fell 10 percent to $73,600, compared to March 2009, the figures show.
While rising sales are uplifting news, analysts differ on whether South Florida's real estate prices have hit rock bottom, which is likely the true test of an incipient recovery.
David Dabby, president of the Dabby Group in Coral Gables, believes prices have stabilized since hitting the floor in April 2009. They've been wavering -- some months up slightly, others down -- at the same low level since then.
``The market is in recovery, but it's a very weak recovery, and no price recovery, just price stabilization,'' Dabby said. ``Stabilization of prices is the best we can hope for in the foreseeable future.''
FUTURE PRICES
Meanwhile, McCabe is betting South Florida prices will hit bottom between the end of 2010 and mid-2011, with condo prices possibly continuing to decline until the end of 2011, due to the high supply of condos on the market.
``Foreclosure activity is continuing to drive the market and will keep a lid on prices for the foreseeable future,'' Dabby said.
During March, he said 55 percent of all single-family home sales in Miami-Dade were foreclosures or short sales, in which lenders allow homes to be sold for less than the mortgages owed against them.
``It's just a foreclosure buying binge, and I hope it continues, because that is the only way we will return to a normal market,'' he said.
According to data from EWM Realtors, nearly 24,000 homes and condos were available for sale in Miami-Dade at the end of March. That has been whittled down since March of last year, when 34,123 homes and condos were on the market. Similarly, in Broward, 17,469 homes and condos were on the market at the end of March, down from 26,668 one year ago, EWM Realtors data shows.
Wealthy buyers are heating up the market and helping to absorb the supply, some Realtors say.
``This first quarter is the best first quarter we've had certainly in the last three years,'' said Claudia Lewis, a Realtor with Century 21 Premier Elite Realty in Coral Gables. ``It has been so active, most agents are working 12, 13, 14 hours a day.''
In recent weeks, Lewis has sold or delivered contracts for a $3 million house in Redland, a $2 million house in Pinecrest and three $1 million-plus condos in Coconut Grove.
``The market has just changed dramatically from the fourth quarter of 2009 to the first quarter of 2010,'' she said. ``There has been a dramatic increase in activity and sales.''
FINANCING
Nudging the market further is financing -- when available -- remains affordable, with mortgage rates hovering at about 5 percent.
In fact, even foreign investors are again abundant, particularly from Europe and Latin America, said Maria Visser, international director/corporate relocation, and a broker associate with Century 21 Premier Elite Realty in Coral Gables.
``What they are seeing is that prices are low, interest rates are low -- when has it been this attractive to buy here?'' she said.
Yet another financial impetus: Potential buyers have one week left to gain access to federal tax credits, geared to stimulate sales.
Buyers who have signed a contract to purchase a primary residence by April 30 have until June 30 to close to be eligible for the federal tax credit of up to $8,000 for first-time buyers and up to $6,500 for repeat buyers.
``We're seeing a last-minute rush here for people trying to capitalize on this, and I have several buyers coming to town specifically to find something with the intent of making a contract before the end of the month to meet the deadline,'' said Steve Scarpone, a Realtor with Coldwell Banker in Kendall.
To spur sales even after the deadline, Coldwell Banker is asking its sellers to agree to pay $8,000 toward a buyer's closing costs after May 1.
In fact, a survey released this week by Century 21 Real Estate showed that first-time home buyers rated the three most influential factors in their decision to buy a home as current housing prices (66 percent), followed closely by the home buyer tax credit (63 percent) and low interest rates (60 percent).
ACROSS U.S.
Nationwide, existing-home sales, including single-family, townhomes, condos and co-ops, rose 6.8 percent to 5.35 million in March, compared to 5.01 million the previous month, according to data from the National Association of Realtors.
The median sales price rose 0.4 percent in March to $170,700, and sales were up 16.1 percent, compared to March 2009, marking the beginning of an expected spring surge, the association said.
The home buyer tax credit is spurring sales across the nation, said Lawrence Yun, chief economist for the association. A NARS survey shows first-time buyers purchased 44 percent of homes in March, up from 42 percent in February. Investors accounted for 19 percent of transactions in March, unchanged from February; the remaining sales were to repeat buyers.
``The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices,'' Yun said in a statement. ``This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.''
Source: http://www.miamiherald.com/2010/04/22/1593777_p2/home-sale-surge-a-sign-of-recovery.html
BY INA PAIVA CORDLE
icordle@MiamiHerald.com
At the same time, wealthy buyers who have waited on the sidelines as the market tumbled are now jumping in. Those investors are opting to put their cash into property rather than risk it in the still-volatile stock market, real estate agents say.
``What we are seeing is that prices have dropped 40 to 50 percent since the height of the market, which has made attaining a home much more affordable,'' said Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach.
In Miami-Dade County, sales of existing homes rose 17 percent in March compared to the same month last year, and median prices declined 4 percent to $197,500, according to figures released Thursday by the trade group Florida Realtors.
At the same time, condominium sales jumped 58 percent to 835 sales, while median prices fell 8 percent to $138,800.
Figures for Broward County trailed Miami-Dade's, with existing home sales up 8 percent in March, and median prices falling 3 percent to $214,000, compared to the same month last year.
March condo sales jumped by 46 percent to 1,140 in Broward, while median condo prices fell 10 percent to $73,600, compared to March 2009, the figures show.
While rising sales are uplifting news, analysts differ on whether South Florida's real estate prices have hit rock bottom, which is likely the true test of an incipient recovery.
David Dabby, president of the Dabby Group in Coral Gables, believes prices have stabilized since hitting the floor in April 2009. They've been wavering -- some months up slightly, others down -- at the same low level since then.
``The market is in recovery, but it's a very weak recovery, and no price recovery, just price stabilization,'' Dabby said. ``Stabilization of prices is the best we can hope for in the foreseeable future.''
FUTURE PRICES
Meanwhile, McCabe is betting South Florida prices will hit bottom between the end of 2010 and mid-2011, with condo prices possibly continuing to decline until the end of 2011, due to the high supply of condos on the market.
``Foreclosure activity is continuing to drive the market and will keep a lid on prices for the foreseeable future,'' Dabby said.
During March, he said 55 percent of all single-family home sales in Miami-Dade were foreclosures or short sales, in which lenders allow homes to be sold for less than the mortgages owed against them.
``It's just a foreclosure buying binge, and I hope it continues, because that is the only way we will return to a normal market,'' he said.
According to data from EWM Realtors, nearly 24,000 homes and condos were available for sale in Miami-Dade at the end of March. That has been whittled down since March of last year, when 34,123 homes and condos were on the market. Similarly, in Broward, 17,469 homes and condos were on the market at the end of March, down from 26,668 one year ago, EWM Realtors data shows.
Wealthy buyers are heating up the market and helping to absorb the supply, some Realtors say.
``This first quarter is the best first quarter we've had certainly in the last three years,'' said Claudia Lewis, a Realtor with Century 21 Premier Elite Realty in Coral Gables. ``It has been so active, most agents are working 12, 13, 14 hours a day.''
In recent weeks, Lewis has sold or delivered contracts for a $3 million house in Redland, a $2 million house in Pinecrest and three $1 million-plus condos in Coconut Grove.
``The market has just changed dramatically from the fourth quarter of 2009 to the first quarter of 2010,'' she said. ``There has been a dramatic increase in activity and sales.''
FINANCING
Nudging the market further is financing -- when available -- remains affordable, with mortgage rates hovering at about 5 percent.
In fact, even foreign investors are again abundant, particularly from Europe and Latin America, said Maria Visser, international director/corporate relocation, and a broker associate with Century 21 Premier Elite Realty in Coral Gables.
``What they are seeing is that prices are low, interest rates are low -- when has it been this attractive to buy here?'' she said.
Yet another financial impetus: Potential buyers have one week left to gain access to federal tax credits, geared to stimulate sales.
Buyers who have signed a contract to purchase a primary residence by April 30 have until June 30 to close to be eligible for the federal tax credit of up to $8,000 for first-time buyers and up to $6,500 for repeat buyers.
``We're seeing a last-minute rush here for people trying to capitalize on this, and I have several buyers coming to town specifically to find something with the intent of making a contract before the end of the month to meet the deadline,'' said Steve Scarpone, a Realtor with Coldwell Banker in Kendall.
To spur sales even after the deadline, Coldwell Banker is asking its sellers to agree to pay $8,000 toward a buyer's closing costs after May 1.
In fact, a survey released this week by Century 21 Real Estate showed that first-time home buyers rated the three most influential factors in their decision to buy a home as current housing prices (66 percent), followed closely by the home buyer tax credit (63 percent) and low interest rates (60 percent).
ACROSS U.S.
Nationwide, existing-home sales, including single-family, townhomes, condos and co-ops, rose 6.8 percent to 5.35 million in March, compared to 5.01 million the previous month, according to data from the National Association of Realtors.
The median sales price rose 0.4 percent in March to $170,700, and sales were up 16.1 percent, compared to March 2009, marking the beginning of an expected spring surge, the association said.
The home buyer tax credit is spurring sales across the nation, said Lawrence Yun, chief economist for the association. A NARS survey shows first-time buyers purchased 44 percent of homes in March, up from 42 percent in February. Investors accounted for 19 percent of transactions in March, unchanged from February; the remaining sales were to repeat buyers.
``The home buyer tax credit has been a resounding success as these underlying trends point to a broad stabilization in home prices,'' Yun said in a statement. ``This is preserving perhaps $1 trillion in largely middle class housing wealth that may have been wiped out without the housing stimulus measure.''
Source: http://www.miamiherald.com/2010/04/22/1593777_p2/home-sale-surge-a-sign-of-recovery.html
BY INA PAIVA CORDLE
icordle@MiamiHerald.com
Friday, April 23, 2010
Sales Of Previously Owned Homes
FOR MORE INFORMATION GO TO OUR WEBSITE
Sales of previously owned U.S. homes jumped 6.8 percent in March, a national group said Thursday.
Real estate agents have been counting on a spring surge brought on by an expanded and extended federal tax credit for buyers. The March sales pace reached a seasonally adjusted annual rate of 5.35 million units, up from 5.01 million in February and 16.1 percent above the 4.61-million-unit pace in March 2009, according to the National Association of Realtors in Washington.
Lawrence Yun, chief economist for the group, said the federal tax credit that was to expire at the end of this month had been a "resounding success."
Whether home sales will hold up after the expiration remains a question in debate.
"I'm fairly sanguine, frankly," said Michael D. Larson, a housing and interest-rate analyst with Weiss Research. "While the credit expires April 30, more forces are at work here. Home prices are now reasonable in many parts of the country, and financing costs remain low."
The national median home price was $170,700 last month, up 0.4 percent from the same month the prior year, the Realtors group said.
Regionally, sales of previously owned homes rose 6.6 percent in the West, 7.1 percent in the South, 7.2 percent in the Midwest and 6 percent in the East.
Source: http://www.miamiherald.com/2010/04/22/1593001/sales-of-previously-owned-homes.html
By ALEJANDRO LAZO
Los Angeles Times
Sales of previously owned U.S. homes jumped 6.8 percent in March, a national group said Thursday.
Real estate agents have been counting on a spring surge brought on by an expanded and extended federal tax credit for buyers. The March sales pace reached a seasonally adjusted annual rate of 5.35 million units, up from 5.01 million in February and 16.1 percent above the 4.61-million-unit pace in March 2009, according to the National Association of Realtors in Washington.
Lawrence Yun, chief economist for the group, said the federal tax credit that was to expire at the end of this month had been a "resounding success."
Whether home sales will hold up after the expiration remains a question in debate.
"I'm fairly sanguine, frankly," said Michael D. Larson, a housing and interest-rate analyst with Weiss Research. "While the credit expires April 30, more forces are at work here. Home prices are now reasonable in many parts of the country, and financing costs remain low."
The national median home price was $170,700 last month, up 0.4 percent from the same month the prior year, the Realtors group said.
Regionally, sales of previously owned homes rose 6.6 percent in the West, 7.1 percent in the South, 7.2 percent in the Midwest and 6 percent in the East.
Source: http://www.miamiherald.com/2010/04/22/1593001/sales-of-previously-owned-homes.html
By ALEJANDRO LAZO
Los Angeles Times
Thursday, April 22, 2010
8 Signs Of A Real Estate Rebound
FOR MORE INFORMATION GO TO OUR WEBSITE
Is the housing market on the verge of recovering? Is it recovering already? If you're not sure whether you believe the economists and pundits who think they can see the future, here are some tools that will help you make up your own mind.
Pending Home Sales
According to the National Association of Realtors, pending home sales, or the number of homes that are under contract and in the process of selling, rose by 8.2% in February (the most recent month for which data are available). The index is also an encouraging 17.3% over what it was a year ago.
Pending home sales are considered a leading indicator, meaning that they can forecast the direction the economy is headed. Leading indicators cannot truly predict the future, though, so they should be taken with a grain of salt. (To learn more about leading indicators, read Leading Economic Indicators Predict Market Trends.)
The increase in pending home sales could be less indicative of a genuine improvement in the housing market, however, and more indicative of the pending expiration of the homebuyer tax credit, which requires homes to be under contract by April 30. (To learn more about the homebuyer tax credit, read Claim the Homebuyer Tax Credit Before It Expires.)
Housing Starts
Housing starts are an important leading indicator of not just the housing market, but the economy as a whole, because people are more likely to start new residential construction projects when things are looking good. Housing starts don't look promising right now - the U.S. Census Bureau reported that privately owned housing starts in February were 5.9% below January and 0.2% above February 2009. (Learn more about housing starts in Economic Indicators: Housing Starts.)
New and Existing Home Sales
New home sales reached a record low in February with 308,000 sales, according to the National Association of Home Builders (NAHB). In 2005, 1,283,000 new homes were sold per month on average. The good news is that new home sales increased by 20.8% in the West, one of the regions hardest hit by the housing crisis.
More good news comes from statistics on existing home sales. About 5 million existing homes were sold in February, up from about 4.7 million a year ago. (For more on this subject, read Economic Indicators: Existing Home Sales.)
Home Inventory
Home inventory is another leading economic indicator. A greater supply of homes-for-sale indicates weak market conditions. The NAHB also reported that as of February 2010, there were 236,000 new homes, or 9.2 months' supply, on the market, the worst number since May 2009. There was also 8.6 months' supply of existing homes on the market, the worst number since August 2009. However, these numbers are better than those from a year ago, when the supply was 11.1 months for new homes and 9.7 months for existing homes.
Housing Affordability
The National Association of Realtors reports that in February 2010, the median price of an existing home in the United States was $164,300 and the average mortgage rate was 4.99%. With median family income at $60,498, a family's housing payment would only be 14.2% of its income, well below the 25% cap many financial experts recommend for keeping the monthly budget under control.
Compare these figures to 2007 averages, when a house cost $217,900, mortgage rates were 6.52% and median incomes were about the same at $61,173. While falling home prices aren't good, improved home affordability could help the recovery by putting home ownership within reach for more families, especially the first-time buyers who have historically helped end housing slumps.
However, credit is still difficult to obtain, and unlike investors, most families can't buy homes without a mortgage. What's more, despite how far prices have fallen, there are still plenty of people in high-cost-of-living cities who can't afford to buy anything.
Mortgage Applications
The Mortgage Bankers Association (MBA) issues its Weekly Mortgage Applications Survey that reports on the number of people applying to borrow money to buy a house. For the week ending April 9, mortgage applications declined by 9.6% over the previous week. The four-week moving average, which is helpful in smoothing out the ups and downs of the weekly figures, was down 6.2%. The MBA stated that an increase in mortgage insurance premiums for FHA loans, which are attractive to buyers because of their low down payment requirements, may have contributed to this decline.
Mortgage Interest Rates
For the week ending April 9, the MBA reported that the average contract rate on a 30-year fixed-rate mortgage was 5.17%. Mortgage rates have been at historic lows for months, wavering between 5% and 6%. Low mortgage rates help entice buyers, but they can't fix a bad housing market on their own. The Consumer Confidence Index, a survey of how optimistic or pessimistic people feel about the economy, has been up and down in 2010, and consumers still feel pessimistic about the job market. The thousands of Americans who are unemployed couldn't get a mortgage even if rates were 1%. (For related reading, see Consumer Confidence: A Killer Statistic.)
Real Estate Mutual Funds
According to Morningstar, real estate mutual funds returned 9.4% in the first quarter of 2010, one of the highest return of any mutual fund category. Over the last year, they have also led all mutual funds with a gain of 105.3%. Shares of Vanguard's REIT ETF (VNQ), which invests in a wide range of real estate companies, gained 10% in the first quarter of 2010 and over 69% in the last year. These returns show investor confidence in the overall real estate market.
REITs are not limited to investing in the residential housing market, however; VNQ's largest holdings, for example, include Simon Property Group, which owns numerous shopping malls; Vornado Realty Trust, the owner of many office and retail buildings; and Public Storage, the well-known storage unit rental company.
Mixed Signals
Major housing market indicators currently provide mixed signals about how the housing market is doing. High unemployment rates, the continued difficulty of obtaining credit and the pending expiration of the homebuyer tax credit make it hard to tell where the housing market is headed at the moment. Keep an eye on these indicators and wait for clear and consistent signals to emerge before you consider the housing market to truly be recovering.
Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/04/20/investopedia43633.DTL
provided by Amy Fontinelle,
Is the housing market on the verge of recovering? Is it recovering already? If you're not sure whether you believe the economists and pundits who think they can see the future, here are some tools that will help you make up your own mind.
Pending Home Sales
According to the National Association of Realtors, pending home sales, or the number of homes that are under contract and in the process of selling, rose by 8.2% in February (the most recent month for which data are available). The index is also an encouraging 17.3% over what it was a year ago.
Pending home sales are considered a leading indicator, meaning that they can forecast the direction the economy is headed. Leading indicators cannot truly predict the future, though, so they should be taken with a grain of salt. (To learn more about leading indicators, read Leading Economic Indicators Predict Market Trends.)
The increase in pending home sales could be less indicative of a genuine improvement in the housing market, however, and more indicative of the pending expiration of the homebuyer tax credit, which requires homes to be under contract by April 30. (To learn more about the homebuyer tax credit, read Claim the Homebuyer Tax Credit Before It Expires.)
Housing Starts
Housing starts are an important leading indicator of not just the housing market, but the economy as a whole, because people are more likely to start new residential construction projects when things are looking good. Housing starts don't look promising right now - the U.S. Census Bureau reported that privately owned housing starts in February were 5.9% below January and 0.2% above February 2009. (Learn more about housing starts in Economic Indicators: Housing Starts.)
New and Existing Home Sales
New home sales reached a record low in February with 308,000 sales, according to the National Association of Home Builders (NAHB). In 2005, 1,283,000 new homes were sold per month on average. The good news is that new home sales increased by 20.8% in the West, one of the regions hardest hit by the housing crisis.
More good news comes from statistics on existing home sales. About 5 million existing homes were sold in February, up from about 4.7 million a year ago. (For more on this subject, read Economic Indicators: Existing Home Sales.)
Home Inventory
Home inventory is another leading economic indicator. A greater supply of homes-for-sale indicates weak market conditions. The NAHB also reported that as of February 2010, there were 236,000 new homes, or 9.2 months' supply, on the market, the worst number since May 2009. There was also 8.6 months' supply of existing homes on the market, the worst number since August 2009. However, these numbers are better than those from a year ago, when the supply was 11.1 months for new homes and 9.7 months for existing homes.
Housing Affordability
The National Association of Realtors reports that in February 2010, the median price of an existing home in the United States was $164,300 and the average mortgage rate was 4.99%. With median family income at $60,498, a family's housing payment would only be 14.2% of its income, well below the 25% cap many financial experts recommend for keeping the monthly budget under control.
Compare these figures to 2007 averages, when a house cost $217,900, mortgage rates were 6.52% and median incomes were about the same at $61,173. While falling home prices aren't good, improved home affordability could help the recovery by putting home ownership within reach for more families, especially the first-time buyers who have historically helped end housing slumps.
However, credit is still difficult to obtain, and unlike investors, most families can't buy homes without a mortgage. What's more, despite how far prices have fallen, there are still plenty of people in high-cost-of-living cities who can't afford to buy anything.
Mortgage Applications
The Mortgage Bankers Association (MBA) issues its Weekly Mortgage Applications Survey that reports on the number of people applying to borrow money to buy a house. For the week ending April 9, mortgage applications declined by 9.6% over the previous week. The four-week moving average, which is helpful in smoothing out the ups and downs of the weekly figures, was down 6.2%. The MBA stated that an increase in mortgage insurance premiums for FHA loans, which are attractive to buyers because of their low down payment requirements, may have contributed to this decline.
Mortgage Interest Rates
For the week ending April 9, the MBA reported that the average contract rate on a 30-year fixed-rate mortgage was 5.17%. Mortgage rates have been at historic lows for months, wavering between 5% and 6%. Low mortgage rates help entice buyers, but they can't fix a bad housing market on their own. The Consumer Confidence Index, a survey of how optimistic or pessimistic people feel about the economy, has been up and down in 2010, and consumers still feel pessimistic about the job market. The thousands of Americans who are unemployed couldn't get a mortgage even if rates were 1%. (For related reading, see Consumer Confidence: A Killer Statistic.)
Real Estate Mutual Funds
According to Morningstar, real estate mutual funds returned 9.4% in the first quarter of 2010, one of the highest return of any mutual fund category. Over the last year, they have also led all mutual funds with a gain of 105.3%. Shares of Vanguard's REIT ETF (VNQ), which invests in a wide range of real estate companies, gained 10% in the first quarter of 2010 and over 69% in the last year. These returns show investor confidence in the overall real estate market.
REITs are not limited to investing in the residential housing market, however; VNQ's largest holdings, for example, include Simon Property Group, which owns numerous shopping malls; Vornado Realty Trust, the owner of many office and retail buildings; and Public Storage, the well-known storage unit rental company.
Mixed Signals
Major housing market indicators currently provide mixed signals about how the housing market is doing. High unemployment rates, the continued difficulty of obtaining credit and the pending expiration of the homebuyer tax credit make it hard to tell where the housing market is headed at the moment. Keep an eye on these indicators and wait for clear and consistent signals to emerge before you consider the housing market to truly be recovering.
Source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/04/20/investopedia43633.DTL
provided by Amy Fontinelle,
Wednesday, April 21, 2010
In Miami, Condo Sales Rise as Prices Bottom Out
FOR MORE INFORMATION GO TO OUR WEBSITE
MIAMI — Though it overlooks the Atlantic Ocean and offers high-end amenities like a wine vault and a cigar humidor, the Caribbean condominium complex in Miami Beach seemed by last summer to be just another casualty of the glutted South Florida housing market.
The Caribbean in Miami Beach.
There were buyers for all 103 units in the complex, which includes a small renovated Art Deco building and a new glass tower, but only 14 had been willing to close. The rest had simply walked away from their deposits.
The Caribbean, at 37th Street and Collins Avenue, resulted in heavy losses for its developers, a partnership of Christa Development of Victor, N.Y., and Bluerock Real Estate of New York City, and its lender, the now-defunct Corus Bankshares of Chicago.
But it has reaped a nice profit for another real estate investor, Melohn Properties, also of New York City, which assumed control of the property after buying the $127.7 million mortgage from Corus last August. Melohn paid less than half the face value of the loan, according to the building’s broker, Diane Lieberman, the owner of SBI Realty in Miami Beach.
There are now just 15 units left at the Caribbean, Ms. Lieberman said. Originally priced around $1,100 a square foot, the condos are selling for an average of $600 a square foot, with those on a high floor with wraparound terraces selling at $750 a square foot. Most of the buyers paid cash, and all plan to use the condos themselves, she said.
Peter Zalewski, the owner of Condo Vultures, a brokerage firm that specializes in selling units in bulk, said a dozen other investors had taken a look at the Caribbean loan and passed. “Now they’re all having remorse,” he said.
Though the Miami market remains deeply troubled, it is no longer moribund, real estate specialists say. Activity is picking up, though buyers who intend to live in their units are primarily interested in top properties in the best locations, said Robert Kaplan, a principal of Olympian Capital Group, a real estate investment bank in Miami. Even though the Caribbean is opposite a stalled project and is north of South Beach, its ocean views and solid construction are attractive, he said.
Brokers say that South Beach, because of its glamorous night life and smaller inventory as well as its proximity to the ocean, continues to do much better than downtown, with its canyons of new high-rise condos.
From May through December last year, 1,000 new units sold in downtown Miami — an area from Brickell Avenue north to the Julia Tuttle Causeway — according to a study prepared for the Miami Downtown Development Authority, a quasi-independent city agency. But the majority of the buyers were investors, many of them from South America, real estate specialists said. And though occupancy in new downtown buildings increased to 74 percent from 68 percent, more than half of the new residents were renters, and 7,000 of the 22,000 new condo units built since 2003 remained unsold. Most are in the Brickell area, where much of the new construction is concentrated.
Since the study was completed, another 700 units have sold downtown, Mr. Zalewski said.
A big chunk of these sales were made at the Icon Brickell, a new 1,646-unit condominium complex that became a symbol of downtown excess because of features like as a $15 million entryway with 100 sculptured columns. By the end of last year, only 125 condos had sold, with an average price of $543 a square foot, Mr. Zalewski’s data shows.
Since January, however, 199 sales have closed at the complex, which is situated where the Miami River meets Biscayne Bay. But the average price in the first quarter was $404 a square foot and about 30 units have sold for less than $300 a square foot.
“In South America, a Brickell address is like a U.S. savings bond,” said Jay Massirman, a senior managing director of Related Group of Florida, which developed the complex. “They know that prices are not going any lower. He said buyers also know they are buying for less than it cost to build the units.
Over all, condo prices in Miami-Dade County have declined by 51 percent since 2007, when the median price was $275,000, said Ronald A. Shuffield, the president of Esslinger-Wooten-Maxwell Realtors of Coral Gables. Last month, 2,381 condos in the county went to contract — nearly twice as many as in March 2009 — but the median price had slipped to $135,000, he said.
Still, the increase in sales may not translate into higher prices. With so many investment sales, many units will come back to the market when prices begin to rise, in turn keeping prices down, said Lewis M. Goodkin, a real estate analyst and a co-author of the downtown association’s report. “So we’re far from out of the woods,” Mr. Goodkin said. “I think we have a minimum of five years left before we have equilibrium in the market.”
Jack McCabe, a real estate consultant in Deerfield Beach, Fla., said rents had fallen so far that a new condo with 1,200 square feet could be leased for as little as $1,200 a month, less than what it cost most owners to cover their expenses. “The mini-boom is not creating a healthy real estate market,” he said.
But the influx of renters has meant that downtown no longer looks like a ghost town. More lights are on at night, and new shops and restaurants have opened. “It’s bringing a vibrancy to the downtown that we haven’t ever felt here,” said Alyce Robertson, the executive director of the downtown association. Two Publix supermarkets have been added to downtown since the mini-boom began. While some stores and restaurants closed during the recession, and a planned Whole Foods never materialized, the area had a net gain of 42 retailers in 2009, Ms. Robertson said.
Brokers said more owner-occupiers were in the market now that both Fannie Mae and Freddie Mac had loosened restrictions that made it harder for prospective buyers to get loans. Some condos in foreclosure had even received multiple bids, said Lucas Lechuga, a sales agent with Keller Williams Realty in Miami. Mr. Lechuga said one of his clients lost out on a one-bedroom condo at the Vue at Brickell in downtown Miami that was listed at $142,500 but sold for $225,000. Buyers do not seem deterred even in cases when the previous owner made off with the appliances, Mr. Lechuga said. “It’s crazy what I’ve been seeing in the last three months,” he said.
But anyone looking for a bargain at the Paramount Bay, at North East 21st Street and North Bayshore Drive, or at the new Mint, on the Miami River at South West Third Street, will have to wait. The two developments were part of Corus’s $5 billion national loan portfolio. Starwood Capital and several partners bought a 40 percent stake in the portfolio in January in a deal valued at $2.77 billion. “It will be some time before we are offering units for sale to the public at either property,” said Tom Johnson, a spokesman for Starwood, which is managing the portfolio.
To make the portfolio attractive, the Federal Deposit Insurance Corporation took a majority stake and provided $1 billion in interest-free financing.
“Our purchase price for Corus coupled with the unusual financing we have in place allows us to be very patient,” Barry Sternlicht, chief executive of Starwood, said in an e-mail message.
Craig A. Werley, the president of Focus Real Estate Advisors, a Miami consulting firm, and a co-author of the downtown study, said Starwood would be well-positioned in the future when other new buildings had sold out. “They are sitting in the
catbird seat.” he said.
Source: http://www.nytimes.com/2010/04/21/realestate/commercial/21miami.html
By TERRY PRISTIN
MIAMI — Though it overlooks the Atlantic Ocean and offers high-end amenities like a wine vault and a cigar humidor, the Caribbean condominium complex in Miami Beach seemed by last summer to be just another casualty of the glutted South Florida housing market.
The Caribbean in Miami Beach.
There were buyers for all 103 units in the complex, which includes a small renovated Art Deco building and a new glass tower, but only 14 had been willing to close. The rest had simply walked away from their deposits.
The Caribbean, at 37th Street and Collins Avenue, resulted in heavy losses for its developers, a partnership of Christa Development of Victor, N.Y., and Bluerock Real Estate of New York City, and its lender, the now-defunct Corus Bankshares of Chicago.
But it has reaped a nice profit for another real estate investor, Melohn Properties, also of New York City, which assumed control of the property after buying the $127.7 million mortgage from Corus last August. Melohn paid less than half the face value of the loan, according to the building’s broker, Diane Lieberman, the owner of SBI Realty in Miami Beach.
There are now just 15 units left at the Caribbean, Ms. Lieberman said. Originally priced around $1,100 a square foot, the condos are selling for an average of $600 a square foot, with those on a high floor with wraparound terraces selling at $750 a square foot. Most of the buyers paid cash, and all plan to use the condos themselves, she said.
Peter Zalewski, the owner of Condo Vultures, a brokerage firm that specializes in selling units in bulk, said a dozen other investors had taken a look at the Caribbean loan and passed. “Now they’re all having remorse,” he said.
Though the Miami market remains deeply troubled, it is no longer moribund, real estate specialists say. Activity is picking up, though buyers who intend to live in their units are primarily interested in top properties in the best locations, said Robert Kaplan, a principal of Olympian Capital Group, a real estate investment bank in Miami. Even though the Caribbean is opposite a stalled project and is north of South Beach, its ocean views and solid construction are attractive, he said.
Brokers say that South Beach, because of its glamorous night life and smaller inventory as well as its proximity to the ocean, continues to do much better than downtown, with its canyons of new high-rise condos.
From May through December last year, 1,000 new units sold in downtown Miami — an area from Brickell Avenue north to the Julia Tuttle Causeway — according to a study prepared for the Miami Downtown Development Authority, a quasi-independent city agency. But the majority of the buyers were investors, many of them from South America, real estate specialists said. And though occupancy in new downtown buildings increased to 74 percent from 68 percent, more than half of the new residents were renters, and 7,000 of the 22,000 new condo units built since 2003 remained unsold. Most are in the Brickell area, where much of the new construction is concentrated.
Since the study was completed, another 700 units have sold downtown, Mr. Zalewski said.
A big chunk of these sales were made at the Icon Brickell, a new 1,646-unit condominium complex that became a symbol of downtown excess because of features like as a $15 million entryway with 100 sculptured columns. By the end of last year, only 125 condos had sold, with an average price of $543 a square foot, Mr. Zalewski’s data shows.
Since January, however, 199 sales have closed at the complex, which is situated where the Miami River meets Biscayne Bay. But the average price in the first quarter was $404 a square foot and about 30 units have sold for less than $300 a square foot.
“In South America, a Brickell address is like a U.S. savings bond,” said Jay Massirman, a senior managing director of Related Group of Florida, which developed the complex. “They know that prices are not going any lower. He said buyers also know they are buying for less than it cost to build the units.
Over all, condo prices in Miami-Dade County have declined by 51 percent since 2007, when the median price was $275,000, said Ronald A. Shuffield, the president of Esslinger-Wooten-Maxwell Realtors of Coral Gables. Last month, 2,381 condos in the county went to contract — nearly twice as many as in March 2009 — but the median price had slipped to $135,000, he said.
Still, the increase in sales may not translate into higher prices. With so many investment sales, many units will come back to the market when prices begin to rise, in turn keeping prices down, said Lewis M. Goodkin, a real estate analyst and a co-author of the downtown association’s report. “So we’re far from out of the woods,” Mr. Goodkin said. “I think we have a minimum of five years left before we have equilibrium in the market.”
Jack McCabe, a real estate consultant in Deerfield Beach, Fla., said rents had fallen so far that a new condo with 1,200 square feet could be leased for as little as $1,200 a month, less than what it cost most owners to cover their expenses. “The mini-boom is not creating a healthy real estate market,” he said.
But the influx of renters has meant that downtown no longer looks like a ghost town. More lights are on at night, and new shops and restaurants have opened. “It’s bringing a vibrancy to the downtown that we haven’t ever felt here,” said Alyce Robertson, the executive director of the downtown association. Two Publix supermarkets have been added to downtown since the mini-boom began. While some stores and restaurants closed during the recession, and a planned Whole Foods never materialized, the area had a net gain of 42 retailers in 2009, Ms. Robertson said.
Brokers said more owner-occupiers were in the market now that both Fannie Mae and Freddie Mac had loosened restrictions that made it harder for prospective buyers to get loans. Some condos in foreclosure had even received multiple bids, said Lucas Lechuga, a sales agent with Keller Williams Realty in Miami. Mr. Lechuga said one of his clients lost out on a one-bedroom condo at the Vue at Brickell in downtown Miami that was listed at $142,500 but sold for $225,000. Buyers do not seem deterred even in cases when the previous owner made off with the appliances, Mr. Lechuga said. “It’s crazy what I’ve been seeing in the last three months,” he said.
But anyone looking for a bargain at the Paramount Bay, at North East 21st Street and North Bayshore Drive, or at the new Mint, on the Miami River at South West Third Street, will have to wait. The two developments were part of Corus’s $5 billion national loan portfolio. Starwood Capital and several partners bought a 40 percent stake in the portfolio in January in a deal valued at $2.77 billion. “It will be some time before we are offering units for sale to the public at either property,” said Tom Johnson, a spokesman for Starwood, which is managing the portfolio.
To make the portfolio attractive, the Federal Deposit Insurance Corporation took a majority stake and provided $1 billion in interest-free financing.
“Our purchase price for Corus coupled with the unusual financing we have in place allows us to be very patient,” Barry Sternlicht, chief executive of Starwood, said in an e-mail message.
Craig A. Werley, the president of Focus Real Estate Advisors, a Miami consulting firm, and a co-author of the downtown study, said Starwood would be well-positioned in the future when other new buildings had sold out. “They are sitting in the
catbird seat.” he said.
Source: http://www.nytimes.com/2010/04/21/realestate/commercial/21miami.html
By TERRY PRISTIN
Monday, April 19, 2010
Promising sign for new homes
FOR MORE INFORMATION GO TO OUR WEBSITE
Housing construction posted a better-than-expected performance in March, rising to the highest level in 16 months.
The gain was due solely to multifamily homes, which account for less than 20 percent of the market.
The Commerce Department report Friday said construction of single-family homes, the most important segment of the market, fell 0.9 percent to an annual rate of 531,000 units. But permits for single-family construction, a gauge of future activity, were up.
The increase in housing starts tempered news this week from RealtyTrac that a record number of U.S. homes were lost to foreclosure in the first three months of the year.
The low selling prices of those foreclosed homes have put builders at a disadvantage, held back hiring in the construction industry and helped restrain the broader economic recovery.
The Commerce report Friday said overall construction rose 1.6 percent to a seasonally adjusted annual rate of 626,000. That was higher than the 610,000 level economists expected.
In addition, the government revised February's numbers to show a 1.1 percent gain rather than the initially reported drop of 5.9 percent.
Applications for building permits rose 7.5 percent to an annual rate of 685,000.
The weakness in single-family construction was offset by an 18.8 percent surge in the smaller multifamily sector, which rose to a seasonally adjusted annual rate of 95,000 units.
Analysts do not expect this strength to continue given a multitude of problems facing commercial real estate, including high apartment vacancy rates and rising foreclosures of commercial properties.
Source: http://www.miamiherald.com/2010/04/17/1583699/promising-sign-for-new-homes.html
BY MARTIN CRUTSINGER
Housing construction posted a better-than-expected performance in March, rising to the highest level in 16 months.
The gain was due solely to multifamily homes, which account for less than 20 percent of the market.
The Commerce Department report Friday said construction of single-family homes, the most important segment of the market, fell 0.9 percent to an annual rate of 531,000 units. But permits for single-family construction, a gauge of future activity, were up.
The increase in housing starts tempered news this week from RealtyTrac that a record number of U.S. homes were lost to foreclosure in the first three months of the year.
The low selling prices of those foreclosed homes have put builders at a disadvantage, held back hiring in the construction industry and helped restrain the broader economic recovery.
The Commerce report Friday said overall construction rose 1.6 percent to a seasonally adjusted annual rate of 626,000. That was higher than the 610,000 level economists expected.
In addition, the government revised February's numbers to show a 1.1 percent gain rather than the initially reported drop of 5.9 percent.
Applications for building permits rose 7.5 percent to an annual rate of 685,000.
The weakness in single-family construction was offset by an 18.8 percent surge in the smaller multifamily sector, which rose to a seasonally adjusted annual rate of 95,000 units.
Analysts do not expect this strength to continue given a multitude of problems facing commercial real estate, including high apartment vacancy rates and rising foreclosures of commercial properties.
Source: http://www.miamiherald.com/2010/04/17/1583699/promising-sign-for-new-homes.html
BY MARTIN CRUTSINGER
Thursday, April 15, 2010
Provisions expected to spark South Florida market
FOR MORE INFORMATION GO TO OUR WEBSITE
Two bills that supporters say will help bolster Florida’s condo market are one step away from becoming law.
House Bill 561 and Senate Bill 840 have been approved by committees that needed to review the bills before they are sent to the Senate and House for a final vote.
A key element of both bills: Bulk buyers of condominiums won’t be held liable for construction defects or other problems related to the project’s original developer.
Industry experts say this will help move unsold units in many new or converted condo projects in the region.
State laws put developer liabilities onto any investor that acquires multiple units in a project.
“Successor developer liability is a huge concern for any bulk buyer because they are stepping into the shoes of the developer,” said David Metalonis, a Colliers Abood Wood-Fay broker who represents sellers and buyers in bulk condo deals.
“[Buyers] are extremely hesitant to step into to those shoes and that risk is factored in the price.”
Peter Zalewski of CondoVultures said if the provision passes, it could bring more institutional buyers into the bulk condo market.
“I don’t think it’s going to have that much of an impact on private equity investors — they are the ones that have been closing bulk deals — because their mentality is no judge would rule against them and call them a developer,” Zalewski said.
“But the institutional investors — those who want to spend a minimum of $25 million, the hedge funds, the pensions funds — tend to be more focused on fundamentals. I’ve talked to many hedge funds that want to get in the game, but there is no way they can overcome the liability issues. That is why you haven’t seen institutional [bulk condo] deals.”
If they become law, the bills could also be an incentive for institutional lenders to start financing bulk condo deals, he said. The additional lending options and the potential influx of institutional buyers into the condo market could also increase the price of bulk deals by as much as 15 percent, said Zalewski, a former reporter for the Daily Business Review.
Sen. Eleanor Sobel, D-Hollywood, said she is pleased Senate Bill 840 “has soared through its three committees with unanimous ‘yes’ votes.”
“I am confident that the Senate will act quickly to approve this good bill,” she said in a prepared statement. “SB 840 has bipartisan support and provides an immediate stimulus to Florida’s condominium market.”
HB 561 and SB 840 are two of a number of bills that included “distressed buyer language” to relieve bulk buyers of liability in this years legislative session.
“A lot of lenders, developers and associations want it to pass,” said Donna Berger, a community association attorney who helped draft HB 561 and other related bills.
Rep. Maria Lorts Sachs, D-Delray Beach, who co-sponsored HB 561, said it is essential to the economic recovery of South Florida.
“Sometimes we have to take to steps back in order to make things fit to this economy,” she said. “If that means going back on laws that we passed a couple years ago, so be it. We need to reflect the needs of this economy and do whatever it takes to bring back our market and give relief to unit owners who are suffering.”
The house bill would block condo associations from requiring individual owners to purchase casualty insurance. It also extends to 2019 the deadline for condo associations to add sprinkler systems to older buildings. The previous deadline was 2014.
Buildings with four stories or fewer would be exempt from the state-mandated retrofitting. Previously all buildings were subject to having sprinklers installed.
“The main goal of 561 is to provide more relief for struggling associations,” Berger said.
Berger said that retrofitting costs can average $10,000 in special assessments for each unit owners, depending on the size of the development.
Opponents of the bill include fire marshals and firefighters, inspection industry groups and the sprinkler industry. They claim the retrofitting of sprinklers is a safety issue.
Last year, Gov. Charlie Crist vetoed a similar bill and has said he would likely do the same this year for any bill that tried to push back the deadline to add fire sprinklers.
Berger said she met with the governor several weeks ago regarding the issue.
“I explained to him this is a billion-dollar issue for the sprinkler industry and that the state of Florida is the only state that did not make provisions for existing buildings” to be grandfathered in, she said. “It’s our strong hope that we opened his eyes.”
Source: http://www.dailybusinessreview.com/news.html?news_id=61750
Polyana da Costa can be reached at (561) 820-2065.
Two bills that supporters say will help bolster Florida’s condo market are one step away from becoming law.
House Bill 561 and Senate Bill 840 have been approved by committees that needed to review the bills before they are sent to the Senate and House for a final vote.
A key element of both bills: Bulk buyers of condominiums won’t be held liable for construction defects or other problems related to the project’s original developer.
Industry experts say this will help move unsold units in many new or converted condo projects in the region.
State laws put developer liabilities onto any investor that acquires multiple units in a project.
“Successor developer liability is a huge concern for any bulk buyer because they are stepping into the shoes of the developer,” said David Metalonis, a Colliers Abood Wood-Fay broker who represents sellers and buyers in bulk condo deals.
“[Buyers] are extremely hesitant to step into to those shoes and that risk is factored in the price.”
Peter Zalewski of CondoVultures said if the provision passes, it could bring more institutional buyers into the bulk condo market.
“I don’t think it’s going to have that much of an impact on private equity investors — they are the ones that have been closing bulk deals — because their mentality is no judge would rule against them and call them a developer,” Zalewski said.
“But the institutional investors — those who want to spend a minimum of $25 million, the hedge funds, the pensions funds — tend to be more focused on fundamentals. I’ve talked to many hedge funds that want to get in the game, but there is no way they can overcome the liability issues. That is why you haven’t seen institutional [bulk condo] deals.”
If they become law, the bills could also be an incentive for institutional lenders to start financing bulk condo deals, he said. The additional lending options and the potential influx of institutional buyers into the condo market could also increase the price of bulk deals by as much as 15 percent, said Zalewski, a former reporter for the Daily Business Review.
Sen. Eleanor Sobel, D-Hollywood, said she is pleased Senate Bill 840 “has soared through its three committees with unanimous ‘yes’ votes.”
“I am confident that the Senate will act quickly to approve this good bill,” she said in a prepared statement. “SB 840 has bipartisan support and provides an immediate stimulus to Florida’s condominium market.”
HB 561 and SB 840 are two of a number of bills that included “distressed buyer language” to relieve bulk buyers of liability in this years legislative session.
“A lot of lenders, developers and associations want it to pass,” said Donna Berger, a community association attorney who helped draft HB 561 and other related bills.
Rep. Maria Lorts Sachs, D-Delray Beach, who co-sponsored HB 561, said it is essential to the economic recovery of South Florida.
“Sometimes we have to take to steps back in order to make things fit to this economy,” she said. “If that means going back on laws that we passed a couple years ago, so be it. We need to reflect the needs of this economy and do whatever it takes to bring back our market and give relief to unit owners who are suffering.”
The house bill would block condo associations from requiring individual owners to purchase casualty insurance. It also extends to 2019 the deadline for condo associations to add sprinkler systems to older buildings. The previous deadline was 2014.
Buildings with four stories or fewer would be exempt from the state-mandated retrofitting. Previously all buildings were subject to having sprinklers installed.
“The main goal of 561 is to provide more relief for struggling associations,” Berger said.
Berger said that retrofitting costs can average $10,000 in special assessments for each unit owners, depending on the size of the development.
Opponents of the bill include fire marshals and firefighters, inspection industry groups and the sprinkler industry. They claim the retrofitting of sprinklers is a safety issue.
Last year, Gov. Charlie Crist vetoed a similar bill and has said he would likely do the same this year for any bill that tried to push back the deadline to add fire sprinklers.
Berger said she met with the governor several weeks ago regarding the issue.
“I explained to him this is a billion-dollar issue for the sprinkler industry and that the state of Florida is the only state that did not make provisions for existing buildings” to be grandfathered in, she said. “It’s our strong hope that we opened his eyes.”
Source: http://www.dailybusinessreview.com/news.html?news_id=61750
Polyana da Costa can be reached at (561) 820-2065.
Condo Meltdown
Visit our website for more information
Ruling could open door for buyers to recoup deposits
Miami attorney Alexander Lian may have come up with an innovative strategy to help people recover pre-construction deposits they gave condo developers during the housing boom.
Lawsuits have blossomed since the real estate market collapsed in 2007 as would-be condo buyers go after developers to recover their deposits — often as much as 20 percent of the purchase price. The results of those suits have been mixed, with some rulings favoring developers and others favoring buyers.
Lian argued that developer Swire Pacific Holdings and title company Lawyers Title Insurance failed to create two separate escrow accounts when his client deposited $232,000, or 20 percent of the $1.16 million purchase price, in 2004 to reserve a unit at the then-proposed Asia on Brickell Key.
Lian, with Lian & Associates in Miami, cited Florida Statute 718.202, which says a developer must set up a pair of escrow accounts if the deposit exceeds 10 percent of the purchase price. If that doesn’t happen, the buyer has the right to rescind the contract and recover the deposit.
U.S. District Judge Cecilia Altonaga agreed with Lian in a 45-page opinion issued March 30.
‘TECHNICAL’ VIOLATION
When developers receive a 20 percent deposit, they are to put half of the money into a protected account and the other half into an account the developer can access to pay for construction, she said in her ruling.
Swire failed to split Double AA International Investment Group’s deposit between two accounts, Lian said. In early 2009, Double AA demanded that the contract be canceled. Swire and the title company ignored the request, Lian said.
Altonaga rejected the Swire and Lawyers Title defense that the “violation was a technical one that should excuse them from liability,” according to the judge’s ruling.
Swire and the title company argued that it is common practice for escrow agents to create one account and “then use bookkeeping entries to say what money belongs where,” Lian said.
Gary Saul, a Greenberg Traurig lawyer in Miami who represented Swire, said his client declined to comment.
Lawyers Title declined to comment, said Fort Lauderdale lawyer Philip Kantor, who represented the company. Kantor is with Quintairos Prieto Wood & Boyer.
‘POWERFUL’ STRATEGY
This strategy “is very powerful,” Lian said. “It allows the buyer to rescind the entire contract and get all the money back plus interest.“
No money was missing from the escrow account, according to the lawsuit.
Swire and Lawyers Title have until the end of the month to turn over $232,000 to Double AA or to appeal the ruling to the 11th U.S. Circuit.
Since the ruling, lawyers specializing in deposit recovery have rushed to amend their pending lawsuits to add this claim, said Fort Lauderdale attorney Joseph Altschul. He has already amended more than 10 cases.
Altonaga’s ruling applies only to cases where the buyers sued to cancel the purchase contract before backing out of the deal and being declared in default by the developer, Altschul said.
POSSIBLE APPEAL
If Altonaga’s ruling is appealed and upheld, numerous developers will have to return millions of dollars in deposits, even after they had already spent some of the money for construction of their buildings.
Two sources who declined to be identified said Swire plans to appeal the ruling. Some experts predict the company will be successful.
“I feel very strongly that it was a misinterpretation of the statute by the court and it will be overturned on appeal,” said Tony DiTocco, a former developer and now a real estate consultant for builders marketing new condos.
DiTocco, president of DiTocco Consulting in Fort Lauderdale, interprets the law the same way Swire and Lawyers Title did: One account is sufficient if separate records are maintained. DiTocco is not involved with the case.
“There is no purpose to be served” by keeping two accounts, he added.
Hollywood attorney Gary Phillips, who represents condo developers including Miami’s Tibor Hollo, said Altonaga was correct in her ruling, but the law doesn’t make sense.
“The judge is technically right, and most developers I know do have two escrow accounts,” Phillips said. “But I think it is a shame.”
LIMITED IMPACT?
If Swire and the title company lose the appeal, Altonaga’s ruling will gain the force of law and be a significant boost for buyers seeking to get out of condo deals.
For now, however, her 45-page opinion isn’t binding on other judges who may see similar cases, Altschul said.
“Right now, it is certainly what we would call persuasive authority but it is not binding authority,” he said.
“It is not very often that you find a written opinion that goes through such detailed analysis,” Altschul said of the lengthy ruling. “It will be very difficult for a federal appeals court to overturn her conclusion on the merits.”
Altschul, who represents several people seeking to recover condo deposits, is reviewing their developers’ escrow agreements to see if Lian’s strategy can be used.
He said many of the agreements he has looked at don’t require two escrow accounts.
“But that doesn’t mean that maybe they didn’t do it right,” Altschul said.
If Altonaga’s ruling is appealed and upheld, numerous developers will have to return millions of dollars in deposits, even when they had already spent the portion that was allowed to go toward construction of their buildings.
Phillips expects to see a flood of deposit recovery cases tackling this issue.
“I am sure will be see a flurry of discovery now requesting documentation on where the escrow monies were held and in what accounts,” he said. “Luckily my clients … all use separate escrow accounts.”
Source: http://www.dailybusinessreview.com/news.html?news_id=61867
Paola Iuspa-Abbott can be reached at (305) 347-6657.
Ruling could open door for buyers to recoup deposits
Miami attorney Alexander Lian may have come up with an innovative strategy to help people recover pre-construction deposits they gave condo developers during the housing boom.
Lawsuits have blossomed since the real estate market collapsed in 2007 as would-be condo buyers go after developers to recover their deposits — often as much as 20 percent of the purchase price. The results of those suits have been mixed, with some rulings favoring developers and others favoring buyers.
Lian argued that developer Swire Pacific Holdings and title company Lawyers Title Insurance failed to create two separate escrow accounts when his client deposited $232,000, or 20 percent of the $1.16 million purchase price, in 2004 to reserve a unit at the then-proposed Asia on Brickell Key.
Lian, with Lian & Associates in Miami, cited Florida Statute 718.202, which says a developer must set up a pair of escrow accounts if the deposit exceeds 10 percent of the purchase price. If that doesn’t happen, the buyer has the right to rescind the contract and recover the deposit.
U.S. District Judge Cecilia Altonaga agreed with Lian in a 45-page opinion issued March 30.
‘TECHNICAL’ VIOLATION
When developers receive a 20 percent deposit, they are to put half of the money into a protected account and the other half into an account the developer can access to pay for construction, she said in her ruling.
Swire failed to split Double AA International Investment Group’s deposit between two accounts, Lian said. In early 2009, Double AA demanded that the contract be canceled. Swire and the title company ignored the request, Lian said.
Altonaga rejected the Swire and Lawyers Title defense that the “violation was a technical one that should excuse them from liability,” according to the judge’s ruling.
Swire and the title company argued that it is common practice for escrow agents to create one account and “then use bookkeeping entries to say what money belongs where,” Lian said.
Gary Saul, a Greenberg Traurig lawyer in Miami who represented Swire, said his client declined to comment.
Lawyers Title declined to comment, said Fort Lauderdale lawyer Philip Kantor, who represented the company. Kantor is with Quintairos Prieto Wood & Boyer.
‘POWERFUL’ STRATEGY
This strategy “is very powerful,” Lian said. “It allows the buyer to rescind the entire contract and get all the money back plus interest.“
No money was missing from the escrow account, according to the lawsuit.
Swire and Lawyers Title have until the end of the month to turn over $232,000 to Double AA or to appeal the ruling to the 11th U.S. Circuit.
Since the ruling, lawyers specializing in deposit recovery have rushed to amend their pending lawsuits to add this claim, said Fort Lauderdale attorney Joseph Altschul. He has already amended more than 10 cases.
Altonaga’s ruling applies only to cases where the buyers sued to cancel the purchase contract before backing out of the deal and being declared in default by the developer, Altschul said.
POSSIBLE APPEAL
If Altonaga’s ruling is appealed and upheld, numerous developers will have to return millions of dollars in deposits, even after they had already spent some of the money for construction of their buildings.
Two sources who declined to be identified said Swire plans to appeal the ruling. Some experts predict the company will be successful.
“I feel very strongly that it was a misinterpretation of the statute by the court and it will be overturned on appeal,” said Tony DiTocco, a former developer and now a real estate consultant for builders marketing new condos.
DiTocco, president of DiTocco Consulting in Fort Lauderdale, interprets the law the same way Swire and Lawyers Title did: One account is sufficient if separate records are maintained. DiTocco is not involved with the case.
“There is no purpose to be served” by keeping two accounts, he added.
Hollywood attorney Gary Phillips, who represents condo developers including Miami’s Tibor Hollo, said Altonaga was correct in her ruling, but the law doesn’t make sense.
“The judge is technically right, and most developers I know do have two escrow accounts,” Phillips said. “But I think it is a shame.”
LIMITED IMPACT?
If Swire and the title company lose the appeal, Altonaga’s ruling will gain the force of law and be a significant boost for buyers seeking to get out of condo deals.
For now, however, her 45-page opinion isn’t binding on other judges who may see similar cases, Altschul said.
“Right now, it is certainly what we would call persuasive authority but it is not binding authority,” he said.
“It is not very often that you find a written opinion that goes through such detailed analysis,” Altschul said of the lengthy ruling. “It will be very difficult for a federal appeals court to overturn her conclusion on the merits.”
Altschul, who represents several people seeking to recover condo deposits, is reviewing their developers’ escrow agreements to see if Lian’s strategy can be used.
He said many of the agreements he has looked at don’t require two escrow accounts.
“But that doesn’t mean that maybe they didn’t do it right,” Altschul said.
If Altonaga’s ruling is appealed and upheld, numerous developers will have to return millions of dollars in deposits, even when they had already spent the portion that was allowed to go toward construction of their buildings.
Phillips expects to see a flood of deposit recovery cases tackling this issue.
“I am sure will be see a flurry of discovery now requesting documentation on where the escrow monies were held and in what accounts,” he said. “Luckily my clients … all use separate escrow accounts.”
Source: http://www.dailybusinessreview.com/news.html?news_id=61867
Paola Iuspa-Abbott can be reached at (305) 347-6657.
REDC Auctions 65 Condos in Miami Area
In an announcement Tuesday, Real Estate Disposition, LLC (REDC), a real estate auction company based in Irvine, California, said it sold 100 percent of the San Lorenzo condominiums it auctioned in the Little Havana area of Miami this last weekend.
In just two-and-a-half hours, the company auctioned a total of 65 condos at 110 percent of reserves and 88 percent of retail before a crowd of 375 potential buyers. REDC had marketed and originally planned to auction 62 homes at San Lorenzo, but three additional condos were added by the seller the morning of the auction. The final numbers show that REDC had no trouble selling these last-minute additions.
“We’re obviously very pleased with the results from the auction,” said Jeff Frieden, CEO of REDC. “Our clients were able to sell their entire inventory at the auction to the large group of homebuyers and investors.”
According to Frieden, buyers and sellers alike were very pleased with the entire auction process. While the majority of the condos were bought by on-site bidders, 25 percent of the homes sold to online bidders, which Frieden says is becoming an increasingly-popular option.
REDC is currently in the midst of 125 auctions in 70 days. In addition to the San Lorenzo auction, the company conducted several other live and online auctions over the weekend with total sales exceeding $48 million.
Since 2007, REDC has sold more than $6.5 billion in real estate assets at its auctions. The company says its success is based on the aggregation of real estate assets that are marketed and sold in large event-style auctions across the country and in online auctions through its Web site.
Source: http://www.dsnews.com/articles/redc-auctions-65-condos-in-miami-area-2010-04-13
By: Brittany Dunn
In just two-and-a-half hours, the company auctioned a total of 65 condos at 110 percent of reserves and 88 percent of retail before a crowd of 375 potential buyers. REDC had marketed and originally planned to auction 62 homes at San Lorenzo, but three additional condos were added by the seller the morning of the auction. The final numbers show that REDC had no trouble selling these last-minute additions.
“We’re obviously very pleased with the results from the auction,” said Jeff Frieden, CEO of REDC. “Our clients were able to sell their entire inventory at the auction to the large group of homebuyers and investors.”
According to Frieden, buyers and sellers alike were very pleased with the entire auction process. While the majority of the condos were bought by on-site bidders, 25 percent of the homes sold to online bidders, which Frieden says is becoming an increasingly-popular option.
REDC is currently in the midst of 125 auctions in 70 days. In addition to the San Lorenzo auction, the company conducted several other live and online auctions over the weekend with total sales exceeding $48 million.
Since 2007, REDC has sold more than $6.5 billion in real estate assets at its auctions. The company says its success is based on the aggregation of real estate assets that are marketed and sold in large event-style auctions across the country and in online auctions through its Web site.
Source: http://www.dsnews.com/articles/redc-auctions-65-condos-in-miami-area-2010-04-13
By: Brittany Dunn
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