Commercial real estate markets are stabilizing nationwide and will modestly improve in 2011, according to the latest National Association of Realtors economic outlook released Monday.
The outlook cited a recent commercial real estate index by The Society of Industrial and Office Realtors, which reported a 1.6% increase in the third quarter, to 42.6 on the index. This is the fourth consecutive quarter of improvement in the index, however, it still remains well below normal.
The index is measured on a scale to 100. An index of 100 represents equilibrium in the commercial marketplace.
NAR's chief economist, Lawrence Yun, said that signs of stabilization in the market are due primarily to an increase in demand for commercial space, which "means overall vacancy rates have already peaked or will soon top out."
The current vacancy rate for office space nationally stands at 16.7%, but NAR predicts that rate to drop to 16.4% by the fourth quarter of 2011. New York City and Honolulu are the cities with the lowest vacancy rates, both near 9%, according to NAR. All other office markets monitored by NAR — which monitors a range of 50 to 60 markets for each commercial category — reported an office vacancy rate more than 10%.
NAR expects vacancy rates in the industrial and multifamily sectors to decline as well. Industrial vacancies are projected to fall to 13.2% by the fourth quarter of 2011, down from the current 13.9%.
Multifamily properties are also predicted to improve, according to NAR's outlook. Vacancy rates will drop to 5.8% by the end of 2011, down from the current 6.4%.
As of the report's release, San Jose, Calif, Miami, Boston and Portland, Ore., had the lowest multifamily vacancies rates, around 4%.
Lower vacancy rates suggest and increase in property rent, according to Yun; however, only rent in the multifamily sector is expected to rise, up 0.2% in the fourth quarter of 2010 and up 1.6% in 2011.
Rent in the retail sector is expected to drop 3.4% from the fourth quarter of 2010 to the same period 2011, while rent for industrial property is predicted to fall 7.4%. NAR said rent for office space will drop 3.4% by the end of 2011.
Source: http://www.housingwire.com/2010/11/29/nar-predicts-commercial-vacancies-to-fall-in-2011-as-market-stabilizes
http://www.housingwire.com/2010/11/29/nar-predicts-commercial-vacancies-to-fall-in-2011-as-market-stabilizes
by CHRISTINE RICCIARDI
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.
Monday, November 29, 2010
Wednesday, November 24, 2010
Homebuyers get creative to close the deal
MIAMI — — When Efrain Hernandez couldn't seal a deal before the first-time home buyer tax credit expired this year, he lost faith that he would ever own a house in this real estate climate.
But the enforced wait got him more than the $8,000 federal tax credit.
Hernandez negotiated a contract on a five-bedroom, three-bath home in a development near Homestead, Fla., talking homebuilder Lennar into $40,000 off the list price, getting it to pay $18,000 in closing costs and scoring a $7,500 no-interest loan from Miami-Dade County to lighten his down payment.
"I was finally able to buy the house of my dreams," Hernandez said.
Though cash is now king, new homeowners such as Hernandez are finding ways to buy homes — well-kept ones with current mortgages.
After a long drought, money is becoming available to buy homes. Take Wells Fargo Home Mortgage. Andre Brooks, vice president and regional sales manager for the bank's Florida operation, said his company has made more than $3 billion in mortgages this year in Florida, nearly 20 percent more than last year.
But lending guidelines remain restrictive, said Terry H. Francisco, spokesman with Bank of America, so making purchases often requires creativity and calculation.
Among the options:
FHA
Loans backed by the Federal Housing Administration can require a down payment of just 3.5 percent compared with 20 percent many banks typically require.
But there are limits. For one, like other loans with a down payment less than 20 percent, the buyer must get mortgage insurance.
FHA loans also have a maximum and are available only to people who don't have an FHA loan and plan to make the property their primary residence.
Private loan
Made by a noninstitutional investor who does not advertise as a mortgage lender, this requires networking and personal relationships.
Grant S. Stern, president of Morningside Mortgage Corp., brokered a loan this summer for a condo buyer.
The borrower had made a preconstruction down payment of $90,000 on a two-bedroom, two-bath $300,000 condo. He had another $65,000 cash to close, but Fannie Mae's approval for the project expired with the the developer on the verge of default. With no time to get a conventional bank loan, so Stern arranged for a real estate investor to fund a five-year, fixed-rate loan.
"They said, 'Close in one week.' We closed in one week," he said.
Non Distressed Properties
Part of real estate agent Gene Mastro's strategy for buyers is avoiding foreclosures and short sales — especially by buyers who intend to live in the home they buy.
Owners of nondistressed properties are "more ready to correct problems, any minor deficiencies," said Mastro, who works for Coldwell Banker.
And they may be willing to pay all or part of closing costs, which can range from 2 to 7 percent of the purchase price.
Short-term loan
Another way to cover closing costs is a fast, short-term loan that doesn't show up on credit reports.
Todd Hills noticed that some users of his company, Boomerang Lending, wanted fast cash to pay closing costs. His Colorado-based business works like a pawn shop for those with pricier assets, including paintings and fine jewelry. A recent borrower offered a 1955 Picasso sketch.
"It's not something we've experienced before the last six months," said Hills, company CEO, but "it makes absolutely perfect sense. This is a way this consumer can get the cash that they need."
Lease to own
"It's a purchase agreement with a very delayed closing — three months or three years," Manausa said.
Tom Nisbet and fiancee, Greta Leber, have just such a contract on their condo. They are living in the 1,600-square-foot unit they hope to buy. It comes with two parking spaces, a pool and a gym, and it's close to the University of Miami, where Leber is working on her Ph.D.
After watching others' experiences with short sales and foreclosures, they steered clear. "This is by far the best place we saw on the market," Nisbet said.
State and local aid
While the federal first-time home buyer's tax credit ended months ago, it's not too late for house hunters to get government home-buying help.
Many city or county governments offer their own home buyer subsidies.
Government agencies with home-buying assistance programs say they are fielding lots of calls.
Source: http://articles.chicagotribune.com/2010-11-23/classified/sc-bizspecial-1123-credative-homebuyi20101123_1_home-buyer-tax-credit-mortgages-condo-buyer
But the enforced wait got him more than the $8,000 federal tax credit.
Hernandez negotiated a contract on a five-bedroom, three-bath home in a development near Homestead, Fla., talking homebuilder Lennar into $40,000 off the list price, getting it to pay $18,000 in closing costs and scoring a $7,500 no-interest loan from Miami-Dade County to lighten his down payment.
"I was finally able to buy the house of my dreams," Hernandez said.
Though cash is now king, new homeowners such as Hernandez are finding ways to buy homes — well-kept ones with current mortgages.
After a long drought, money is becoming available to buy homes. Take Wells Fargo Home Mortgage. Andre Brooks, vice president and regional sales manager for the bank's Florida operation, said his company has made more than $3 billion in mortgages this year in Florida, nearly 20 percent more than last year.
But lending guidelines remain restrictive, said Terry H. Francisco, spokesman with Bank of America, so making purchases often requires creativity and calculation.
Among the options:
FHA
Loans backed by the Federal Housing Administration can require a down payment of just 3.5 percent compared with 20 percent many banks typically require.
But there are limits. For one, like other loans with a down payment less than 20 percent, the buyer must get mortgage insurance.
FHA loans also have a maximum and are available only to people who don't have an FHA loan and plan to make the property their primary residence.
Private loan
Made by a noninstitutional investor who does not advertise as a mortgage lender, this requires networking and personal relationships.
Grant S. Stern, president of Morningside Mortgage Corp., brokered a loan this summer for a condo buyer.
The borrower had made a preconstruction down payment of $90,000 on a two-bedroom, two-bath $300,000 condo. He had another $65,000 cash to close, but Fannie Mae's approval for the project expired with the the developer on the verge of default. With no time to get a conventional bank loan, so Stern arranged for a real estate investor to fund a five-year, fixed-rate loan.
"They said, 'Close in one week.' We closed in one week," he said.
Non Distressed Properties
Part of real estate agent Gene Mastro's strategy for buyers is avoiding foreclosures and short sales — especially by buyers who intend to live in the home they buy.
Owners of nondistressed properties are "more ready to correct problems, any minor deficiencies," said Mastro, who works for Coldwell Banker.
And they may be willing to pay all or part of closing costs, which can range from 2 to 7 percent of the purchase price.
Short-term loan
Another way to cover closing costs is a fast, short-term loan that doesn't show up on credit reports.
Todd Hills noticed that some users of his company, Boomerang Lending, wanted fast cash to pay closing costs. His Colorado-based business works like a pawn shop for those with pricier assets, including paintings and fine jewelry. A recent borrower offered a 1955 Picasso sketch.
"It's not something we've experienced before the last six months," said Hills, company CEO, but "it makes absolutely perfect sense. This is a way this consumer can get the cash that they need."
Lease to own
"It's a purchase agreement with a very delayed closing — three months or three years," Manausa said.
Tom Nisbet and fiancee, Greta Leber, have just such a contract on their condo. They are living in the 1,600-square-foot unit they hope to buy. It comes with two parking spaces, a pool and a gym, and it's close to the University of Miami, where Leber is working on her Ph.D.
After watching others' experiences with short sales and foreclosures, they steered clear. "This is by far the best place we saw on the market," Nisbet said.
State and local aid
While the federal first-time home buyer's tax credit ended months ago, it's not too late for house hunters to get government home-buying help.
Many city or county governments offer their own home buyer subsidies.
Government agencies with home-buying assistance programs say they are fielding lots of calls.
Source: http://articles.chicagotribune.com/2010-11-23/classified/sc-bizspecial-1123-credative-homebuyi20101123_1_home-buyer-tax-credit-mortgages-condo-buyer
Tuesday, November 23, 2010
Miami Home Sales Jumped
Miami, FL -- The median sales price of single-family homes in October in the Miami Metropolitan Statistical Area increased 12 percent to $199,100 from a year earlier, according to the MIAMI Association of REALTORS and the Southeast Florida Multiple Listing Service (SEFMLS).
Miami was one of only three home markets and the only major metropolitan area in Florida posting an increase for median sales price of single-family homes. Compared to the previous month, the median sales price rose six percent. "Rising median sales prices reflect strengthening and stability of the Miami real estate market," said Jack H. Levine, 2010 Chairman of the Board of the MIAMI Association of REALTORS.
On the other hand, the median sales price of condominiums in the Miami MSA dropped 22 percent in October, to $107,700, compared to the same month last year but increased more than eight percent compared to the previous month.
The sales of existing single-family homes in the Miami MSA decreased only four percent to 546 compared to October 2009 but were 21 percent higher than they were in October 2008. The Miami real estate market experienced rising residential sales since August 2008, posting increases for 23 consecutive months.
In the Miami MSA, condominium sales increased 17 percent to 757 compared to October 2009 and a 72 percent increase compared to two years ago, when sales were already rising. This was the highest increase in condominium sales of any major metropolitan area in Florida.
Short sales and foreclosures are continuing to have an impact on median and average sales prices for both single-family homes and condominiums especially in some areas of the county. "We continue to observe positive signs in the Miami market, and international buyers continue to fuel market strengthening," said 2010 MIAMI Association of REALTORS Residential President Oliver Ruiz. "While distressed properties continue to affect home values, especially for condominiums, we expect home values to improve as excess inventory is absorbed.
Miami was one of only three home markets and the only major metropolitan area in Florida posting an increase for median sales price of single-family homes. Compared to the previous month, the median sales price rose six percent. "Rising median sales prices reflect strengthening and stability of the Miami real estate market," said Jack H. Levine, 2010 Chairman of the Board of the MIAMI Association of REALTORS.
On the other hand, the median sales price of condominiums in the Miami MSA dropped 22 percent in October, to $107,700, compared to the same month last year but increased more than eight percent compared to the previous month.
The sales of existing single-family homes in the Miami MSA decreased only four percent to 546 compared to October 2009 but were 21 percent higher than they were in October 2008. The Miami real estate market experienced rising residential sales since August 2008, posting increases for 23 consecutive months.
In the Miami MSA, condominium sales increased 17 percent to 757 compared to October 2009 and a 72 percent increase compared to two years ago, when sales were already rising. This was the highest increase in condominium sales of any major metropolitan area in Florida.
Short sales and foreclosures are continuing to have an impact on median and average sales prices for both single-family homes and condominiums especially in some areas of the county. "We continue to observe positive signs in the Miami market, and international buyers continue to fuel market strengthening," said 2010 MIAMI Association of REALTORS Residential President Oliver Ruiz. "While distressed properties continue to affect home values, especially for condominiums, we expect home values to improve as excess inventory is absorbed.
Monday, November 22, 2010
Add 2.1 million houses to the glut
There's a large number of homes, either already repossessed by lenders or very seriously delinquent, that are poised to be added to the already glutted regular supply of homes on the market.
This "shadow inventory" jumped 10% during the past year, to an eight-month supply at the current rate of home sales, according to a report issued Monday.
According to CoreLogic, a financial information provider, there were 2.1 million homes in this uncounted inventory as of the end of August, up from 1.9 million units 12 months earlier.
Adding the shadow inventory to the visible supply of homes on the market boosted the total housing-market supply to 6.3 million units from 6.1 million in August 2009. At the current sales rate, it would take 23 months to go through the entire visible and shadow inventory of homes -- more than three times the normal rate of six to seven months.
The potential extra supply raises the risk of further home price declines, according to Mark Fleming, CoreLogic's chief economist.
"[Weak demand] is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time," he said.
The shadow inventory has been growing as banks take a long time to process defaults.
Home prices expected to slide another 8%
Many banks have been slowing the foreclosure process because they already own a glut of homes, according to Rick Sharga, spokesman for RealtyTrac, the online marketer of foreclosed properties.
He said the banks are "managing" their inventory and not pushing delinquent borrowers quickly through the foreclosure pipeline so they don't have to repossess homes that will take a long time to sell.
It's better for the banks to allow borrowers to stay in these homes, doing the maintenance and protecting them from vandalism, than leaving them vacant for months in moribund markets.
Foreclosures: Where does your state rank?
The recent "robo-signing" scandal has further lengthened the foreclosure process. Several servicers temporarily froze foreclosure actions amid questions about whether many of the foreclosure documents were signed without proper review, raising questions about the procedure's validity.
Florida, Michigan, and California have the highest ratios of properties 90 days or more late compared with home sales. Texas has the lowest ratio of distressed properties to sales.
This "shadow inventory" jumped 10% during the past year, to an eight-month supply at the current rate of home sales, according to a report issued Monday.
According to CoreLogic, a financial information provider, there were 2.1 million homes in this uncounted inventory as of the end of August, up from 1.9 million units 12 months earlier.
Adding the shadow inventory to the visible supply of homes on the market boosted the total housing-market supply to 6.3 million units from 6.1 million in August 2009. At the current sales rate, it would take 23 months to go through the entire visible and shadow inventory of homes -- more than three times the normal rate of six to seven months.
The potential extra supply raises the risk of further home price declines, according to Mark Fleming, CoreLogic's chief economist.
"[Weak demand] is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time," he said.
The shadow inventory has been growing as banks take a long time to process defaults.
Home prices expected to slide another 8%
Many banks have been slowing the foreclosure process because they already own a glut of homes, according to Rick Sharga, spokesman for RealtyTrac, the online marketer of foreclosed properties.
He said the banks are "managing" their inventory and not pushing delinquent borrowers quickly through the foreclosure pipeline so they don't have to repossess homes that will take a long time to sell.
It's better for the banks to allow borrowers to stay in these homes, doing the maintenance and protecting them from vandalism, than leaving them vacant for months in moribund markets.
Foreclosures: Where does your state rank?
The recent "robo-signing" scandal has further lengthened the foreclosure process. Several servicers temporarily froze foreclosure actions amid questions about whether many of the foreclosure documents were signed without proper review, raising questions about the procedure's validity.
Florida, Michigan, and California have the highest ratios of properties 90 days or more late compared with home sales. Texas has the lowest ratio of distressed properties to sales.
Friday, November 19, 2010
Tough times for REO buyers
Q: My family wants to buy a house in Miami. They are looking for a foreclosed property around $60,000, and will pay all cash. Do you think the time is right to buy now? If not, when would be the best time to buy? --Mehmet, Florida
A: First, I'd like to ask you and your family to rethink a core element of your approach to this process. I'm often approached with questions by buyers-to-be who say they "are looking for a foreclosure."
I submit that what you're actually looking for is a good deal -- even a really good deal -- on a property that is well-suited for your purposes. I also submit that the property that best fits that description may or may not be a home that was foreclosed on.
Sellers of individually owned homes that are currently on the market are largely aware that they are in competition with many distressed (bank-owned and short-sale) properties.
As a result, there are many bargains available on non-foreclosures, which are often in superior condition to foreclosed homes. As well, individual sellers tend to be vastly more negotiable on terms like repairs, included personal property, etc., when compared to banks.
Now, let's turn to your question of when the best time to buy is or will be. Overall, the best time to buy is the time that makes the most sense for your family's life, plans and vision for the future. This is also a very frequently asked question, though, especially from those savviest of buyers and investors who are fixated on market timing, so let's talk about whether the market has hit bottom.
The most recent Case-Shiller housing index reported that Miami home prices were on their third month of increases, after nine straight months of decline. As a result, some learned observers of the real estate market would say that Miami prices are actually slightly past their bottom.
However, just as many learned observers might opine that the Miami market -- and the American real estate market in general -- are actually simply going to bounce around the bottom of the appreciation trajectory for awhile. Long story short: It's impossible to know with certainty whether the market is at bottom.
And frankly, trying to time the bottom is a fool's errand on at least two levels. The first? It's impossible. The second: The desire to time the bottom arises out of fallacious reasoning.
A logic flaw called myopic loss aversion causes consumers to be more afraid of losing money than they are excited about gaining a similar amount of money, or equity.
The fact is this: We all know that prices in Miami are very, very low, and likely near bottom. But some will hold off from buying because they think losing even a dollar's worth of equity would be excruciating; in that desperate attempt to avoid a post-purchase loss in value, they will wait so long that prices will go up and they will experience the opportunity cost of lost appreciation they might have realized had they bought a bit sooner.
Human tendency when trying to time the bottom of the market is to wait too long. When prices hit bottom, everyone comes out and wants to buy, sending prices right back up. The only thing stopping that from happening on today's market are the twin buyer paralytics of unemployment and tight mortgage lending guidelines.
That creates a great atmosphere for you and your family to take advantage of low prices soon, without feeling a desperate, breakneck urgency to buy anything before prices skyrocket -- although I don't expect we'll be seeing any true "skyrocketing" anytime soon.
So this might be a great time for your family to buy, if it's a good time in the context of your lives, and if you are comfortable making the commitment to owning a home for a good seven years, plus or minus a bit.
With a longer-term view, you can feel much more comfortable that you'll come out ahead on the purchase and don't have to be fixated on whether the value of the home rises or falls by a percent here or there in the very short term. But to do that, you have to let go of the all too currently common fixation on getting the absolute most for the absolute least, and decide to be OK with buying very, very low.
"So if you wait for the robins, spring will be over," Warren Buffett once famously said about the stock market, and the same applies to real estate. He elaborated that no one -- not even he -- can predict the short-term market movement and that, in fact, those who buy near the bottom might very well lose money -- in the short term.
But if you wait until the signs of appreciation and recovery are clear enough to make a strong short-term prediction, you will have waited so long that everyone else will be buying, too, and prices will be on the rise. Your bargain-basement pricing opportunity will have passed.
With all that said, if you are committed to buying a foreclosed home, or happen to simply select a foreclosed home as the one that works the best for your family, I'd say that now is a very difficult time for REO buyers. There is a great deal of uncertainty about whether flaws in the foreclosure documentation practices of a number of banks may have created "clouded" or unclear title for the buyers of those homes.
If you do elect to buy a foreclosed home, make 150 percent certain to obtain title insurance, which is commonly forgone by cash buyers. I'd also recommend working with a local title or real estate attorney during your purchase, or consulting with them in advance on how to obtain clear title, if you plan to buy a property at an actual foreclosure auction. Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
Source: http://www.boston.com/realestate/news/articles/2010/11/18/tough_times_for_reo_buyers/?page=1
By Tara-Nicholle Nelson
November 18, 2010
A: First, I'd like to ask you and your family to rethink a core element of your approach to this process. I'm often approached with questions by buyers-to-be who say they "are looking for a foreclosure."
I submit that what you're actually looking for is a good deal -- even a really good deal -- on a property that is well-suited for your purposes. I also submit that the property that best fits that description may or may not be a home that was foreclosed on.
Sellers of individually owned homes that are currently on the market are largely aware that they are in competition with many distressed (bank-owned and short-sale) properties.
As a result, there are many bargains available on non-foreclosures, which are often in superior condition to foreclosed homes. As well, individual sellers tend to be vastly more negotiable on terms like repairs, included personal property, etc., when compared to banks.
Now, let's turn to your question of when the best time to buy is or will be. Overall, the best time to buy is the time that makes the most sense for your family's life, plans and vision for the future. This is also a very frequently asked question, though, especially from those savviest of buyers and investors who are fixated on market timing, so let's talk about whether the market has hit bottom.
The most recent Case-Shiller housing index reported that Miami home prices were on their third month of increases, after nine straight months of decline. As a result, some learned observers of the real estate market would say that Miami prices are actually slightly past their bottom.
However, just as many learned observers might opine that the Miami market -- and the American real estate market in general -- are actually simply going to bounce around the bottom of the appreciation trajectory for awhile. Long story short: It's impossible to know with certainty whether the market is at bottom.
And frankly, trying to time the bottom is a fool's errand on at least two levels. The first? It's impossible. The second: The desire to time the bottom arises out of fallacious reasoning.
A logic flaw called myopic loss aversion causes consumers to be more afraid of losing money than they are excited about gaining a similar amount of money, or equity.
The fact is this: We all know that prices in Miami are very, very low, and likely near bottom. But some will hold off from buying because they think losing even a dollar's worth of equity would be excruciating; in that desperate attempt to avoid a post-purchase loss in value, they will wait so long that prices will go up and they will experience the opportunity cost of lost appreciation they might have realized had they bought a bit sooner.
Human tendency when trying to time the bottom of the market is to wait too long. When prices hit bottom, everyone comes out and wants to buy, sending prices right back up. The only thing stopping that from happening on today's market are the twin buyer paralytics of unemployment and tight mortgage lending guidelines.
That creates a great atmosphere for you and your family to take advantage of low prices soon, without feeling a desperate, breakneck urgency to buy anything before prices skyrocket -- although I don't expect we'll be seeing any true "skyrocketing" anytime soon.
So this might be a great time for your family to buy, if it's a good time in the context of your lives, and if you are comfortable making the commitment to owning a home for a good seven years, plus or minus a bit.
With a longer-term view, you can feel much more comfortable that you'll come out ahead on the purchase and don't have to be fixated on whether the value of the home rises or falls by a percent here or there in the very short term. But to do that, you have to let go of the all too currently common fixation on getting the absolute most for the absolute least, and decide to be OK with buying very, very low.
"So if you wait for the robins, spring will be over," Warren Buffett once famously said about the stock market, and the same applies to real estate. He elaborated that no one -- not even he -- can predict the short-term market movement and that, in fact, those who buy near the bottom might very well lose money -- in the short term.
But if you wait until the signs of appreciation and recovery are clear enough to make a strong short-term prediction, you will have waited so long that everyone else will be buying, too, and prices will be on the rise. Your bargain-basement pricing opportunity will have passed.
With all that said, if you are committed to buying a foreclosed home, or happen to simply select a foreclosed home as the one that works the best for your family, I'd say that now is a very difficult time for REO buyers. There is a great deal of uncertainty about whether flaws in the foreclosure documentation practices of a number of banks may have created "clouded" or unclear title for the buyers of those homes.
If you do elect to buy a foreclosed home, make 150 percent certain to obtain title insurance, which is commonly forgone by cash buyers. I'd also recommend working with a local title or real estate attorney during your purchase, or consulting with them in advance on how to obtain clear title, if you plan to buy a property at an actual foreclosure auction. Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.
Source: http://www.boston.com/realestate/news/articles/2010/11/18/tough_times_for_reo_buyers/?page=1
By Tara-Nicholle Nelson
November 18, 2010
Wednesday, November 17, 2010
Know condo rules before decking the halls
Before you tack, nail or tape holiday decorations outside your condominium or home, consider your governing documents, your right to religious freedom and the story of Laurie Richter Spector.
Richter Spector, of Fort Lauderdale, fought back in court several years ago when her condo association demanded she remove a Jewish mezuzah from her door shortly after the holidays. While the case was eventually dismissed, now all Floridians share a state-supported right to post religiously mandated symbols — albeit small in size — anytime of year, regardless of association rules.
"I had a bad experience," said Richter Spector, about her association's order to remove her mezuzah — a small display case no longer than 6 inches long that encases a scroll with religious messages — from the exterior of her front door.
"But I am glad we went through it," added Spector, who left the condo community after the 2007 incident. "Nobody should be deprived of freedom of religion, especially in their own home."
Spector's experience is especially relevant this time of year, when residents' religious beliefs — and desire to express them publicly through holiday decorations — sometimes run afoul of HOA and condo rules.
Richter Spector argued that her right to religious freedom trumped the authority of the association. She said she was following Jewish religious law by keeping a mezuzah near the entrance of her home, and in letters to the association cited the fact that at least one other owner was allowed to keep a Christmas wreath up months after the holiday.
The association cited rules against exterior modifications and threatened eviction and a $1,000 fine.
Both sides refused to budge and ended up in civil court until the Florida Attorney General's Office intervened on behalf of Richter Spector and ordered the association to allow mezuzahs. The association was also ordered to post a sign in the building to let owners know their right to display mezuzahs.
Now it's a rule of the land. In 2008, the Legislature amended state law to guarantee condo owners a special right to display religious objects outside the door. While the statute does not mention the word "mezuzah," it covers objects with the same dimensions of a traditional mezuzah — 6 inches long, 3 inches wide and 1.5 inches deep.
Richter Spector says her ordeal remains a bittersweet victory. It also serves as a civics lesson about protecting your rights as an owner in a shared community.
But keep this in mind: Your condo or homeowners association may be able to put the kibosh on large religious displays and nonreligious decorations of any size.
Before you decorate this year, give your governing documents a once-over. Some associations limit sizes and locations of holiday displays, some enforce fines for taking too long to remove them post-holiday. Others may have no rules because they were not passed properly or have lapsed.
The state of Florida, which regulates condo communities, allows condo associations to pass rules that keep the community and residents safe. That means if your decorations interfere with that, you could have a problem.
There are not similar regulations for homeowners association per se, but an HOA may ban displays that block common areas, walkways, street intersections or the view of drivers on the road. An outdoor lighting display with poor wiring could be the subject of removal, possibly at the expense of the owner should governing documents provide the association the authority to fine and/or pay to have a display moved.
Source:http://www.sun-sentinel.com/business/realestate/condos/fl-decorations-condocol-1117-20101116,0,7701864.column
Daniel Vasquez can be reached at CondoColumn@Sunsentinel.com or 954-356-4219 or 561-243-6686. His condo column runs Wednesdays in Your Money and at SunSentinel.com/condos. Check out Daniel's Condos & HOAs blog for news, information and tips related to life in community associations at SunSentinel.com/condoblog. You can also read his consumer column Mondays in Your Money and at sunsentinel.com/vasquez.
Richter Spector, of Fort Lauderdale, fought back in court several years ago when her condo association demanded she remove a Jewish mezuzah from her door shortly after the holidays. While the case was eventually dismissed, now all Floridians share a state-supported right to post religiously mandated symbols — albeit small in size — anytime of year, regardless of association rules.
"I had a bad experience," said Richter Spector, about her association's order to remove her mezuzah — a small display case no longer than 6 inches long that encases a scroll with religious messages — from the exterior of her front door.
"But I am glad we went through it," added Spector, who left the condo community after the 2007 incident. "Nobody should be deprived of freedom of religion, especially in their own home."
Spector's experience is especially relevant this time of year, when residents' religious beliefs — and desire to express them publicly through holiday decorations — sometimes run afoul of HOA and condo rules.
Richter Spector argued that her right to religious freedom trumped the authority of the association. She said she was following Jewish religious law by keeping a mezuzah near the entrance of her home, and in letters to the association cited the fact that at least one other owner was allowed to keep a Christmas wreath up months after the holiday.
The association cited rules against exterior modifications and threatened eviction and a $1,000 fine.
Both sides refused to budge and ended up in civil court until the Florida Attorney General's Office intervened on behalf of Richter Spector and ordered the association to allow mezuzahs. The association was also ordered to post a sign in the building to let owners know their right to display mezuzahs.
Now it's a rule of the land. In 2008, the Legislature amended state law to guarantee condo owners a special right to display religious objects outside the door. While the statute does not mention the word "mezuzah," it covers objects with the same dimensions of a traditional mezuzah — 6 inches long, 3 inches wide and 1.5 inches deep.
Richter Spector says her ordeal remains a bittersweet victory. It also serves as a civics lesson about protecting your rights as an owner in a shared community.
But keep this in mind: Your condo or homeowners association may be able to put the kibosh on large religious displays and nonreligious decorations of any size.
Before you decorate this year, give your governing documents a once-over. Some associations limit sizes and locations of holiday displays, some enforce fines for taking too long to remove them post-holiday. Others may have no rules because they were not passed properly or have lapsed.
The state of Florida, which regulates condo communities, allows condo associations to pass rules that keep the community and residents safe. That means if your decorations interfere with that, you could have a problem.
There are not similar regulations for homeowners association per se, but an HOA may ban displays that block common areas, walkways, street intersections or the view of drivers on the road. An outdoor lighting display with poor wiring could be the subject of removal, possibly at the expense of the owner should governing documents provide the association the authority to fine and/or pay to have a display moved.
Source:http://www.sun-sentinel.com/business/realestate/condos/fl-decorations-condocol-1117-20101116,0,7701864.column
Daniel Vasquez can be reached at CondoColumn@Sunsentinel.com or 954-356-4219 or 561-243-6686. His condo column runs Wednesdays in Your Money and at SunSentinel.com/condos. Check out Daniel's Condos & HOAs blog for news, information and tips related to life in community associations at SunSentinel.com/condoblog. You can also read his consumer column Mondays in Your Money and at sunsentinel.com/vasquez.
Monday, November 15, 2010
For the quarter, home prices fall
South Florida home prices continued to drop in the third quarter, spurring an increase in condominium sales, even as single-family sales slumped, a report released Thursday by the Florida Association of Realtors found.
In Miami-Dade County, condo sales jumped to 2,527 in the third quarter, up 43 percent compared to the third quarter of last year. Single-family home sales dipped slightly to 1,812, down 1 percent from last year.
In Broward County, both condo sales and single-family home sales were down in the third quarter. Condo sales totaled 2,459 for an 8 percent drop, and single-family home sales totaled 2,076, an 18 percent drop.
Median prices dropped across the board. Single-family homes in Miami-Dade was $191,100, down 1 percent. Median-priced condos cost $104,600, a decrease of 24 percent.
In Broward, condo prices were $73,100 and single-family home prices stood at $209,600, down 10 and 2 percent, respectively.
Source: http://www.miamiherald.com/2010/11/12/1921731/for-the-quarter-home-prices-fall.html
TOLUSE OLORUNNIPA
In Miami-Dade County, condo sales jumped to 2,527 in the third quarter, up 43 percent compared to the third quarter of last year. Single-family home sales dipped slightly to 1,812, down 1 percent from last year.
In Broward County, both condo sales and single-family home sales were down in the third quarter. Condo sales totaled 2,459 for an 8 percent drop, and single-family home sales totaled 2,076, an 18 percent drop.
Median prices dropped across the board. Single-family homes in Miami-Dade was $191,100, down 1 percent. Median-priced condos cost $104,600, a decrease of 24 percent.
In Broward, condo prices were $73,100 and single-family home prices stood at $209,600, down 10 and 2 percent, respectively.
Source: http://www.miamiherald.com/2010/11/12/1921731/for-the-quarter-home-prices-fall.html
TOLUSE OLORUNNIPA
Wednesday, November 10, 2010
Slide in South Florida home prices continues
South Florida homes continued to shed value, sellers were still slashing prices and distressed sales were still dominating the market in the third quarter of the year-- all signs that the real estate recovery has a long way to go.
A report released Wednesday by real estate firm Zillow found that 45.2 percent of South Florida homes sold between June and September were sold for a loss, up slightly from the previous quarter, but down 2 percent for the month.
``Distressed sales have contributed to that 50 percent decline,'' said David Dabby, president of Coral Gables-based Dabby Group. ``They will continue to put a lid on prices for the foreseeable future.''
The continued slide has added to the ranks of underwater homes in the region. Since the June 2006 peak, home values have fallen 53.5 percent in South Florida, the largest drop among the top 25 markets covered by Zillow. That has left some 42 percent of single-family homeowners underwater, or owing more on their mortgages that their homes are worth.
That's slightly better than the third quarter of last year, when 45.1 percent of homes were underwater, but still much higher than the national average of 25 percent.
A high foreclosure rate and a weak job market continued to influence housing in the third quarter, the report found.
Deborah Katsikas, who recently sold her home in Southwest Miami-Dade County, said she had to cut the price, finally accepting an offer that was considerably less than she originally hoped for.
``The only way to sell is if you're competitive with everything that's out there,'' she said.
Now she's reaping the benefit of a buyer's market as she looks to purchase a new home. She has a contract to buy a short sale in Palmetto Bay, and the price of that home has been slashed multiple times, said her real estate agent, Anthony Askowitz.
According to Zillow, 21 percent of South Florida home sellers reduced prices in the third quarter, with a median reduction of 10 percent. The median selling price for a single-family home was $221,200 in the third quarter, up 1 percent quarter-over-quarter, but down 7.8 percent from last year.
For South Florida condominiums, the median sales price was $109,800, down 4.3 percent over last quarter, and down 14.2 percent from last year.
Askowitz, who owns two Re/Max offices, said price-cutting is the new normal, as home sellers seek to compete with the glut of foreclosures on the market.
According to a sales analysis by Esslinger-Wooten-Maxwell Realty, short sales and foreclosures account for more than 60 percent of South Florida home sales.
Source: http://www.miamiherald.com/2010/11/10/1917884/slide-in-south-florida-home-prices.html
By TOLUSE OLORUNNIPA
tolorunnipa@MiamiHerald.com
A report released Wednesday by real estate firm Zillow found that 45.2 percent of South Florida homes sold between June and September were sold for a loss, up slightly from the previous quarter, but down 2 percent for the month.
``Distressed sales have contributed to that 50 percent decline,'' said David Dabby, president of Coral Gables-based Dabby Group. ``They will continue to put a lid on prices for the foreseeable future.''
The continued slide has added to the ranks of underwater homes in the region. Since the June 2006 peak, home values have fallen 53.5 percent in South Florida, the largest drop among the top 25 markets covered by Zillow. That has left some 42 percent of single-family homeowners underwater, or owing more on their mortgages that their homes are worth.
That's slightly better than the third quarter of last year, when 45.1 percent of homes were underwater, but still much higher than the national average of 25 percent.
A high foreclosure rate and a weak job market continued to influence housing in the third quarter, the report found.
Deborah Katsikas, who recently sold her home in Southwest Miami-Dade County, said she had to cut the price, finally accepting an offer that was considerably less than she originally hoped for.
``The only way to sell is if you're competitive with everything that's out there,'' she said.
Now she's reaping the benefit of a buyer's market as she looks to purchase a new home. She has a contract to buy a short sale in Palmetto Bay, and the price of that home has been slashed multiple times, said her real estate agent, Anthony Askowitz.
According to Zillow, 21 percent of South Florida home sellers reduced prices in the third quarter, with a median reduction of 10 percent. The median selling price for a single-family home was $221,200 in the third quarter, up 1 percent quarter-over-quarter, but down 7.8 percent from last year.
For South Florida condominiums, the median sales price was $109,800, down 4.3 percent over last quarter, and down 14.2 percent from last year.
Askowitz, who owns two Re/Max offices, said price-cutting is the new normal, as home sellers seek to compete with the glut of foreclosures on the market.
According to a sales analysis by Esslinger-Wooten-Maxwell Realty, short sales and foreclosures account for more than 60 percent of South Florida home sales.
Source: http://www.miamiherald.com/2010/11/10/1917884/slide-in-south-florida-home-prices.html
By TOLUSE OLORUNNIPA
tolorunnipa@MiamiHerald.com
Friday, November 5, 2010
Real estate market improves as bargain hunters begin buying
Amid South Florida’s recession-battered real estate market, there’s some pretty good news: We haven’t lost our allure and bargain hunters have moved in.
That’s the feedback from a panel of real estate experts gathered for the 10th Business Journal Critical Conversation for 2010. Previous installments of the news series have covered topics ranging from health care and manufacturing to cloud computing and the cruise industry.
Residential real estate shows considerable movement, with bargains spurring sales and some builders starting new single-family homes with little competition left, our experts said. Industrial space is tight in some areas, but office space is expected to lag in the recovery.
Hotels are seeing a rebound in occupancy rates, but there are more bad loans and foreclosures still to be worked out.
Condo bargain hunting
The conversation about condos has turned from the bust story of 2009 to the bargain hunting of 2010, said Hermen Rodriguez, managing director of Holliday Fenoglio Fowler in Coral Gables “I think the condo story, particularly for Miami, has been very strong. Yes, it was overpriced. Yes, it was too much supply. But, there are people who believe in Miami.”
Shari B. Olefson, a partner with the law firm of Fowler White Boggs in Fort Lauderdale and the author of “Foreclosure Nation,” said: “Every major morning show has covered what a great deal Miami is.”
The host of one national network show interviewed her and then turned around and bought a condo in Miami, she said.
“A lot of buyers are stepping in and buying at 50 cents on the dollar,” said Brad Hunter, chief economist for Metrostudy.
In some recent months, there have been 300 sales a month in downtown Miami.
“That’s not happening in Vegas,” Rodriguez said.
Pricing is very market specific, said Mark Pordes, president and CEO of Pordes Residential in Aventura. For example, he’s seen a big uptick on Miami Beach.
He’s involved with several projects, including Terra Beachside Villas on Collins Avenue at 60th Street, which was purchased out of foreclosure, he said. “The group that picked it up repositioned it the right way, and we have been able to raise prices. We are selling them.”
Neil Merin, chairman of NAI Merin Hunter Codman, said a lot of entrepreneurs are buying in Miami.
“If you are in Barcelona, Brazil and Budapest, you can buy a beautiful beachfront apartment,” he said. That is tremendous for Miami.”
There are also a lot of cash buyers from places like Venezuela and Brazil, some of whom rent their units and get cash flow, Pordes said.
Many condo buildings are now qualifying for Federal Housing Administration financing, which was not as widely available six or 12 months ago, Pordes said. Other units are selling after banks recognize that a developer has a good sales force and opts to take a haircut on the loan, rather than selling to a bulk buyer at a drastic discount.
That can go too far, though.
Some of our panelists were concerned that some bankers were going too easy on developers whom they hope to continue doing business with when the economy turns up.
Pordes cited an example of a well-done deal: 2700 North Ocean on Singer Island in Riviera Beach was acquired by a group that is rebranding it as Ritz-Carlton Residences.
“It’s going to sell well now,” he said. “You have fresh people in there and fresh blood going on.”
Even condo-hotel units, which received a black eye during the downturn, are showing signs of life, Pordes said. Would-be buyers can go to the front desk and find out just how well the units are being filled with guests.
By law, condo-hotel units aren’t supposed to be marketed as investments, but that didn’t prevent some buyers from falling into that trap during the boom – and later being sorely disappointed by a lack of cash flow.
One example of buyer interest: Pordes said he was involved with the purchase of 25 condo-hotel units built next to the original Fontainebleau hotel on Miami Beach. He only has 11 left to resell, with more deals pending.
Single-family rebound
It’s been a long, slow slide when it comes to single-family homes.
The residential market peaked in 2005, and the bottom for housing starts was reached last year, Hunter said. “We are slowly crawling our way off the bottom.”
While it is difficult to stop in mid-construction on a condo high-rise, it’s easier on a single-family home project.
“What happened is the builders were very quick to slash their prices in 2006 and blew out the inventory really fast,” Hunter said. “Existing home prices were a lot more sticky.”
By 2009, builders had pretty much gotten rid of their excess inventories, so now some are at the point where, every time they sell a house, they have to start building a new one.
Homes are selling fast in areas such as Doral and Jupiter’s Abacoa, and GL Homes has had success in Boynton Beach and Delray Beach, selling $300,000 to $500,000 residences, Hunter said.
Shane Soefker, senior managing director for Cushman & Wakefield in South Florida, noted that land speculators have started to acquire residential tracts with infrastructure to resell to single-family homebuilders as the market returns.
Hunter sees two drivers for what’s going on.
“Basically, in a lot of cases, the builders’ competitors went away – they went out of business or got out of the homebuilding business for a while,” he said. “Secondly, and very important, these projects all have something in common. They are in ‘A’ locations – close to jobs, recreation and shopping. They are where people want to live.”
Buyers prefer newly built homes over foreclosures, which may need fixing up, he said.
South Florida has chewed through a wave of foreclosures on lower-priced homes, which have probably reached bottom in pricing, Hunter said. Now, there are more foreclosures of nicer homes.
Demographics are another factor.
A lot of the homes built during the boom had five or six bedrooms for baby boomers and their families, but the kids are growing up and moving out. The result was an oversupply of oversized homes.
Generation X came to home-buying age at the peak of the market, and many owe more than their homes are worth or have lost them, Hunter said. “Then, we have Generation Yers, who are saying, ‘Now I’m going to be renting, and will be renting for several years.”
Institutional interest
Many commercial property deals these days are dependent on deep-pocketed institutional investors after financing dried up and cracks formed in the commercial mortgage-backed securities market.
The success in dealing with the overbuilt condo situation is a positive signal to institutional investors in general, Pordes said. “Where one lives translates into where one works.”
Rodriguez said: “To institutional investors in New York and Chicago, this seems like a very orderly disposition of real estate.”
Many investors have bicoastal strategies for the U.S. and consider South Florida a tier-one location, Rodriguez said. “We are on the East Coast, so it’s New York, Boston and Washington. Then they bypass Atlanta and come to South Florida.”
Merin said investors thought South Florida was a bulletproof market when the area hit about 5 million in population and started accepting low initial rates of return with the expectations of a payoff as prices rose.
“So, they are coming back now and realizing Florida is still a cyclical market,” Merin said.
Miami is recognized as a global gateway city, but buyers start drilling down into markets further north, he said. “Do I want to be in Plantation? Do I want to be in downtown Fort Lauderdale?”
Hunter said some institutional investors are looking for distressed properties, such as stalled townhouse projects and half-built subdivisions.
A lot of funds have raised $1 billion or $2 billion, and are itching to get the right yields and deploy their capital, Merin said.
Rodriguez said more commercial property owners are willing to sell – telling themselves they avoided selling at the worst of the market and it’s time to make new investments.
Banks with foreclosed commercial properties are also taking a strong look at exit strategies, especially if cash flow isn’t so great and repairs are needed, he said.
Some bargain hunters are deceiving themselves if they think a property held by a troubled bank will be easier to get when the bank fails, Olefson said. The best window is usually the two- or three-month period when a bank is still trying to raise capital.
“It’s the exact opposite as to what people think,” she said.
Obstacles for office
Office space represents a challenge with the high unemployment rate and retrenchment by many employers.
“We didn’t overbuild, but we had a jobs recession,” Merin said.
Firms such as ADT Security Services, which just signed a deal to relocate its Boca Raton operation, have been able to lease space 40 percent cheaper than they did before.
Some markets, such as Plantation, have available space vacated by firms that downsized or went out of business.
The economy is not adding jobs at a steady pace and it will be a while before increased employment will boost the office market, Cushman & Wakefield’s Soefker said. Downtowns are doing better than suburban areas, but it will generally be a long, steady recovery when it comes to leasing rates.
Future development will be contingent on leasing and rental rates that enable builders to get financing for projects, Soefker said. He doesn’t expect to see that until 2012.
Rodriguez said office space would be the last to sector to rebound.
In the meantime, the market would favor owners, which are also strong operators, Merin said.
Improvements in industrial
The rebound has been quicker for industrial and warehouse space.
“Corporations and users in general have gone from a destocking mode to a restocking mode,” Soefker said. “A lot of it is consumer driven and import/export driven. You can’t look at any port that hasn’t had an increase in container volume from an industrial standpoint.”
Many economists believe that manufacturers and retailers anticipated a worse recession than actually happened, Merin said. “So, in warehouse and manufacturing, you are seeing a quicker restocking because there was an overreaction to the news in 2009.”
Industrial projects are much easier to cycle through than office towers or shopping centers, which require longer development time frames, Merin said.
Soefker said: “You can turn the spigot off on the deliverables and control it much easier.”
There are not a lot of raw sites left for industrial projects in Miami-Dade and Broward counties, Soefker said. Many of the locations in Miami-Dade are controlled by a couple of entities.
Institutional buyers are paying record-low capitalization rates (the first-year return based on income in relation to sales price), Soefker said.
Merin termed this “chasing yields.”
Soefker cited a recent 800,000-square-foot industrial sale with a 5.9 percent cap rate. The buyer said it liked the site because the purchase price was less than what it would cost to build a similar project.
Turnaround for hotels
Hotels are dealing with two key cycles, and there has been a fundamental shift in recent months, said Guy Trusty, president of Lodging & Hospitality Realty in Coral Gables.
The revenue cycle is turning up in the form of higher room rates, so that’s starting to help the other cycle of real estate prices.
About six months ago, investors only wanted to buy notes on properties, and lenders “would go there with a lawyer and a hammer and foreclose on the note,” he said.
Now, with the rising room rates, good operators are finding new slack.
“It boils down to whether the bank has confidence in the operator and works with the owner or forecloses on the note,” Trusty said.
He is dealing with real estate investment trusts and other investors “who have a pile of cash and want to invest it in a hotel,” he said.
Transactions involving the Royal Palm Hotel and Seville Hotel in Miami Beach show some long-running issues are being resolved, he said.
Sometimes, Trusty said his strategy is to initiate separate talks with the bank and the owner. “Sometimes they don’t like to hear that.”
Olefson says she is seeing recovery in some urban areas like Miami Beach, but problems linger in areas where there might be a cluster of suburban hotels.
Merin said some buyers see an opportunity roll out new concepts and brands, but he’s also had his hands full with the former DoubleTree in Boca Raton, where he is acting as a receiver.
“The property is going to waste,” he said. “We have to shut down the hotel and fire all the people,” he said.
Merin is worried that South Florida’s humidity could create damage that could necessitate leveling the structure if the power is turned off.
The foreclosure situation in general is creating a lot of uncertainty and delays, Olefson said. Some banks don’t think they have the authority on pricing the notes on properties and aren’t sure how they will be reimbursed under FDIC loss-sharing agreements.
She said: “A lot of workouts will start hitting the foreclosure dockets – lots of hotels, a lot of multifamily foreclosures.”
Source: http://www.bizjournals.com/southflorida/print-edition/2010/11/05/real-estate-market-improves-as.html
South Florida Business Journal - by Kevin Gale
That’s the feedback from a panel of real estate experts gathered for the 10th Business Journal Critical Conversation for 2010. Previous installments of the news series have covered topics ranging from health care and manufacturing to cloud computing and the cruise industry.
Residential real estate shows considerable movement, with bargains spurring sales and some builders starting new single-family homes with little competition left, our experts said. Industrial space is tight in some areas, but office space is expected to lag in the recovery.
Hotels are seeing a rebound in occupancy rates, but there are more bad loans and foreclosures still to be worked out.
Condo bargain hunting
The conversation about condos has turned from the bust story of 2009 to the bargain hunting of 2010, said Hermen Rodriguez, managing director of Holliday Fenoglio Fowler in Coral Gables “I think the condo story, particularly for Miami, has been very strong. Yes, it was overpriced. Yes, it was too much supply. But, there are people who believe in Miami.”
Shari B. Olefson, a partner with the law firm of Fowler White Boggs in Fort Lauderdale and the author of “Foreclosure Nation,” said: “Every major morning show has covered what a great deal Miami is.”
The host of one national network show interviewed her and then turned around and bought a condo in Miami, she said.
“A lot of buyers are stepping in and buying at 50 cents on the dollar,” said Brad Hunter, chief economist for Metrostudy.
In some recent months, there have been 300 sales a month in downtown Miami.
“That’s not happening in Vegas,” Rodriguez said.
Pricing is very market specific, said Mark Pordes, president and CEO of Pordes Residential in Aventura. For example, he’s seen a big uptick on Miami Beach.
He’s involved with several projects, including Terra Beachside Villas on Collins Avenue at 60th Street, which was purchased out of foreclosure, he said. “The group that picked it up repositioned it the right way, and we have been able to raise prices. We are selling them.”
Neil Merin, chairman of NAI Merin Hunter Codman, said a lot of entrepreneurs are buying in Miami.
“If you are in Barcelona, Brazil and Budapest, you can buy a beautiful beachfront apartment,” he said. That is tremendous for Miami.”
There are also a lot of cash buyers from places like Venezuela and Brazil, some of whom rent their units and get cash flow, Pordes said.
Many condo buildings are now qualifying for Federal Housing Administration financing, which was not as widely available six or 12 months ago, Pordes said. Other units are selling after banks recognize that a developer has a good sales force and opts to take a haircut on the loan, rather than selling to a bulk buyer at a drastic discount.
That can go too far, though.
Some of our panelists were concerned that some bankers were going too easy on developers whom they hope to continue doing business with when the economy turns up.
Pordes cited an example of a well-done deal: 2700 North Ocean on Singer Island in Riviera Beach was acquired by a group that is rebranding it as Ritz-Carlton Residences.
“It’s going to sell well now,” he said. “You have fresh people in there and fresh blood going on.”
Even condo-hotel units, which received a black eye during the downturn, are showing signs of life, Pordes said. Would-be buyers can go to the front desk and find out just how well the units are being filled with guests.
By law, condo-hotel units aren’t supposed to be marketed as investments, but that didn’t prevent some buyers from falling into that trap during the boom – and later being sorely disappointed by a lack of cash flow.
One example of buyer interest: Pordes said he was involved with the purchase of 25 condo-hotel units built next to the original Fontainebleau hotel on Miami Beach. He only has 11 left to resell, with more deals pending.
Single-family rebound
It’s been a long, slow slide when it comes to single-family homes.
The residential market peaked in 2005, and the bottom for housing starts was reached last year, Hunter said. “We are slowly crawling our way off the bottom.”
While it is difficult to stop in mid-construction on a condo high-rise, it’s easier on a single-family home project.
“What happened is the builders were very quick to slash their prices in 2006 and blew out the inventory really fast,” Hunter said. “Existing home prices were a lot more sticky.”
By 2009, builders had pretty much gotten rid of their excess inventories, so now some are at the point where, every time they sell a house, they have to start building a new one.
Homes are selling fast in areas such as Doral and Jupiter’s Abacoa, and GL Homes has had success in Boynton Beach and Delray Beach, selling $300,000 to $500,000 residences, Hunter said.
Shane Soefker, senior managing director for Cushman & Wakefield in South Florida, noted that land speculators have started to acquire residential tracts with infrastructure to resell to single-family homebuilders as the market returns.
Hunter sees two drivers for what’s going on.
“Basically, in a lot of cases, the builders’ competitors went away – they went out of business or got out of the homebuilding business for a while,” he said. “Secondly, and very important, these projects all have something in common. They are in ‘A’ locations – close to jobs, recreation and shopping. They are where people want to live.”
Buyers prefer newly built homes over foreclosures, which may need fixing up, he said.
South Florida has chewed through a wave of foreclosures on lower-priced homes, which have probably reached bottom in pricing, Hunter said. Now, there are more foreclosures of nicer homes.
Demographics are another factor.
A lot of the homes built during the boom had five or six bedrooms for baby boomers and their families, but the kids are growing up and moving out. The result was an oversupply of oversized homes.
Generation X came to home-buying age at the peak of the market, and many owe more than their homes are worth or have lost them, Hunter said. “Then, we have Generation Yers, who are saying, ‘Now I’m going to be renting, and will be renting for several years.”
Institutional interest
Many commercial property deals these days are dependent on deep-pocketed institutional investors after financing dried up and cracks formed in the commercial mortgage-backed securities market.
The success in dealing with the overbuilt condo situation is a positive signal to institutional investors in general, Pordes said. “Where one lives translates into where one works.”
Rodriguez said: “To institutional investors in New York and Chicago, this seems like a very orderly disposition of real estate.”
Many investors have bicoastal strategies for the U.S. and consider South Florida a tier-one location, Rodriguez said. “We are on the East Coast, so it’s New York, Boston and Washington. Then they bypass Atlanta and come to South Florida.”
Merin said investors thought South Florida was a bulletproof market when the area hit about 5 million in population and started accepting low initial rates of return with the expectations of a payoff as prices rose.
“So, they are coming back now and realizing Florida is still a cyclical market,” Merin said.
Miami is recognized as a global gateway city, but buyers start drilling down into markets further north, he said. “Do I want to be in Plantation? Do I want to be in downtown Fort Lauderdale?”
Hunter said some institutional investors are looking for distressed properties, such as stalled townhouse projects and half-built subdivisions.
A lot of funds have raised $1 billion or $2 billion, and are itching to get the right yields and deploy their capital, Merin said.
Rodriguez said more commercial property owners are willing to sell – telling themselves they avoided selling at the worst of the market and it’s time to make new investments.
Banks with foreclosed commercial properties are also taking a strong look at exit strategies, especially if cash flow isn’t so great and repairs are needed, he said.
Some bargain hunters are deceiving themselves if they think a property held by a troubled bank will be easier to get when the bank fails, Olefson said. The best window is usually the two- or three-month period when a bank is still trying to raise capital.
“It’s the exact opposite as to what people think,” she said.
Obstacles for office
Office space represents a challenge with the high unemployment rate and retrenchment by many employers.
“We didn’t overbuild, but we had a jobs recession,” Merin said.
Firms such as ADT Security Services, which just signed a deal to relocate its Boca Raton operation, have been able to lease space 40 percent cheaper than they did before.
Some markets, such as Plantation, have available space vacated by firms that downsized or went out of business.
The economy is not adding jobs at a steady pace and it will be a while before increased employment will boost the office market, Cushman & Wakefield’s Soefker said. Downtowns are doing better than suburban areas, but it will generally be a long, steady recovery when it comes to leasing rates.
Future development will be contingent on leasing and rental rates that enable builders to get financing for projects, Soefker said. He doesn’t expect to see that until 2012.
Rodriguez said office space would be the last to sector to rebound.
In the meantime, the market would favor owners, which are also strong operators, Merin said.
Improvements in industrial
The rebound has been quicker for industrial and warehouse space.
“Corporations and users in general have gone from a destocking mode to a restocking mode,” Soefker said. “A lot of it is consumer driven and import/export driven. You can’t look at any port that hasn’t had an increase in container volume from an industrial standpoint.”
Many economists believe that manufacturers and retailers anticipated a worse recession than actually happened, Merin said. “So, in warehouse and manufacturing, you are seeing a quicker restocking because there was an overreaction to the news in 2009.”
Industrial projects are much easier to cycle through than office towers or shopping centers, which require longer development time frames, Merin said.
Soefker said: “You can turn the spigot off on the deliverables and control it much easier.”
There are not a lot of raw sites left for industrial projects in Miami-Dade and Broward counties, Soefker said. Many of the locations in Miami-Dade are controlled by a couple of entities.
Institutional buyers are paying record-low capitalization rates (the first-year return based on income in relation to sales price), Soefker said.
Merin termed this “chasing yields.”
Soefker cited a recent 800,000-square-foot industrial sale with a 5.9 percent cap rate. The buyer said it liked the site because the purchase price was less than what it would cost to build a similar project.
Turnaround for hotels
Hotels are dealing with two key cycles, and there has been a fundamental shift in recent months, said Guy Trusty, president of Lodging & Hospitality Realty in Coral Gables.
The revenue cycle is turning up in the form of higher room rates, so that’s starting to help the other cycle of real estate prices.
About six months ago, investors only wanted to buy notes on properties, and lenders “would go there with a lawyer and a hammer and foreclose on the note,” he said.
Now, with the rising room rates, good operators are finding new slack.
“It boils down to whether the bank has confidence in the operator and works with the owner or forecloses on the note,” Trusty said.
He is dealing with real estate investment trusts and other investors “who have a pile of cash and want to invest it in a hotel,” he said.
Transactions involving the Royal Palm Hotel and Seville Hotel in Miami Beach show some long-running issues are being resolved, he said.
Sometimes, Trusty said his strategy is to initiate separate talks with the bank and the owner. “Sometimes they don’t like to hear that.”
Olefson says she is seeing recovery in some urban areas like Miami Beach, but problems linger in areas where there might be a cluster of suburban hotels.
Merin said some buyers see an opportunity roll out new concepts and brands, but he’s also had his hands full with the former DoubleTree in Boca Raton, where he is acting as a receiver.
“The property is going to waste,” he said. “We have to shut down the hotel and fire all the people,” he said.
Merin is worried that South Florida’s humidity could create damage that could necessitate leveling the structure if the power is turned off.
The foreclosure situation in general is creating a lot of uncertainty and delays, Olefson said. Some banks don’t think they have the authority on pricing the notes on properties and aren’t sure how they will be reimbursed under FDIC loss-sharing agreements.
She said: “A lot of workouts will start hitting the foreclosure dockets – lots of hotels, a lot of multifamily foreclosures.”
Source: http://www.bizjournals.com/southflorida/print-edition/2010/11/05/real-estate-market-improves-as.html
South Florida Business Journal - by Kevin Gale
Wednesday, November 3, 2010
Florida Real Estate Prices On the Rise in Miami and Orlando?
As we all know, Florida has seen some of the most dramatic falls in real estate prices and the total number of homes sold since the housing market collapsed. Although things are bad in much of the state, it seems that the real estate market in Florida may be on the mend.
Some of the most hard hit areas such as the Orlando, Miami, and Fort Myers areas have seen nice rebounds in the number of homes sold over the last several months, raising hope that prices will soon follow. Fort Myers, located in Southwest Florida, has seen the number of home sales rise from about 850 sales in February of 2008, to well over 1,700 in October of this year. Miami has seen even bigger gains in that time period, with approximately 2,000 sales in February of 2008, compared with over 5,100 last month.
As inventory reduces, prices should begin to rise, not only in hardly hit Florida, but in real estate markets nationwide. The one variable that is still an unknown is what affect remaining foreclosures may have on this market. As long as foreclosures trickle in, instead of all hitting at once, inventory reductions should hopefully leave us with a stronger market come the end of 2011, and 2012.
Some of the most hard hit areas such as the Orlando, Miami, and Fort Myers areas have seen nice rebounds in the number of homes sold over the last several months, raising hope that prices will soon follow. Fort Myers, located in Southwest Florida, has seen the number of home sales rise from about 850 sales in February of 2008, to well over 1,700 in October of this year. Miami has seen even bigger gains in that time period, with approximately 2,000 sales in February of 2008, compared with over 5,100 last month.
As inventory reduces, prices should begin to rise, not only in hardly hit Florida, but in real estate markets nationwide. The one variable that is still an unknown is what affect remaining foreclosures may have on this market. As long as foreclosures trickle in, instead of all hitting at once, inventory reductions should hopefully leave us with a stronger market come the end of 2011, and 2012.
Monday, November 1, 2010
Market bright spot: condos in Dade
As South Florida's shaky real estate market searches for recovery, an investor group's $1 billion bet on the local condominium market is about to be put to the test.
Starwood Capital-led investor group ST Residential -- in charge of more than 1,200 new condo units in South Florida -- launched its ST Miami initiative this month, announcing plans to release hundreds of new condo units into South Florida's fragile market in the coming months.
Condo sales were the standout figure in the September existing sales report released Monday by the Miami Association of Realtors.
Existing condo sales in Miami-Dade County rose 36 percent in September compared to the same month last year, with 833 sales closed. Month over month, sales were down 2.8 percent, despite a 5 percent decline in median prices. In Broward County, condo sales slid to 828, down 4 percent from September of last year.
Existing single-family home sales continued their descent in September, falling 6 percent year over year in Miami-Dade, with 582 sales. In Broward, year-over-year single family sales dropped 16 percent to 673.
Nationally, the housing market improved in September, with existing sales increasing 10 percent from August.
Prices are still falling in many sectors of the housing market, but ST Residential CEO Wade Hundley said brand new condos have avoided that fate this year, even posting increases.
``Relative to all the other markets in the U.S., Miami is doing well,'' Hundley said. ``We've seen prices increase about 10 to 15 percent since the beginning of the year.''
ST Residential became a major player in South Florida's real estate market about a year ago when it bought a stake in the distressed real estate portfolio of failed Chicago-based Corus Bank. In a public-private deal with the Federal Deposit Insurance Corporation, ST Residential bought into a portfolio of condo projects that includes Paramount Bay in Miami, Jade Ocean Condominiums in Sunny Isles Beach and Tao in Sunrise.
The purchase made ST the second-largest owner of developer units in Miami's downtown condo market, behind Jorge Perez's Related Group, and the public-private deal gave the investor group the flexibility to adjust pricing levels.
ST Residential is ``coming in at a time when prices have stabilized, and they're creeping upwards, in that Brickell-downtown area,'' said David Dabby, a real estate analyst with Dabby Group Advisors. ``The market is weak overall, but there's enough acquisition activity to begin moving that [developer] inventory.''
Dabby noted however, that prices are still 50 percent below where they were four years ago, and not likely to make significant gains anytime soon, since discounted foreclosures and short sales rule the market.
Distressed properties are responsible for more than half of existing home sales in South Florida, dragging down median prices.
In September, year-over-year housing prices fell nearly across the board, with Broward single-family homes standing out as the sole exception. The median priced home in Broward sold for $214,200, up 7 percent compared to last September. Broward condo prices were down 9 percent to $71,600. In Miami-Dade, condo prices fell 25 percent to $99,400, and single-family home prices fell 2 percent to $188,000.
ST Residential plans to relaunch 530-unit Mint on the Miami River into the market in December and will kickstart sales at the 346-unit Paramount Bay on Biscayne Bay north of the Performing Arts Center next year, pricing units ``at market'' rates, Hundley said.
``We control so much inventory that if we come in at very low price point we could disrupt the market,'' he said. ``And we don't want to do that.''
Source: http://www.miamiherald.com/2010/10/26/1891129/market-bright-spot-condos-in-dade.html
BY TOLUSE OLORUNNIPA
tolorunnipa@MiamiHerald.com
Starwood Capital-led investor group ST Residential -- in charge of more than 1,200 new condo units in South Florida -- launched its ST Miami initiative this month, announcing plans to release hundreds of new condo units into South Florida's fragile market in the coming months.
Condo sales were the standout figure in the September existing sales report released Monday by the Miami Association of Realtors.
Existing condo sales in Miami-Dade County rose 36 percent in September compared to the same month last year, with 833 sales closed. Month over month, sales were down 2.8 percent, despite a 5 percent decline in median prices. In Broward County, condo sales slid to 828, down 4 percent from September of last year.
Existing single-family home sales continued their descent in September, falling 6 percent year over year in Miami-Dade, with 582 sales. In Broward, year-over-year single family sales dropped 16 percent to 673.
Nationally, the housing market improved in September, with existing sales increasing 10 percent from August.
Prices are still falling in many sectors of the housing market, but ST Residential CEO Wade Hundley said brand new condos have avoided that fate this year, even posting increases.
``Relative to all the other markets in the U.S., Miami is doing well,'' Hundley said. ``We've seen prices increase about 10 to 15 percent since the beginning of the year.''
ST Residential became a major player in South Florida's real estate market about a year ago when it bought a stake in the distressed real estate portfolio of failed Chicago-based Corus Bank. In a public-private deal with the Federal Deposit Insurance Corporation, ST Residential bought into a portfolio of condo projects that includes Paramount Bay in Miami, Jade Ocean Condominiums in Sunny Isles Beach and Tao in Sunrise.
The purchase made ST the second-largest owner of developer units in Miami's downtown condo market, behind Jorge Perez's Related Group, and the public-private deal gave the investor group the flexibility to adjust pricing levels.
ST Residential is ``coming in at a time when prices have stabilized, and they're creeping upwards, in that Brickell-downtown area,'' said David Dabby, a real estate analyst with Dabby Group Advisors. ``The market is weak overall, but there's enough acquisition activity to begin moving that [developer] inventory.''
Dabby noted however, that prices are still 50 percent below where they were four years ago, and not likely to make significant gains anytime soon, since discounted foreclosures and short sales rule the market.
Distressed properties are responsible for more than half of existing home sales in South Florida, dragging down median prices.
In September, year-over-year housing prices fell nearly across the board, with Broward single-family homes standing out as the sole exception. The median priced home in Broward sold for $214,200, up 7 percent compared to last September. Broward condo prices were down 9 percent to $71,600. In Miami-Dade, condo prices fell 25 percent to $99,400, and single-family home prices fell 2 percent to $188,000.
ST Residential plans to relaunch 530-unit Mint on the Miami River into the market in December and will kickstart sales at the 346-unit Paramount Bay on Biscayne Bay north of the Performing Arts Center next year, pricing units ``at market'' rates, Hundley said.
``We control so much inventory that if we come in at very low price point we could disrupt the market,'' he said. ``And we don't want to do that.''
Source: http://www.miamiherald.com/2010/10/26/1891129/market-bright-spot-condos-in-dade.html
BY TOLUSE OLORUNNIPA
tolorunnipa@MiamiHerald.com
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