Major deal for key parcels shows new growth opportunities in current market
MIAMI, Feb. 25 /PRNewswire-FirstCall/ -- Lennar Corporation (NYSE: LEN and LEN.B) – In a deal between one of the nation's largest homebuilders and one of the nation's premier real estate investment firms, Lennar Corporation announced today that it has closed a deal with Starwood Land Ventures LLC to acquire or option more than 2,700 homesites in 38 communities across Florida. These land holdings constitute one of the most desirable real estate portfolios to come to market in years.
The homesites are part of the extensive Florida holdings formerly held by TOUSA Inc. that Starwood acquired at auction in late January. The Florida homesites are located in first-time homebuyer, master planned, active adult and premier golf course communities in the Tampa, Orlando, Jacksonville and Southeast Florida markets where Miami-based Lennar plans to build single-family homes, townhomes and garden villas priced from the low $100,000s.
"We are very pleased to work with Starwood on this transaction and we view this deal as a major step forward for Lennar's growth in the State of Florida," said Fred Rothman, Regional President for Lennar. "These new communities will complement our existing operations. We have great designs and floor plans in place for each of the communities and our team is ready to build beautiful new homes at great prices that will appeal to savvy buyers."
Mike Moser, East Region President of Bradenton-based Starwood, said "Starwood chose Lennar as its preferred Florida homebuilder because of Lennar's proven track record for performance and quality."
"Lennar is one of the nation's premier homebuilders and we trusted their ability to help us maximize our return on investment," Moser said. "Lennar's geographic diversity and depth of operations throughout Florida was aligned perfectly with the portfolio we purchased in the bankruptcy auction."
Jim Bavouset, Lennar's Regional Vice President for Acquisitions, said "Lennar was pleased to work with Starwood on the transaction as their position and expertise in the residential real-estate market had made the firm one of Florida's most prominent real estate investors."
"Lennar's unwavering commitment to the State of Florida is enhanced by Starwood's market-changing acquisition," Bavouset said. "We are excited to continue to grow our business in Florida and look forward to a long relationship between all the Starwood and Lennar associates whose hard work brought this transaction together."
Lennar Corporation, founded in 1954, is one of the nation's leading builders of quality homes for all generations. The Company builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides primarily mortgage financing, title insurance and closing services for both buyers of the Company's homes and others. Previous press releases and further information about the Company may be obtained at the "Investor Relations" section of the Company's website, www.lennar.com.
Starwood Land Ventures, LLC is a Bradenton, FL, based residential real estate investment firm focused on land acquisition, development and financing nationwide. The firm is primarily funded by an affiliate of Greenwich, Conn. based Starwood Capital Group Global, a privately held international real estate investment firm founded in 1991. Starwood Land partners with builders, developers, lenders and landholders and provides creative solutions to recapitalize assets with both debt and equity. The firm also purchases debt and specializes in the acquisition, entitlement and development of large, master-planned communities, which may include mixed-use components. Through its platform of partnerships with leading development firms across the country, Starwood Land and its experienced team aim to be the capital partners of choice to land owners, developers and builders. For more information about Starwood Land, visit www.starwoodland.com.
Starwood Capital Group is a private, U.S.-based investment firm with a core focus on global real estate. Since the group's inception in 1991, the firm, through its various funds has invested more than $6 billion of equity capital, representing $21 billion in assets. Starwood currently has approximately $13 billion of assets under management. Starwood maintains offices in Greenwich, Atlanta, San Francisco, Washington, D.C., London, Mumbai and Tokyo. Starwood has invested in nearly every class of real estate on a global basis including office, retail, residential, senior housing, golf, hotels, resorts and industrial assets. Starwood and its affiliates have successfully executed an investment strategy that includes building enterprises around core real estate portfolios in both the private and public markets. For more information about Starwood Capital Group, visit www.starwoodcapital.com.
Some of the statements in this press release are "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our business, financial condition, results of operations, cash flows, strategies and prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption "Risk Factors" in Item 1A of our Annual Report on Form 10-K for our fiscal year ended November 30, 2009. We do not undertake any obligation to update forward-looking statements, except as required by Federal securities laws.
Source: http://www.prnewswire.com/news-releases/lennar-and-starwood-land-ventures-completes-strategic-deal-on-prime-homesites-across-florida-85403472.html
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, February 26, 2010
Thursday, February 25, 2010
Tips for first-time homebuyers
Time is running out for potential homebuyers to take advantage of the First-Time Homebuyer Tax Credit.
So we solicited tips from five experts in the field to help potential homebuyers navigate what can be a complicated market.
Real estate agent
Role: The Internet can be a great tool for a potential homebuyer, but Willinette Cohen, a Realtor with Prudential J.R. Carucci Real Estate Inc., said it is helpful to work with a real estate agent.
Tip 1: Cohen recommended that potential homebuyers work with lenders to become pre-qualified. “It makes your offer a stronger offer,” she said.
Tip 2: “I would always ask to see a property disclosure.”
The disclosure will list all attributes the real estate agent knows about the house.
“As a Realtor, there’s nothing that we’re aware of that we would not tell a potential buyer,” she said.
Banker/lender
Role: “There are still avenues for financing,” Judy Rowlands, a senior mortgage consultant with First Niagara, assures first-time homebuyers.
But lenders have become more conservative. Rowlands said she looks for applicants with credit scores of 680 or better, an employment history of at least two years and savings.
Tip 1: When applying for pre-approval, potential homebuyers should ask about their loans, Rowlands said, such as if there is a penalty for prepaying principal on the loan.
Tip 2: Rowlands said potential buyers should also ask about programs that may be available to them. First Niagara, for example, has a First Home Club open to first-time buyers who make less than $52,240 annually.
Lawyer
Role: A purchaser’s attorney is essentially an advocate for the buyer going into the closing, said William Calli Jr., an attorney with Calli, Calli & Cully.
Tip 1: Not hiring an attorney could save you some money in the short run, said Calli, but if problems arise in the closing process, it could cost more to fix the problems later.
Tip 2: The main misconception is assuming the lawyer representing the bank is representing the buyer as well, Calli said.
Home inspector
Role: Don Archer, a home inspector with Advanced Home Inspection Service, said the role of the home inspector is to educate potential homeowners. A basic inspection typically evaluates structural integrity, as well as the electrical, plumbing and heating systems.
Tip 1: Most often, Archer said, problems found by a home inspector will not need to be immediately addressed, but occasionally a serious issue is discovered.
Tip 2: Having a home inspection is optional, but Archer said the report is valuable. “I think it’s very important to have the education to pass on to our clients – what is normal wear and tear and what may need to be improved,” Archer said.
Tax adviser
Role: Filing for the credit is something homeowners can do on their own, but Peter Brown, a tax adviser with H&R Block, said, “You might want to have somebody walk you through it.”
Tip 1: New homeowners don’t have to wait to take advantage of their credit, Brown said. “They can file an amendment against their 2009 taxes and get the credit now.”
Tip 2: Brown suggested new homeowners invest at least $4,500 of the credit back into the house in green updates. The first $4,500 in environmentally friendly improvements can be deducted from the 2010 taxes.
About the Tax Credit
To apply for the First-Time Homebuyer Tax Credit, a binding contract must be entered into on or before April 30, 2010, and the closing must take place before June 1.
To qualify, a single homeowner must make less than $125,000 a year and homeowners filing jointly must make less than $150,000 annually. The purchase price of the home cannot exceed $800,000.
The credit allows first-time homeowners – those who have not owned a principal residence for the past three years – to claim 10 percent of the purchase price, up to $8,000.
Additionally, on Nov. 7, 2009, the First-Time Homebuyer Tax Credit was expanded to include a tax credit for 10 percent of the purchase price of the home – up to $6,500 – for homeowners who have lived in their homes continuously for five out of the previous eight years.
Source: http://www.uticaod.com/business/x1487806368/Tips-for-first-time-homebuyers
By LISA KAPPS
Observer-Dispatch
For more information about the First-Time Homebuyer Tax Credit, visit www.federalhousingtaxcredit.com.
So we solicited tips from five experts in the field to help potential homebuyers navigate what can be a complicated market.
Real estate agent
Role: The Internet can be a great tool for a potential homebuyer, but Willinette Cohen, a Realtor with Prudential J.R. Carucci Real Estate Inc., said it is helpful to work with a real estate agent.
Tip 1: Cohen recommended that potential homebuyers work with lenders to become pre-qualified. “It makes your offer a stronger offer,” she said.
Tip 2: “I would always ask to see a property disclosure.”
The disclosure will list all attributes the real estate agent knows about the house.
“As a Realtor, there’s nothing that we’re aware of that we would not tell a potential buyer,” she said.
Banker/lender
Role: “There are still avenues for financing,” Judy Rowlands, a senior mortgage consultant with First Niagara, assures first-time homebuyers.
But lenders have become more conservative. Rowlands said she looks for applicants with credit scores of 680 or better, an employment history of at least two years and savings.
Tip 1: When applying for pre-approval, potential homebuyers should ask about their loans, Rowlands said, such as if there is a penalty for prepaying principal on the loan.
Tip 2: Rowlands said potential buyers should also ask about programs that may be available to them. First Niagara, for example, has a First Home Club open to first-time buyers who make less than $52,240 annually.
Lawyer
Role: A purchaser’s attorney is essentially an advocate for the buyer going into the closing, said William Calli Jr., an attorney with Calli, Calli & Cully.
Tip 1: Not hiring an attorney could save you some money in the short run, said Calli, but if problems arise in the closing process, it could cost more to fix the problems later.
Tip 2: The main misconception is assuming the lawyer representing the bank is representing the buyer as well, Calli said.
Home inspector
Role: Don Archer, a home inspector with Advanced Home Inspection Service, said the role of the home inspector is to educate potential homeowners. A basic inspection typically evaluates structural integrity, as well as the electrical, plumbing and heating systems.
Tip 1: Most often, Archer said, problems found by a home inspector will not need to be immediately addressed, but occasionally a serious issue is discovered.
Tip 2: Having a home inspection is optional, but Archer said the report is valuable. “I think it’s very important to have the education to pass on to our clients – what is normal wear and tear and what may need to be improved,” Archer said.
Tax adviser
Role: Filing for the credit is something homeowners can do on their own, but Peter Brown, a tax adviser with H&R Block, said, “You might want to have somebody walk you through it.”
Tip 1: New homeowners don’t have to wait to take advantage of their credit, Brown said. “They can file an amendment against their 2009 taxes and get the credit now.”
Tip 2: Brown suggested new homeowners invest at least $4,500 of the credit back into the house in green updates. The first $4,500 in environmentally friendly improvements can be deducted from the 2010 taxes.
About the Tax Credit
To apply for the First-Time Homebuyer Tax Credit, a binding contract must be entered into on or before April 30, 2010, and the closing must take place before June 1.
To qualify, a single homeowner must make less than $125,000 a year and homeowners filing jointly must make less than $150,000 annually. The purchase price of the home cannot exceed $800,000.
The credit allows first-time homeowners – those who have not owned a principal residence for the past three years – to claim 10 percent of the purchase price, up to $8,000.
Additionally, on Nov. 7, 2009, the First-Time Homebuyer Tax Credit was expanded to include a tax credit for 10 percent of the purchase price of the home – up to $6,500 – for homeowners who have lived in their homes continuously for five out of the previous eight years.
Source: http://www.uticaod.com/business/x1487806368/Tips-for-first-time-homebuyers
By LISA KAPPS
Observer-Dispatch
For more information about the First-Time Homebuyer Tax Credit, visit www.federalhousingtaxcredit.com.
Wednesday, February 24, 2010
Veteran Consultant Cautions Banks' Dumping Foreclosed Condos Are Ruining Downtown Miami Real Estate Market
(MIAMI, FL) -- Jack Studnicky, an internationally known real estate consultant, lecturer, trainer and workout specialist for 50 years, warns the current dumping of financially distressed residential condominiums in the Greater Miami axis, could damage the development and financing in the luxury condo market for years to come.
In a specially prepared White Paper, he states:
"There are some great deals on condominiums in downtown Miami right now. Some banks holding foreclosed condos in luxury high rise buildings along Biscayne Bay from the Rickenbacker Causeway north are offering door buster prices.
"These 'below cost' of construction prices are great for homebuyers who seek an amenity rich, knockout-view lifestyle. But the fire sale prices banks are setting now will play a critical role in the decline of the downtown real estate market.
"This downward spiral may be so steep; it could take years for the market to come back strong enough represent the actual cost of building the condos.
"To stop the downward trend, banks need to draw a line in the sand on pricing.
History repeats itself
"I've seen the Brickell Avenue effect, the pressure to sell below cost, when I entered the business of marketing foreclosed condos. In the 1970s, Chase Trust gave me an opportunity to blow out 175 Maryland beachfront condos.
Brickell Avenue skyline
"I had to hustle because with winter approaching, the selling season was nearing a close. In less than six weeks I sold every unit.
"The bank was thrilled. I had a pocket full of gold and my phone was ringing off the hook with requests from other financial institutions to help them dump their foreclosed properties.
"But the downside of the blowout pricing was drastic. It took more than a decade for that market to recover.
"Homeowners who purchased their condos when they were priced above the cost of construction saw their home values plummet.
"New development became stagnant because the market was saturated with underpriced homes.
"Economic reality dictated that no developer would start any new building in the area while existing condos were selling below construction costs. Loan officers would not lend under those conditions, so commercial banking became anemic.
Why the giveaway?
"Downtown Miami condominium supply and demand is way out of balance. Supply is high while normal demand is non-existent.
"This is facilitating panic selling. On top of that, real estate agents are more than happy to support any bank's lowball pricing.
Rickenbacker Causeway
"These agents, understandably, want a commission check now, not next holiday season.
"Fire sale pricing is encouraging bulk buyers to swoop in like vultures to snap up blocks of condos. These latest flippers are also going for the quick buck.
"The great deals in downtown condos are attracting Latin American buyers who are purchasing for a home away from home.
"They realize this is an excellent time to obtain a second home in the U.S. capital of Central and South America. But there's not enough of them to create a seller's market.
"The continued panic selling and bulk buying will result in the stagnation of future financing and development of Miami's luxury condo market.
"Banks holding boatloads of foreclosed Miami condos need to take a deep breath and stand firm on realistic pricing, which should be at least cost of replacement.
"There is no need to comply with an archaic and misdirected appraisal process as these bargain hunters are paying cash."
Jack Studnicky has been a member of the Institute of Residential Marketing since 1988. As a spokesperson for the National Association of Home Builders, (NAHB), he has testified before Congress and appeared on national TV.
Studnicky has provided training and lectured at most of the major home builder conventions in America. He has been published or written about in many of the top newspapers and trade publications in the United States.
In his career to date, Studnicky has directed the sales of over $2 billion dollars worth of residential real estate. He is an industry-acknowledged REO Specialist and has completed over 50 successful workouts.
Source: http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-miami-condo-sales-brickell-avenue-condo-sales-jack-studnicky-miami-condo-foreclosures-chase-trust-institute-of-residential-marketing-2072.php
In a specially prepared White Paper, he states:
"There are some great deals on condominiums in downtown Miami right now. Some banks holding foreclosed condos in luxury high rise buildings along Biscayne Bay from the Rickenbacker Causeway north are offering door buster prices.
"These 'below cost' of construction prices are great for homebuyers who seek an amenity rich, knockout-view lifestyle. But the fire sale prices banks are setting now will play a critical role in the decline of the downtown real estate market.
"This downward spiral may be so steep; it could take years for the market to come back strong enough represent the actual cost of building the condos.
"To stop the downward trend, banks need to draw a line in the sand on pricing.
History repeats itself
"I've seen the Brickell Avenue effect, the pressure to sell below cost, when I entered the business of marketing foreclosed condos. In the 1970s, Chase Trust gave me an opportunity to blow out 175 Maryland beachfront condos.
Brickell Avenue skyline
"I had to hustle because with winter approaching, the selling season was nearing a close. In less than six weeks I sold every unit.
"The bank was thrilled. I had a pocket full of gold and my phone was ringing off the hook with requests from other financial institutions to help them dump their foreclosed properties.
"But the downside of the blowout pricing was drastic. It took more than a decade for that market to recover.
"Homeowners who purchased their condos when they were priced above the cost of construction saw their home values plummet.
"New development became stagnant because the market was saturated with underpriced homes.
"Economic reality dictated that no developer would start any new building in the area while existing condos were selling below construction costs. Loan officers would not lend under those conditions, so commercial banking became anemic.
Why the giveaway?
"Downtown Miami condominium supply and demand is way out of balance. Supply is high while normal demand is non-existent.
"This is facilitating panic selling. On top of that, real estate agents are more than happy to support any bank's lowball pricing.
Rickenbacker Causeway
"These agents, understandably, want a commission check now, not next holiday season.
"Fire sale pricing is encouraging bulk buyers to swoop in like vultures to snap up blocks of condos. These latest flippers are also going for the quick buck.
"The great deals in downtown condos are attracting Latin American buyers who are purchasing for a home away from home.
"They realize this is an excellent time to obtain a second home in the U.S. capital of Central and South America. But there's not enough of them to create a seller's market.
"The continued panic selling and bulk buying will result in the stagnation of future financing and development of Miami's luxury condo market.
"Banks holding boatloads of foreclosed Miami condos need to take a deep breath and stand firm on realistic pricing, which should be at least cost of replacement.
"There is no need to comply with an archaic and misdirected appraisal process as these bargain hunters are paying cash."
Jack Studnicky has been a member of the Institute of Residential Marketing since 1988. As a spokesperson for the National Association of Home Builders, (NAHB), he has testified before Congress and appeared on national TV.
Studnicky has provided training and lectured at most of the major home builder conventions in America. He has been published or written about in many of the top newspapers and trade publications in the United States.
In his career to date, Studnicky has directed the sales of over $2 billion dollars worth of residential real estate. He is an industry-acknowledged REO Specialist and has completed over 50 successful workouts.
Source: http://www.realestatechannel.com/us-markets/residential-real-estate-1/real-estate-news-miami-condo-sales-brickell-avenue-condo-sales-jack-studnicky-miami-condo-foreclosures-chase-trust-institute-of-residential-marketing-2072.php
Monday, February 22, 2010
Obama sets aside more money for underwater home owners
South Florida homeowners who lost their jobs or owe more than their property is worth could be in line for a big new dose of federal housing aid.
President Barack Obama on Friday unleashed $1.5 billion to help homeowners in Florida and other states hit hardest by unemployment and a flood of foreclosures.
"It's going to allow lenders to help homeowners who are underwater," Obama said, referring to those whose houses are worth less than their mortgages. "And it will help folks who've taken out a second mortgage modify their loans."
The announcement raised hopes that the aid could be used to help homeowners avoid foreclosure by making payments affordable.
Four of every 10 owners of single-family homes with a mortgage in South Florida owe more than the property is worth, according to Zillow.com, a real estate research firm based in Seattle.
While Florida's property values have plunged, the unemployment rate statewide has soared to nearly 12 percent.
State officials were delighted by the unexpected burst of federal spending and began devising plans to apply for it.
"The exciting thing about it is that we are looking at actual help, real money on the street, for a fair number of people who are in a difficult situation," said Cecka Rose Green, spokeswoman for the Florida Housing Finance Corp.
The money will not flow for weeks or months, however.
The Treasury Department will decide over the next two weeks how to dole out the $1.5 billion among Florida and at least four other states – California, Nevada, Michigan and Arizona. State housing agencies will then submit plans for how to use it to meet local needs.
The Florida Housing Finance Corp., a state-funded group, cannot refinance loans, Green said, but may be able to bring in other agencies and partners to help homeowners.
Some analysts foresee short-term loans at no interest or low interest or deferred payments to help unemployed Floridians keep their homes until they find jobs.
"It could be used to pay off second loans so that whoever holds the first mortgage can refinance it," said Mike Larson, a housing analyst with Weiss Research in Jupiter.
"This is an add-on program targeted at those states where the crisis is most acute, and Florida is at the top of the list," Larson said. "It's not some huge game-changer, but another way to help."
Source: http://articles.sun-sentinel.com/2010-02-19/business/fl-obama-housing-help-20100219_1_florida-housing-finance-corp-obama-sets-federal-housing-aid
William E. Gibson can be reached at Wgibson@SunSentinel.com or 202-824-8256.
President Barack Obama on Friday unleashed $1.5 billion to help homeowners in Florida and other states hit hardest by unemployment and a flood of foreclosures.
"It's going to allow lenders to help homeowners who are underwater," Obama said, referring to those whose houses are worth less than their mortgages. "And it will help folks who've taken out a second mortgage modify their loans."
The announcement raised hopes that the aid could be used to help homeowners avoid foreclosure by making payments affordable.
Four of every 10 owners of single-family homes with a mortgage in South Florida owe more than the property is worth, according to Zillow.com, a real estate research firm based in Seattle.
While Florida's property values have plunged, the unemployment rate statewide has soared to nearly 12 percent.
State officials were delighted by the unexpected burst of federal spending and began devising plans to apply for it.
"The exciting thing about it is that we are looking at actual help, real money on the street, for a fair number of people who are in a difficult situation," said Cecka Rose Green, spokeswoman for the Florida Housing Finance Corp.
The money will not flow for weeks or months, however.
The Treasury Department will decide over the next two weeks how to dole out the $1.5 billion among Florida and at least four other states – California, Nevada, Michigan and Arizona. State housing agencies will then submit plans for how to use it to meet local needs.
The Florida Housing Finance Corp., a state-funded group, cannot refinance loans, Green said, but may be able to bring in other agencies and partners to help homeowners.
Some analysts foresee short-term loans at no interest or low interest or deferred payments to help unemployed Floridians keep their homes until they find jobs.
"It could be used to pay off second loans so that whoever holds the first mortgage can refinance it," said Mike Larson, a housing analyst with Weiss Research in Jupiter.
"This is an add-on program targeted at those states where the crisis is most acute, and Florida is at the top of the list," Larson said. "It's not some huge game-changer, but another way to help."
Source: http://articles.sun-sentinel.com/2010-02-19/business/fl-obama-housing-help-20100219_1_florida-housing-finance-corp-obama-sets-federal-housing-aid
William E. Gibson can be reached at Wgibson@SunSentinel.com or 202-824-8256.
Friday, February 19, 2010
Should you buy a home that's been vacant?
A for-sale house that's been vacant may look like a bargain, but buyers should be cautious because expensive problems often lurk inside homes that have been unoccupied for some time.
A home can become vacant due to a marriage, job relocation, death or other life event. But vacancies today are more often due to a bank foreclosure or short sale in which the lender accepts less than the mortgage balance. It's these bank-owned properties, sometimes called "real estate-owned," or REOs, that tend to be "problem homes," says David Tamny, owner of Professional Property Inspection in Columbus, Ohio, and 2010 president of the American Society of Home Inspectors in Des Plaines, Ill.
Vacant homes can suffer from a wide variety of ills due to neglect, deferred maintenance on the part of the prior cash-strapped homeowner and vandalism, Tamny explains. Broken water pipes, stolen copper wiring, damaged appliances and unhealthy molds are but a few examples of the potential problems that may await buyers of these homes.
The risks for buyers are front and center since the number and percentage of for-sale homes has increased during the housing slump. More than 2.2 million for-sale houses in the U.S. were vacant in 2008, according to the U.S. Census Bureau. That figure was more than double the 1 million vacant for-sale homes in 2000. Vacant homes exist throughout the country, but the percentage of vacancies in 2008 was higher than the national average in the South, Midwest and West, and lower in the Northeast.
Turned-off utilities limit home inspection
Homebuyers typically hire a professional to conduct a visual inspection of the home and prepare a report on its condition. That's a wise precaution, but not even a well-qualified and thorough home inspector can see inside walls. Nor can an inspector assess the condition of a home's plumbing, electrical wiring, heating-and-cooling system or major appliances if the water, gas or electricity has been shut off.
"Buyers often don't understand that if there is no electricity, they are going to get a very limited inspection," Tamny says. "You could end up with a lot of surprises if you don't have those systems turned on prior to the inspection."
Swimming pools, which naturally are more common in such states as California, Arizona, Nevada and Florida -- where foreclosure rates have been high -- are also a special concern if a home has been vacant. Some inspectors won't include a pool as part of a basic inspection. Others will include the pool, but again, it may be impossible for the inspector to check out the equipment if the utilities have been shut off in the vacant home.
"You probably will have to accept the pool (as-is because) it's unlikely that you'll be able to get the whole thing up and running just for the purpose of an inspection and then shut it back down," Tamny says. "You could have thousands of dollars in repairs."
As-is home purchase can be risky
Some banks have procedures in place that allow prospective buyers to turn on the utilities, but the buyer may be required to pay a deposit to the utility company and put his or her own name on the account, even though he or she doesn't own the vacant home. That inconvenience may prompt some buyers to forgo parts of the home inspection that can't be performed unless the utilities are on.
That can be risky because unanticipated repairs can cost thousands or even tens of thousands of dollars, and the buyer typically will have no recourse to the bank. That means the buyer will be stuck with whatever problems the house has.
"Buyers are attracted to a house because it's discounted from what it sold for a number of years ago and they are hoping to get a bargain. They don't always understand that sometimes the problems make up the difference between the cost of the house and what they are getting for a discount," Tamny says.
Vacancy may affect homeowners insurance
Homebuyers also should know that insurance companies may decline to issue a homeowners insurance policy until the agent looks at the vacant home, according to Dick Luedke, a spokesman at State Farm in Bloomington, Ill. The agent's once-over isn't the same as a professional home inspection, but can mean extra expense if the home is in poor condition.
"If the home is uninsurable, we wouldn't write the policy. If the problems just increase the risk of the potential of a future claim, then that might increase the premium," Luedke says.
A homeowners insurance policy also may require a vacancy endorsement, again at an extra charge, if the home will continue to be vacant for more than 30 days after the sale. If the vacancy is due to major repairs, a dwelling-under-construction rider may be necessary as well.
A home can become vacant due to a marriage, job relocation, death or other life event. But vacancies today are more often due to a bank foreclosure or short sale in which the lender accepts less than the mortgage balance. It's these bank-owned properties, sometimes called "real estate-owned," or REOs, that tend to be "problem homes," says David Tamny, owner of Professional Property Inspection in Columbus, Ohio, and 2010 president of the American Society of Home Inspectors in Des Plaines, Ill.
Vacant homes can suffer from a wide variety of ills due to neglect, deferred maintenance on the part of the prior cash-strapped homeowner and vandalism, Tamny explains. Broken water pipes, stolen copper wiring, damaged appliances and unhealthy molds are but a few examples of the potential problems that may await buyers of these homes.
The risks for buyers are front and center since the number and percentage of for-sale homes has increased during the housing slump. More than 2.2 million for-sale houses in the U.S. were vacant in 2008, according to the U.S. Census Bureau. That figure was more than double the 1 million vacant for-sale homes in 2000. Vacant homes exist throughout the country, but the percentage of vacancies in 2008 was higher than the national average in the South, Midwest and West, and lower in the Northeast.
Turned-off utilities limit home inspection
Homebuyers typically hire a professional to conduct a visual inspection of the home and prepare a report on its condition. That's a wise precaution, but not even a well-qualified and thorough home inspector can see inside walls. Nor can an inspector assess the condition of a home's plumbing, electrical wiring, heating-and-cooling system or major appliances if the water, gas or electricity has been shut off.
"Buyers often don't understand that if there is no electricity, they are going to get a very limited inspection," Tamny says. "You could end up with a lot of surprises if you don't have those systems turned on prior to the inspection."
Swimming pools, which naturally are more common in such states as California, Arizona, Nevada and Florida -- where foreclosure rates have been high -- are also a special concern if a home has been vacant. Some inspectors won't include a pool as part of a basic inspection. Others will include the pool, but again, it may be impossible for the inspector to check out the equipment if the utilities have been shut off in the vacant home.
"You probably will have to accept the pool (as-is because) it's unlikely that you'll be able to get the whole thing up and running just for the purpose of an inspection and then shut it back down," Tamny says. "You could have thousands of dollars in repairs."
As-is home purchase can be risky
Some banks have procedures in place that allow prospective buyers to turn on the utilities, but the buyer may be required to pay a deposit to the utility company and put his or her own name on the account, even though he or she doesn't own the vacant home. That inconvenience may prompt some buyers to forgo parts of the home inspection that can't be performed unless the utilities are on.
That can be risky because unanticipated repairs can cost thousands or even tens of thousands of dollars, and the buyer typically will have no recourse to the bank. That means the buyer will be stuck with whatever problems the house has.
"Buyers are attracted to a house because it's discounted from what it sold for a number of years ago and they are hoping to get a bargain. They don't always understand that sometimes the problems make up the difference between the cost of the house and what they are getting for a discount," Tamny says.
Vacancy may affect homeowners insurance
Homebuyers also should know that insurance companies may decline to issue a homeowners insurance policy until the agent looks at the vacant home, according to Dick Luedke, a spokesman at State Farm in Bloomington, Ill. The agent's once-over isn't the same as a professional home inspection, but can mean extra expense if the home is in poor condition.
"If the home is uninsurable, we wouldn't write the policy. If the problems just increase the risk of the potential of a future claim, then that might increase the premium," Luedke says.
A homeowners insurance policy also may require a vacancy endorsement, again at an extra charge, if the home will continue to be vacant for more than 30 days after the sale. If the vacancy is due to major repairs, a dwelling-under-construction rider may be necessary as well.
Thursday, February 18, 2010
Simon Could Corner South Florida Mall Market
MIAMI-Simon Property Group's $10-billion bid for General Growth Properties could be a game-changer for South Florida more than other major retail markets statewide. Simon owns 41 malls, outlets and shopping centers throughout Florida, while General Growth has just 15.
Merging the portfolios of the two companies would give Simon an unparalleled position in South Florida's retail sector, experts say. "Simon would be the most dominant player in the region,” says Thomas Godart, managing director of Fort Lauderdale real estate firm Godart Florida Real Estate Investments.
The acquisition would also give Simon the upper hand in a South Florida retail market where tenants are getting rent relief and other concessions from cash-strapped landlords. By eliminating a major competitor in General Growth, Simon would exert even more influence on national tenants who are trying to expand into South Florida.
Simon would gain leverage over multi-center tenants, observes Jim Soble, an attorney and partner at Ruden McClosky who represents retail developers and heads the firm's real estate department. "If a tenant is in one of Simon's centers but not in one of the General Growth centers, it might have to be in both to stay" in the preferred retail space, Soble says.
Simon's largest malls in South Florida include Sawgrass Mills in Sunrise and The Galleria at Fort Lauderdale, along with a minority stake in Aventura Mall. General Growth's presence in the region includes Kendall Town Center, Mizner Park in Boca Raton and Pembroke Lakes Mall in Pembroke Pines.
Elsewhere in Florida, both companies have a somewhat fragmented presence. In Orlando, for example, Simon has the Florida Mall and Orlando Premium Outlets, while General Growth has Altamonte Mall and Festival Bay Mall at International Drive.
Simon's biggest malls around the state include Edison Mall in Fort Myers, Tyrone Square Mall in St. Petersburg and Pier Park in Panama City. General Growth dominates middle markets with malls such as Lakeland Square, Governor's Square in Tallahassee and Regency Square Mall in Jacksonville.
Beyond the strategic benefits of purchasing one of its major competitors, Simon would also gain substantial leverage over its tenant base in a South Florida market where landlords are struggling to maintain occupancy and fill vacancies, Godart says.
"Simon has certain assets that national tenants want to be a part of," he says. "They can use [the General Growth acquisition] as leverage to put those tenants in secondary locations as a condition for leasing space in a class A, strong location. This would also allow them to go aggressively after a bunch of different tenants."
The acquisition could also help Simon strengthen its position in a tenant-driven marketplace. The deal would force tenants to evaluate South Florida malls they occupy space in and where they want to be long-term, more than potential short-term issues like rent relief and sales performance, Soble says.
"Tenants will look again at the future of a particular mall and whether they want to stay in it," he says. "A lot of that depends on the strength of the recovery of Florida, which has always been known as a retail state."
Requiring prospective tenants to occupy space in less-desirable shopping malls in order to lease space at higher-quality centers is a commonly used tactic by major retail landlords like Simon, says Edgar Jones, vice president of Rockefeller Group Development Corp. RockGroup is currently building the Miramar Town Center, a mixed-use project, in partnership with retail REIT Kimco Realty, which specializes in shopping centers.
By gaining the leverage to apply the conditional leasing strategy, Simon would be able to significantly boost the value of its entire portfolio, Jones says. That, along with the presumed discount Simon would get on a per-property basis, could put Simon in a position to make some of its properties more competitive with reduced asking rents.
"This lets Simon reset the rents and be more attractive to tenants," Jones says. "This is a big win for Simon that raises the values of all of its properties."
(Carl Cronan of GlobeSt.com contributed to this story.)
Source: http://www.globest.com/news/1601_1601/florida/183599-1.html
Merging the portfolios of the two companies would give Simon an unparalleled position in South Florida's retail sector, experts say. "Simon would be the most dominant player in the region,” says Thomas Godart, managing director of Fort Lauderdale real estate firm Godart Florida Real Estate Investments.
The acquisition would also give Simon the upper hand in a South Florida retail market where tenants are getting rent relief and other concessions from cash-strapped landlords. By eliminating a major competitor in General Growth, Simon would exert even more influence on national tenants who are trying to expand into South Florida.
Simon would gain leverage over multi-center tenants, observes Jim Soble, an attorney and partner at Ruden McClosky who represents retail developers and heads the firm's real estate department. "If a tenant is in one of Simon's centers but not in one of the General Growth centers, it might have to be in both to stay" in the preferred retail space, Soble says.
Simon's largest malls in South Florida include Sawgrass Mills in Sunrise and The Galleria at Fort Lauderdale, along with a minority stake in Aventura Mall. General Growth's presence in the region includes Kendall Town Center, Mizner Park in Boca Raton and Pembroke Lakes Mall in Pembroke Pines.
Elsewhere in Florida, both companies have a somewhat fragmented presence. In Orlando, for example, Simon has the Florida Mall and Orlando Premium Outlets, while General Growth has Altamonte Mall and Festival Bay Mall at International Drive.
Simon's biggest malls around the state include Edison Mall in Fort Myers, Tyrone Square Mall in St. Petersburg and Pier Park in Panama City. General Growth dominates middle markets with malls such as Lakeland Square, Governor's Square in Tallahassee and Regency Square Mall in Jacksonville.
Beyond the strategic benefits of purchasing one of its major competitors, Simon would also gain substantial leverage over its tenant base in a South Florida market where landlords are struggling to maintain occupancy and fill vacancies, Godart says.
"Simon has certain assets that national tenants want to be a part of," he says. "They can use [the General Growth acquisition] as leverage to put those tenants in secondary locations as a condition for leasing space in a class A, strong location. This would also allow them to go aggressively after a bunch of different tenants."
The acquisition could also help Simon strengthen its position in a tenant-driven marketplace. The deal would force tenants to evaluate South Florida malls they occupy space in and where they want to be long-term, more than potential short-term issues like rent relief and sales performance, Soble says.
"Tenants will look again at the future of a particular mall and whether they want to stay in it," he says. "A lot of that depends on the strength of the recovery of Florida, which has always been known as a retail state."
Requiring prospective tenants to occupy space in less-desirable shopping malls in order to lease space at higher-quality centers is a commonly used tactic by major retail landlords like Simon, says Edgar Jones, vice president of Rockefeller Group Development Corp. RockGroup is currently building the Miramar Town Center, a mixed-use project, in partnership with retail REIT Kimco Realty, which specializes in shopping centers.
By gaining the leverage to apply the conditional leasing strategy, Simon would be able to significantly boost the value of its entire portfolio, Jones says. That, along with the presumed discount Simon would get on a per-property basis, could put Simon in a position to make some of its properties more competitive with reduced asking rents.
"This lets Simon reset the rents and be more attractive to tenants," Jones says. "This is a big win for Simon that raises the values of all of its properties."
(Carl Cronan of GlobeSt.com contributed to this story.)
Source: http://www.globest.com/news/1601_1601/florida/183599-1.html
Wednesday, February 17, 2010
Good real estate news: Home equity is rising again
With all the bad news about underwater homeowners and strategic walkaways, you might think that American homeowners' equity holdings are in the tank. But the least-publicized recent statistic on real estate is that, despite these scary reports, home equity is again on the rise.
Is that some piece of rosy propaganda put out by housing lobbyists to stimulate more home buying? Not unless you consider Federal Reserve economists to be shills for the real estate industry. The Fed conducts massive research into mortgage balances and home-value changes in hundreds of local markets around the country and reports its findings quarterly.
According to the Fed's most recent "flow of funds" survey, homeowners' net equity grew by nearly $1 trillion from the recession's nadir in the first quarter of 2009 through the third quarter. From June 30 to Sept. 30, net equity rose by $418 billion.
That's not all that impressive compared with the quarterly increases during the hyperinflationary housing boom years, but it could signal something important: After three years of unprecedented shrinkage in home equity -- and three years of rapid expansions in the number of underwater borrowers with negative equity -- there are signs that the down cycle may be shifting.
Last week, online real estate valuation researcher Zillow.com released its latest quarterly numbers on negative equity in major markets. The findings were sobering, but the study also offered some hints of modest improvements for housing. The overall negative-equity rate among American homeowners remained flat in the fourth quarter, at 21.4 percent. But like the Fed's numbers, that ratio represented a slight decrease from the first two quarters of last year, when 22 percent and 23 percent of owners owed more on their mortgages than the estimated market value of their real estate.
Zillow's study found that in dozens of housing markets -- including the District, Los Angeles, San Francisco, Detroit, Miami, San Jose, Seattle and Tampa-St. Petersburg -- the percentage of homeowners with negative equity appears to be on the decline. In the Washington area, 27.5 percent of homeowners had negative equity in the fourth quarter. That was down from 29.6 percent in the third quarter and 33.5 percent in the second.
Some of the largest declines occurred in cities hardest hit by the recession and the housing bust: Ann Arbor, Mich. (a decrease of 9 percentage points); Riverside, Calif. (-5.7); and Phoenix (-2). Florida markets that have struggled with major price devaluations also saw significant improvement in negative-equity rate in the fourth quarter, such as Fort Myers (-5.4), Miami (-5.1), Naples (-4.5) and Tampa-St. Petersburg (-1.4).
On the other hand, Zillow's study found historically high rates of negative equity continuing to prevail in key cities. In Las Vegas, for example, 81.3 percent of homeowners -- 256,000 households -- were underwater on their mortgages in the fourth quarter. This number is down from 82.5 percent in early 2009, but that's no consolation to the affected borrowers.
In Phoenix, 61.5 percent of borrowers were in negative territory. That's two percentage points lower than in the previous quarter but still scarily high.
Which major markets have the lowest underwater rates? As you might guess, they tend to be areas where the equity boom never quite boomed and where toxic mortgages and fog-the-mirror underwriting by lenders were never the rage: Tulsa, Okla. (4.2 percent); Harrisburg, Pa. (5.7 percent); Binghamton, N.Y. (5.6 percent); and Peoria, Ill. (8 percent).
Negative-equity rates are crucial barometers of local housing markets' propensity to experience high rates of mortgage default, foreclosure and strategic walkaways. Communities with single-digit negative-equity rates tend to have fewer walkaways and foreclosures.
The reverse is the case in areas where large numbers of underwater homeowners see no economic rationale for continuing to send in their monthly mortgage payments on properties worth tens of thousands, even hundreds of thousands, of dollars less than the principal balance owed to the bank. They feel they are throwing away money on real estate that might take a decade or more to be worth what they paid for it during the boom.
Mortgage market analyst Laurie Goodman, senior managing director of Amherst Securities, recently warned lenders to be especially vigilant about borrowers in markets where negative-equity ratios are high because, in her view, they are prime candidates to walk away from their loans. Once underwater borrowers miss a payment on their mortgage, Goodman said, there is a 75 to 80 percent probability they will chuck the whole deal.
Borrowers with even minimal positive equity, on the other hand, are far less likely to do the same.
Source: http://www.washingtonpost.com/wp-dyn/content/article/2010/02/11/AR2010021105251.html
Is that some piece of rosy propaganda put out by housing lobbyists to stimulate more home buying? Not unless you consider Federal Reserve economists to be shills for the real estate industry. The Fed conducts massive research into mortgage balances and home-value changes in hundreds of local markets around the country and reports its findings quarterly.
According to the Fed's most recent "flow of funds" survey, homeowners' net equity grew by nearly $1 trillion from the recession's nadir in the first quarter of 2009 through the third quarter. From June 30 to Sept. 30, net equity rose by $418 billion.
That's not all that impressive compared with the quarterly increases during the hyperinflationary housing boom years, but it could signal something important: After three years of unprecedented shrinkage in home equity -- and three years of rapid expansions in the number of underwater borrowers with negative equity -- there are signs that the down cycle may be shifting.
Last week, online real estate valuation researcher Zillow.com released its latest quarterly numbers on negative equity in major markets. The findings were sobering, but the study also offered some hints of modest improvements for housing. The overall negative-equity rate among American homeowners remained flat in the fourth quarter, at 21.4 percent. But like the Fed's numbers, that ratio represented a slight decrease from the first two quarters of last year, when 22 percent and 23 percent of owners owed more on their mortgages than the estimated market value of their real estate.
Zillow's study found that in dozens of housing markets -- including the District, Los Angeles, San Francisco, Detroit, Miami, San Jose, Seattle and Tampa-St. Petersburg -- the percentage of homeowners with negative equity appears to be on the decline. In the Washington area, 27.5 percent of homeowners had negative equity in the fourth quarter. That was down from 29.6 percent in the third quarter and 33.5 percent in the second.
Some of the largest declines occurred in cities hardest hit by the recession and the housing bust: Ann Arbor, Mich. (a decrease of 9 percentage points); Riverside, Calif. (-5.7); and Phoenix (-2). Florida markets that have struggled with major price devaluations also saw significant improvement in negative-equity rate in the fourth quarter, such as Fort Myers (-5.4), Miami (-5.1), Naples (-4.5) and Tampa-St. Petersburg (-1.4).
On the other hand, Zillow's study found historically high rates of negative equity continuing to prevail in key cities. In Las Vegas, for example, 81.3 percent of homeowners -- 256,000 households -- were underwater on their mortgages in the fourth quarter. This number is down from 82.5 percent in early 2009, but that's no consolation to the affected borrowers.
In Phoenix, 61.5 percent of borrowers were in negative territory. That's two percentage points lower than in the previous quarter but still scarily high.
Which major markets have the lowest underwater rates? As you might guess, they tend to be areas where the equity boom never quite boomed and where toxic mortgages and fog-the-mirror underwriting by lenders were never the rage: Tulsa, Okla. (4.2 percent); Harrisburg, Pa. (5.7 percent); Binghamton, N.Y. (5.6 percent); and Peoria, Ill. (8 percent).
Negative-equity rates are crucial barometers of local housing markets' propensity to experience high rates of mortgage default, foreclosure and strategic walkaways. Communities with single-digit negative-equity rates tend to have fewer walkaways and foreclosures.
The reverse is the case in areas where large numbers of underwater homeowners see no economic rationale for continuing to send in their monthly mortgage payments on properties worth tens of thousands, even hundreds of thousands, of dollars less than the principal balance owed to the bank. They feel they are throwing away money on real estate that might take a decade or more to be worth what they paid for it during the boom.
Mortgage market analyst Laurie Goodman, senior managing director of Amherst Securities, recently warned lenders to be especially vigilant about borrowers in markets where negative-equity ratios are high because, in her view, they are prime candidates to walk away from their loans. Once underwater borrowers miss a payment on their mortgage, Goodman said, there is a 75 to 80 percent probability they will chuck the whole deal.
Borrowers with even minimal positive equity, on the other hand, are far less likely to do the same.
Source: http://www.washingtonpost.com/wp-dyn/content/article/2010/02/11/AR2010021105251.html
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