Mortgage And Real Estate News

Saturday, January 29, 2011

Mortgage refinances may drop 77% by 2012 « HousingWire

Residential mortgage refinances are expected to deteriorate over the next two years due to factors not limited to rising interest rates. Some are predicting that mortgage refinancings, in fact, will fall by 77% by 2012 and drag down the overall market for originations.

Total refinances hit about $1 trillion in 2010 and accounted for 69% of the market share for originations, according to the Mortgage Bankers Association. The trade association is predicting that will drop more than two-thirds to just $352 billion and comprise of 36% market share in 2011.

MBA anticipates only $236 billion worth of refinances to take place in 2012.

Mortgage purchases will not make up for the losses in the refinance sector, according to the firm's numbers. Purchase originations are expected to increase to $614 billion from $473 billion in 2011 (up 30%), bringing the total originations for the year to $966 billion.

In 2010, origination transactions summed $1.5 trillion, which means a nearly 36% drop in overall residential lending activity.

MBA Senior Vice President and Chief Economist Jay Brinkmann said rising mortgage rates will filter the market for refinances, and that repurchase requests from Fannie Mae, Freddie Mac and mortgage insurers will also impact the market.

"This will continue to hold down originations," he said.

The MBA forecasts new home sales will rise and existing home sales will fall, up to 351,000 and down to 4.8 million, respectively.

Financial services firm KBW reported a 17.5% increase in new home sales from November to December, putting the 2010 year-end total at 329,000. December new home sales, which totaled about 22,000, were down 7.6% compared to a year earlier.

KBW said the average monthly sale volume for 2010 was between 20,000 and 26,000.

"Assuming the absolute level of monthly sales remains near current levels in the near term, the annualized new home sales numbers should continue to improve on seasonal factors in coming months," the firm said.

by Christine Ricciardi HousingWire January 27, 2010






Mortgage refinances may drop 77% by 2012 « HousingWire

Get the Report : Financial Crisis Inquiry Commission





Get the Report : Financial Crisis Inquiry Commission

Tuesday, January 25, 2011

Market Recap - Week Ending January 21, 2011

Stronger than expected economic data with a hint of higher inflation was negative for mortgage markets this week. Concerns about the level of demand for US securities from China added to the pressure. As a result, mortgage rates ended the week higher.

A number of factors combined during the week to push mortgage rates higher. The recent trend of improving economic data continued this week in the housing sector. The inflation component of the Philly Fed manufacturing report also revealed a sharp increase. Later in the week, a Treasury auction for securities which provide protection from inflation showed that investor concerns about future inflation are growing. Investors also worried about a decline in demand for US bonds from China. The Treasury reported that China was a net seller of Treasury securities in November. As the largest foreign holder of US fixed-income securities, any sustained drop in demand from China would have a large impact on US bond markets, including mortgage-backed securities (MBS) markets.

Overall, this week's housing sector data was positive. December Existing Home Sales rose 12% from November to an annual rate of 5.28 million units. The inventory of unsold existing homes declined 4% to an 8.1-month supply. First-time buyers accounted for 33% of existing home sales. December Housing Starts fell 4% from November, but December Building Permits, a leading indicator, rose 17% to the highest level since March. The performance of the housing market varied in different regions, but to see improvement on the national level is encouraging.

The biggest economic event next week will be Wednesday's FOMC meeting. Investors will be looking for an update on the economy and the Fed's plans for monetary policy. The most important economic data will be Friday's report on Gross Domestic Product (GDP), the broadest measure of economic growth. Before that, New Home Sales will be released on Wednesday. Pending Home Sales, a leading indicator for the housing sector, and Durable Orders will come out on Thursday. Consumer Confidence and Consumer Sentiment will round out the schedule. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.


Market Recap - Week Ending January 21, 2011

Sunday, January 23, 2011

Commercial-real-estate market registers positive changes

The Phoenix-area commercial-real-estate market passed a significant milestone in the fourth quarter, but you won't find evidence of it by looking at statistics.

That's because the positive changes were psychological, rather than economic, property investors and brokers said.

About three years after the area's commercial-real-estate market followed housing down the drain, a large number of struggling property owners who had been holding out for a miracle recovery finally began to accept the truth, investor Steven Jaffe and others said.

At the same time, a number of real-estate investment firms that had been hanging onto cash in anticipation of a desperation-fueled commercial-property giveaway finally realized it wasn't going to happen.

"The panic was gone, and the blind optimism that everything was going to turn around was gone," said Jaffe, executive vice president and general counsel for BH Properties LLC, a Los Angeles-based real-estate investment firm.

BH Properties recently acquired the 320-unit Fiesta Park apartment complex, 1033 S. Longmore, in Mesa, for $5.5 million.

It was the company's first purchase in the Phoenix in nearly three years, he said.

"Our last acquisition was in April 2008 - that's when we put the brakes on," he said.

Jaffe said the company is now actively seeking more Phoenix-area apartment buildings to buy and that it also would consider picking up some retail and industrial properties for the right price.

While sales of office, industrial and retail properties remained slow in 2010, the number of interested buyers looking for deals increased dramatically, according to area brokers and investors.

They also reported an explosion of leasing activity as businesses made a mad rush to lock in long-term lease rates at market-bottom prices.

"I'm about ready to call the bottom in the office market," said Jim Achen Jr., senior vice president at commercial-real-estate firm Transwestern in Phoenix.

Achen and fellow Transwestern broker William Zurek have closed on two huge lease deals within the past month, one for 95,000 square feet at ASU Research Park, in Tempe, to DuPont Air Products NanoMaterials LLC and the other for 135,114 square feet at 2512 W. Dunlap Ave., in Phoenix, to IT-services firm Cognizant.

In all, Phoenix-area businesses in 2010 signed new leases on a net 5.9 million square feet of office space, said Craig Henig, senior managing director of commercial-real-estate firm CB Richard Ellis in Phoenix.

All that movement rivals the amount of activity during the local real-estate market's peak years of 2005 and 2006, Henig said, but it didn't cause a significant gain in leased space overall.

The total pickup of about 234,000 square feet made 2010 a turning point after two years of net decreases, he said, but it also shows that the vast majority of activity came from local moves that did not involve any expansion.

Still, there were more announcements about new commercial construction projects during the past month than there had been during the entire previous year.

One came from luxury-apartment-community builder Alliance Residential Co., which said last week that it plans to build a 270-unit apartment community at the 26th Street and Camelback Road location that once was home to the Hard Rock Cafe, and also where real-estate mogul and TV personality Donald Trump had planned back in 2004 to build a $200 million resort.

Another came from data-center operator Digital Realty Trust Inc., which announced Monday that it would add 226,000 square feet to its existing data center at 2121 S. Price Road in Chandler.

Still, the Phoenix area isn't likely to see any big announcements about new office construction for quite some time, said Bryon Carney, president and managing partner of Cassidy Turley BRE Commercial in Phoenix.

More than one out of every four square feet of rentable office space was vacant as of Dec. 31, he said, which means a lot of excess supply that likely would take years to fill.

Still, all of the commercial-real-estate deal makers said 2011 was going to see a sharp rise in sale transactions, nearly all of them driven by sellers' financial troubles.

Henig said about 95 percent of the commercial-real-estate sales in 2010 were short-sale- or foreclosure-driven, he said, a trend that's expected to continue for at least two more years.

Achen said lenders and "special servicers," hired to mitigate securitized commercial-real-estate loan losses on behalf of the investors, have begun to step up their foreclosure activities, a sign that they believe the properties slated for foreclosure are once again marketable.

"I do think special servicers are feeling confident enough in the market to go ahead and foreclose," he said.

Scottsdale, southeast Valley gained the most office tenants in 2010

Office properties in Scottsdale and the southeast Valley added a net 782,000 square feet of rented office space, while north Phoenix and the Camelback/Piestewa Peak area lost about 774,000 square feet due to tenants vacating.

Regional submarketRentable office space (sq. ft.)Office vacancy rateNet change in rented office space (sq. ft.)Office under construction (sq. ft.)Average 1-year lease rate (per sq. ft.)
West Phoenix2.7 million39.8%19,5420$23.05
North Phoenix8.4 million28.1%(-251,931)0$19.08
Desert Ridge/Paradise Valley1.9 million31.8%23,5120$23.77
Camelback/Piestewa Peak10.1 million28.6%(-212,141)0$23.86
Central Business District16.4 million20.7%(-66,850)0$21.68
East Phoenix8.7 million22%(-60,143)0$19.92
Scottsdale17.4 million27.4%437,9700$22.40
Southeast Valley10.5 million28.7%343,7110$21.16
Metro Phoenix76.2 million26.2%233,6700$21.77

Source: CB Richard Ellis


MORE ON THIS TOPIC

Industrial-property sector improves; office and retail vacancies worsen

The vacancy rate for industrial and warehouse properties in the Phoenix area decreased in 2010. Vacancy rates for office and retail space were up slightly.

Property typeVacancy rate 2010Vacancy rate 2009
Office26.2%25.9%
Retail12.2%11.1%
Industrial14.7%16.1%

Source: CB Richard Ellis

by J. Craig Anderson
The Arizona Republic Jan. 23, 2011 12:00 AM

Saturday, January 22, 2011

2010 Q4 Earnings: Season Starts With a JPMorgan Bang | Advisor One

The fourth-quarter 2010 earnings season took off to the races on Friday as JPMorgan Chase reported a 47% boost in earnings over Q4 2009, thus confirming analysts’ expectations for a positive shift in the finance sector’s fortunes after a rough couple of years.

“More than two years after the financial crisis, we believe the U.S. financial services sector is poised to shift toward capital deployment from capital accumulation in 2011,” wroteKeefe Bruyette & Wood’s North America Equity Research teamof analysts in a 2011 finance-sector outlook published in December.

Signs of that shift have already started to appear, with JPMorgan executives talking about an increased dividend—one of the forms of capital redeployment anticipated by KBW. For year-end 2010 and 2011, the analyst team also foresees more share repurchases as well as mergers and acquisitions.

Expect a Choppy Stock Market Performance

Lending and growth opportunities for financials may be constrained, though, by the slow pace of the U.S. economic recovery. And stock performance may not reflect the brighter fundamentals.

John Scherr, founder and president of earnings watchdog site WhisperNumber.com, said Friday afterthe JPMorgan results were posted that he expects a mixed performance from banks for the Q4 earnings season. Even JPMorgan’s strong results may see short-term negative price movement, Scherr said.

“The stock tended to see negative price movement in each of the last five earnings reports,” he said. “JPM has topped the whisper number by an average of 14 cents in the past four quarters. To us that simply means the company is doing a poor job of managing earnings expectations. JPM have now set themselves up to have to beat the expectations by at least 14 cents before the earnings can be considered a true positive surprise.”

JPMorgan’s earnings per share came in at $1.12 versus analysts’ expectations for EPS of $0.99. The bank’s stock after the earnings release on Friday was up $1.18 per share in early trading, or 2.63% higher at $45.63 versus Thursday’s close of $44.45. On Friday, JPM stock closed $0.46 higher, or 1.03%, at $44.91. The New York Stock Exchange is closed Monday as the nation observes Martin Luther King Jr. Day.

by Joyce Hanson Advisor One January 17, 2011




2010 Q4 Earnings: Season Starts With a JPMorgan Bang | Advisor One

El-Erian Says Opportunities Still Exist in Bond Market

Jan. 21 (Bloomberg) -- Mohamed El-Erian, chief executive officer at Pacific Investment Management Co., talks about investment opportunities in the bond market. El-Erian, speaking with Tom Keene on Bloomberg Radio's "Surveillance," also discusses the outlook for the World Economic Forum in Davos, Switzerland, next week. (This is an excerpt of the full interview. Source: Bloomberg)





El-Erian Says Opportunities Still Exist in Bond Market

Get schooled on taxes

1040 individual income tax return.
Tim Boyle/Getty Images

Two more years of the same tax rules, right? Not exactly. While federal legislation passed in December extended income-tax brackets and many other key provisions for two more years, not everything stayed the same. Here are some of the notable items that could affect individual taxpayers' 2010 income-tax returns with a look forward to 2011 and 2012.


TAXPAYER GROUP: Lower-income workers
CHANGES AND EXTENSIONS: The bottom two income brackets will feature tax rates of 10 and 15 percent. Those rates, in effect in 2010, will continue in 2011 and 2012. People in those brackets also pay a zero percent tax on qualifying dividends and capital gains. The child tax credit stays at $1,000 in 2011 and 2012. Workers face a 4.2 percent payroll tax reduction in 2011 only, down from 6.2 percent.

TAXPAYER GROUP: Middle-class workers
CHANGES AND EXTENSIONS: Most middle-income people will continue paying taxes at rates of 25 or 28 percent. Workers in this group will benefit from the 2 percentage point payroll-tax cut on income up to $106,800. A "patch" will insulate more middle-class people from the alternative-minimum tax. A top rate of 15 percent applies on qualifying dividends and capital gains for anyone above the bottom two brackets. The recent legislation will insulate virtually all middle-class people from estate taxes.

TAXPAYER GROUP: The wealthy
CHANGES AND EXTENSIONS: The top marginal tax rates will stay at 33 and 35 percent for two more years, with a top rate of 15 percent on qualifying dividends and capital gains. The maximum rates had been set to rise to 36 and 39.6 percent. Also for two more years: no limits on itemized deductions and no phasing out of personal-exemption deductions. Estate taxes are reinstated for 2011 but at a modest top rate of 35 percent, with a $5 million exclusion.

TAXPAYER GROUP: Educators
CHANGES AND EXTENSIONS: Teachers still can deduct up to $250 in out-of-pocket classroom costs in 2010 and 2011.

TAXPAYER GROUP: Consumers
CHANGES AND EXTENSIONS: Taxpayers can deduct state and local sales taxes instead of state/local income taxes in 2010, 2011.

TAXPAYER GROUP: Homebuyers and owners
CHANGES AND EXTENSIONS: A limited property-tax deduction for homeowners who don't itemize was not renewed. Nor was the first-time homebuyers credit (though there is a temporary extension for military personnel).

TAXPAYER GROUP: Students
CHANGES AND EXTENSIONS: College students can continue taking advantage of several breaks, including an "above the line" higher-education tuition deduction and the American Opportunity Tax Credit.

TAXPAYER GROUP: Retirees
CHANGES AND EXTENSIONS: People older than 70 with Individual Retirement Accounts can elect to transfer up to $100,000 to charities without having to take and report withdrawals as taxable distributions.

TAXPAYER GROUP: Energy users
CHANGES AND EXTENSIONS: Certain residential energy credits continue through 2011 but on less-favorable terms.

TAXPAYER GROUP: Spouses
CHANGES AND EXTENSIONS: Married couples will enjoy two more years of marriage-penalty relief.

TAXPAYER GROUP: The unemployed
CHANGES AND EXTENSIONS: In 2009, up to $2,400 in unemployment benefits were not taxed as income, but that break wasn't extended for 2010 or 2011.

by Russ Wiles The Arizona Republic January 21, 2011





Get schooled on taxes

BofA loses $1.6 billion in 4Q

NEW YORK - Bank of America on Friday reported a loss of $1.6 billion in the fourth quarter after its costs related to soured home loans increased.

The quarter's results were a clean-up effort by the bank in an endeavor to start 2011 with a clean slate. The deep slump in the real estate market has continued to hamper Bank of America more than its competitors because of its 2008 purchase of Countrywide Financial, the country's largest mortgage company at the time.

"Last year was a necessary repair and rebuilding year," said CEO Brian Moynihan.

Bank of America Corp.'s loss available to shareholders after paying out dividends was 16 cents per share. Analysts surveyed by FactSet had forecast the bank would earn 18 cents a share. Excluding a charge of $2 billion related to the home loans, the bank would have earned 4 cents a share.

A year earlier, Bank of America had reported a loss of $5.2 billion after it repaid $4 billion related to its bailout during the financial crisis.

The bank reported revenue of $22.4 billion for the quarter, down from $25.1 billion in the previous year.

Bank of America also kept aside an additional $4.1 billion for bad home loans that it could be forced to buy back from Freddie Mac and Fannie Mae and other investors, and another $1.5 billion for litigation expenses.

Investors say that the bank should take back the bad home loans because they were sold on improper documentation. Besides buying back bad loans, several banks were stung by accusations in the fourth quarter that they failed to properly review documents used in foreclosures. Attorneys general from all 50 states are conducting an investigation.

The results of the nation's largest consumer lender stand as a proxy for the health of the people's finances. And Bank of America's results echoed what other banks have been reporting earlier in the week that the fiscal health of the American people is improving.

For the sixth consecutive quarter, there were fewer people that were late meeting monthly payments. The bank's losses from lending in its credit card and home loan business declined $414 million from the third quarter of 2010, because of a drop in delinquencies and bankruptcies.

For the full year 2010, the bank reported a loss of $3.6 billion, compared to a loss of $2.2 billion in 2009.

Bank of America's shares were down 27 cents, or 1.9 percent, in pre-market trading Friday.


by Associated Press Jan. 21, 2011 07:19 AM


BofA loses $1.6 billion in 4Q

Scottsdale building activity off

Scottsdale's growth machine is in a long, deep hibernation.

Construction activity as reflected in the city's sales collections has been off sharply for three straight years.

Construction-tax collections have been down year-over-year for every month since November 2007 with the exception of July 2008, which showed a negligible increase of 0.01 percent.

The construction decline is apparent just by looking around the city, but the tax-collection figures show just how far things have fallen in the three-year real-estate slump. Construction sales-tax collections have fallen to $13.4 million in the past fiscal year from $32 million in the 2008 fiscal year, a decline of 58 percent.

Scottsdale's construction category includes contracting sales attributable to commercial, residential, industrial and infrastructure work. It also includes speculative building for residential and commercial projects, said Phil Montalvo, city tax audit manager.

Construction-category tax collections for 2010 through November were $11 million, off 31 percent from a year earlier. That is on the heels of a 40 percent drop in construction-sales activity in 2009 from the previous year.

It's a far cry from the boom years when construction-sales-tax collections were $3.4 million in August 2005, up 66 percent from the previous year.

By comparison, the construction category brought in $797,965 last February, less than one-third of where it was at the market peak.

It all adds up to a huge decline in revenue for the city's budget.

And construction is not the only category that has fallen.

Automotive sales were down 41 percent in 2010 from 2008, and hotel sales dropped 27 percent during that time.

by Peter Corbett The Arizona Republic Jan. 22, 2011 12:00 AM




Scottsdale building activity off

Outlook is dim as sales of homes hit 13-year low

WASHINGTON - The number of people who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers.

High unemployment and a record number of foreclosures are deterring potential buyers who fear home prices haven't reached the bottom. Job growth is expected to pick up this year, but not enough to raise home sales to healthier levels.

"We built too many houses during the boom, and now after the crash, it will take us a long time to get back to normal," said David Wyss, chief economist at Standard & Poor's.

The National Association of Realtors reported Thursday that sales dropped 4.8 percent, to 4.91 million units, in 2010. That was slightly fewer than in 2008, which had been the weakest year since 1997.

The poor year for sales did end on a stronger note. Buyers snapped up homes at a seasonally adjusted annual rate of 5.28 million units in December, the best sales pace since May, and the 12.8 percent rise from November was the biggest one-month surge in 11 years.

The increase was an encouraging sign after a dismal year for home sales, said Mark Zandi, chief economist at Moody's Analytics. But he cautioned against raising expectations for a rapid recovery in housing.

"Until we get more jobs, people will be reticent about buying homes," he said.

A reason for more optimism is a decline in the number of people applying for unemployment benefits over the past four months.

Last week, applications fell to a seasonally adjusted 404,000, the Labor Department said.

Fewer than 425,000 people applying for benefits is considered a signal of modest job growth.

by Martin Crutsinger Associated Press Jan. 21, 2011 12:00 AM





Outlook is dim as sales of homes hit 13-year low

Real-estate franchisor eliminates executives

Realty Executives International Inc., a Phoenix-based franchisor of residential real-estate agencies, said owner and executive chairman Richard Rector has eliminated two top-level executive positions and reclaimed his former role as the primary decision-maker.

Rector's move to eliminate the chief executive officer and chief financial officer positions was part of a larger effort to cut costs and eliminate redundancy within the organization, Realty Executives spokeswoman Andrea Kalmanovitz said.

"He has been meeting with advisers for the entire fourth quarter," Kalmanovitz said.

Those discussions led Rector, son of Realty Executives founder Dale Rector, to fire company CEO Glenn Melton, who had been promoted to the position in September 2009.

Rather than replace Melton, Rector decided to go back to handling the day-to-day business himself.

"He is reinserting himself as president," a title Rector had relinquished when he made Melton the company's chief executive, Kalmanovitz said.

Rector also decided to eliminate the position of chief financial officer, she said, firing former CFO Karen Dunham in the process.

Those duties will be handled from now on by a financial consultant, Kalmanovitz said.

Rector had served as president and CEO of Realty Executives International from 1984, when he purchased the company from his father, until 2009, when he gave Melton the job.

Four years before purchasing the company and turning it into a global franchisor with nearly 800 franchises in 14 countries, Rector took over as president and CEO of the original Realty Executives agency in Phoenix - now the company's flagship franchise - which Dale Rector founded in 1965.

by J. Craig Anderson The Arizona Republic Jan. 21, 2011 12:00 AM





Real-estate franchisor eliminates executives

High metal prices hike profit for Freeport

Phoenix-based Freeport-McMoRan Copper and Gold Inc. posted a banner year in 2010 because of high metal prices, which has the company ramping up production at several mines.

The company reported Thursday that profit for the fourth quarter was up 50 percent from a year earlier and that profit for the year was $5.5 billion, up 57 percent from 2009.

Freeport earned $3.25 per share during the quarter, topping the average analyst estimate of $2.88.

But the company's stock price still fell Thursday after the company said that copper and gold production would drop this year as it digs through a low concentration of ore at its major mine in Indonesia.

Commodities in general fell Thursday because of fears that demand in China could slow. Activity there has been fueling metal prices.

The company expects to produce 3.85 billion pounds of copper this year, compared with 3.9 billion in 2010, and 1.4 million ounces of gold, down from 1.9 million ounces in 2010.

The company's copper production in Arizona is going to increase this year, officials said, with previously announced expansions at its Morenci, Miami and Safford operations.

"We are making great progress in the restart-optimization projects we have previously talked about," CEO Richard Adkerson said.

"We also are aggressively working on identifying major growth projects. We have a very significant opportunity to create value for our company by investing in our existing developments and reserves."

Copper prices are down slightly from the $4.49-per-pound record they hit earlier this month. The metal closed at $4.27 a pound Thursday.

"With copper prices in excess of $4 . . . we are earning extraordinary margins," Adkerson said. "We would like to turn on the spigot and produce more copper today. We can't do that. The time it takes to drill for resources, get permits, get water and power, it is a double-edged sword. We can't (produce more quickly), and others can't either, and that leads to high prices."

Freeport could spend $8 billion to $10 billion in the next five years on expansions and new mills, including in Arizona, officials said.

Stock analysts on a conference call with Freeport officials Thursday asked if the company would use some of its cash to buy rivals.

"I'm just wondering what Freeport's thoughts are for (mergers and acquisitions), and would you remain copper-focused?" asked analyst Jorge Beristain from Deutsche Bank.

Adkerson replied that although Freeport thoughtfully considers many buyout offers, the company has significant copper reserves around its existing mines that offer the best expansion opportunities.

In a positive sign for its Arizona mines, Adkerson said that of the new copper reserves Freeport discovered and listed on its balance sheets in 2010, about 80 percent came from the U.S.

"You have to go back many years to hear people in the industry and investment community talk about the poor assets located in the southwest U.S.," Adkerson said. "That simply is not the case in the context of the markets we face today."

Analyst Charles Bradford of Affiliated Research Group asked if Freeport executives were concerned about states raising their taxes or royalties on mining amid the weak economy.

Adkerson responded that he was meeting Thursdayafternoon with Arizona Gov. Jan Brewer to talk about the company's Arizona expansions.

"Here in Arizona, where most of our significant operations are, there is a significant budget deficit," he said. "But the real focus is on job creation."

He also said that because Freeport owns most of its properties, rather than operate on federal land, changes being discussed for federal mining rules won't apply to many of the company's mines.

Freeport shares closed Thursday down $4.26, or 3.7 percent, at $110.90.

by Ryan Randazzo The Arizona Republic Jan. 21, 2011 12:00 AM





High metal prices hike profit for Freeport

Blue Sky plan is scaled down

Gray Development Group next week will submit the latest proposal for its Blue Sky luxury apartment complex north of Scottsdale Fashion Square with a lower number of units, maximum building height and the overall square footage.

The latest plan is in response to negotiations with surrounding property owners, ST Residential and Triyar Properties, whose legal protests forced a supermajority vote of 6-1 for City Council approval. Both protests remain in place.

Blue Sky is planned along Scottsdale Road west of the Safari Drive condominium complex. ST Residential owns and manages Safari Drive, while Triyar's retail center is on the northeastern corner of Scottsdale and Camelback roads.

Triyar has been receptive to Gray's concessions, but ST Residential hasn't budged, said Brian Kearney, Gray's chief operating officer.

ST Residential spokesman Peter Marino said the company had no comment on Blue Sky. Shawn Yari, owner of Triyar Cos., couldn't be reached.

The proposal now includes 749 units; three buildings, down from five; and a maximum building height of 128 feet, including rooftop mechanical.

In November, the council voted to postpone considering Gray's proposal indefinitely. Because the plan includes numerous changes, it will go back before the Development Review Board on Feb. 3, and it would be considered by the Planning Commission on Feb. 9 and the council on Feb. 22.

The tallest building, along Scottsdale Road, would be just north of Triyar's center. The other two buildings, including a second along Scottsdale Road and one along Arizona Canal, would have a maximum height of 118 feet. The maximum height along Scottsdale Road, which would include street-level retail, would be 68.5 feet, Kearney said.

by Edward Gately The Arizona Republic Jan. 22, 2011 12:00 AM






Blue Sky plan is scaled down

Apartments are planned for site of failed projects

The Camelback Corridor property once occupied by a Hard Rock Cafe and later connected to a failed Donald Trump project soon will be abuzz with construction activity, according to a developer that purchased the land in December.

Buyer Alliance Residential Co., which owns and manages upscale multifamily housing, said it plans to build a 270-unit apartment community at the same location where real-estate mogul and TV personality Trump had planned back in 2004 to build a $200 million resort.

The resort was delayed by a fight with neighbors over its proposed height of almost 200 feet, and the project never materialized.

The nearly 5-acre parcel of land is at the southeastern corner of Camelback Road and Esplanade Lane in Phoenix. The transaction, which closed Dec. 16, is a joint venture with AEW Capital Management L.P.

The seller was New York-based lender Hypo Real Estate Capital Corp., which foreclosed on the property after its previous owners defaulted on a $36 million loan.

Developer Ian Swiergol of Alliance Residential said his company already has reached out to neighbors and does not anticipate a repeat of the Trump controversy.

He added that the maximum height of the project, to be branded under Alliance Residential's Broadstone community name, would be 56 feet tall.

Despite the real-estate market's problems overall, Swiergol said upscale, urban-core apartment communities have been doing well recently.

The fact that Alliance was able to get its hands on inexpensive property just a stone's throw from 24th Street and Camelback Road, the epicenter of affluent commerce and lifestyle in Phoenix, made the deal impossible to pass up, he said.

"At this exact location in Phoenix, (this) is basically a once-in-a-lifetime opportunity," Swiergol said.

Formerly home to two restaurants, the Hard Rock Cafe and Marco Polo Supper Club, the new development will feature four-story residential buildings accompanied by one level of partially below-grade parking. The existing structures will be torn down as part of the redevelopment process.

Construction is scheduled to begin in the third quarter, with sister company Alliance Residential Builders serving as the project general contractor and ORB Architecture as the project architect, Swiergol said.

The project should be open to renters by the second quarter of 2013. After completion, Alliance will manage the property's marketing and operations.

The community will feature a mix of studios and one- and two-bedroom units ranging in size from 650 square feet to 1,100 square feet.

Swiergol said it will feature a variety of high-end design features such as spiral staircases and "wood-style flooring."

The developer said it will incorporate a number of amenities into the project, including a two-story fitness center, elevators and air-conditioned exterior corridors.

Alliance already has nine Broadstone-branded communities in the Phoenix area, including Broadstone Ancala in north Scottsdale and Broadstone Twin Fields in Gilbert.

The newest project, Broadstone on Twelfth in central Phoenix, opened in December 2009 and was at 90 percent occupancy within weeks, Swiergol said.

by J. Craig Anderson The Arizona Republic Jan. 18, 2011 12:00 AM





Apartments are planned for site of failed projects

Monday, January 17, 2011

Loan Officer Compensation: Overtime Pay or No Overtime Pay?

The Mortgage Bankers Association has filed suit in federal court in an effort to reverse a March 2010 ruling by the Department of Labor (DOL) requiring that loan officers be paid overtime. That DOL Wage and Hour Division Administrators Interpretation reversed a previous opinion that MBA members had been operating under since 2006 that had exempted mortgage loan officers from the overtime provision of the Fair Labor Standards Act (FLSA.)

FLSA, which was originally enacted in 1938, requires that employers covered by the statute pay overtime wages to employees who work more than 40 hours per week unless they are specifically exempted. Such an exemption applies to employees operating in a bona fide administrative capacity.

The regulations defining FLSA requirements have been periodically revised, most recently in August 2004 and, according to the suit, until last March these revisions were announced by written "Opinion Letters" in response to questions from private parties about application of the regulations and these Opinion Letters have been held by courts to constitute final agency action. MBA maintains that since March 2010 DOL has issued "Administrator Interpretations" without prior notice or any opportunity for public comment or public hearings.

In August 2004 DOL promulgated a regulation that said employees in the financial services industry generally meet the duties requirements for the administrative exemption if those duties include work such as collecting and analyzing customer information, determining and advising the customer on which financial products meet his needs, and marketing, servicing or promoting the employers financial products. "However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption." Other language, however, somewhat exempted an employee whose administrative duties included some sales.

On September 8 2006, DOL sent MBA an Opinion Letter in which it opined that employees largely employed to fulfill administrative functions but who also performed a marketing function still qualified for the exemption. MBA said in its suit that, in reliance on this interpretation, employers in the financial services industry, have classified mortgage loan officers as exempt employees and as such they generally are not paid hourly or overtime wages, "but are well-compensated by other means, including salary, bonus and commissions."

On March 24, DOL issued an Interpretation reversing and withdrawing the 2006 letter and declaring that a loan officer "whose hypothetical 'typical' job duties were to "receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity...collect required financial information from customers they contact or who contact them...assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products..." had a primary duty of non-administrative-exempt sales, and did not qualify for the FLSA;s administrative exemption.

MBA claims that DOL has admitted that this letter represented a substantial change in its interpretation of its own regulation and that it was issued without any prior public notice or without providing any prior opportunity for MBA or other interested parties to comment or without holding or offering to hold public hearings.

The Association said that its members and other interested parties now face substantial exposure to lawsuits alleging that "well-compensated mortgage loan officers are misclassified and are entitled to collect both back overtime wages and penalties." MBA President and CEO John Courson said that the ruling could also require lenders to make costly changes to their internal operations and compensation structure and that these costs would be passed through to the consumer. The regulations, he said, will also deprive loan officers and their customers of the flexible schedules they have enjoyed without increasing their compensation.

The suit asks the court to declare that DOL violated the Administrative Procedures Act under which the suit is filed and to set aside the Administrator's Interpretation and prevent its application and enforcement.

by Jann Swanson Mortgage News Daily January 12, 2011



Loan Officer Compensation: Overtime Pay or No Overtime Pay?

Ariz. housing bust tests smaller towns

KINGMAN -- For Roxanne Knoche, losing the ranch she had custom-built for her retirement would be devastating.

A 53-year-old former office manager for a Costa Mesa, Calif., plumbing company, she moved in 2007 to Kingman, where she lived off disability payments until they ran out a year later.

After more than a year of trying to negotiate a modified loan with Bank of America, seeing her house in Golden Valley advertised as a foreclosure and shooing away people dropping by to see the corner-lot property, Knoche was preparing for another move.

"I would have had to pack up what I could and just go," she said. "I probably would have tried to go back to California to find a room to rent."

While Knoche finally fended off foreclosure in November by getting her $1,242 monthly payments lowered by more than half, she was very close to joining hundreds of Kingman-area residents forced to give up their homes since the real-estate boom went bust.

As the Phoenix area's crush of foreclosures has drawn national attention, routinely ranking among the most-severely hit U.S. markets, Arizona's rural communities have quietly grappled with their own crisis.

And it's a crisis with little relief in sight for smaller towns. Many homeowners faced with escalating mortgage payments and job losses have been giving up on modifying mortgages and then abandoning homes.

With neither strong rental markets to absorb displaced homeowners nor ample job opportunities, leaders in some rural communities fear they are losing longtime residents due to foreclosures.

Cronkite News Service visited communities in Coconino, Mohave and Santa Cruz counties to learn how residents, business leaders and community groups have been affected.

In those three counties combined, roughly 5,360 homes have faced foreclosure through October 2010, according to Irvine, Calif.-based RealtyTrac.

Gathering specific data on rural foreclosures and the effects on the established communities, which have more seasonal residents and mobile and manufactured housing, is difficult, said Jay Butler, associate professor of realty studies at Arizona State University's W.P. Carey School of Business.

"There's not a lot of data on the rural areas," Butler said. "It's a different mix of things that are ongoing there. The economies are much smaller."

A real-estate recovery won't begin until at least next year, he added.

Mohave County

Kingman, a community of 27,521 in northwestern Arizona, boasts tourism and manufacturing industries along a busy railroad and interstate. People here say they enjoy the more-relaxed pace of life over the metropolitan bustle of Las Vegas or Phoenix.

Kingman's foreclosure rates have been unprecedented in the past few years, with 124 foreclosures in the town in October alone, RealtyTrac said. In all of Mohave County, where more than 502 homes were in some stage of foreclosure in October, 3,745 homes faced foreclosure last year.

Kingman had the second-highest number of foreclosures in Mohave County in October after Lake Havasu City, which had 165. Bullhead City, with 110 foreclosures, ranked third. All three municipalities had foreclosure rates higher than both the state and national rates.

"For a community like Kingman here, it's had a pretty big impact," said Jim Wells, Mohave County's federal Department of Housing and Urban Development-approved housing counselor. "It's a lot of people losing their homes. In a small town, there's not a whole lot of resiliency - there's less people to give it that."

Coconino County

One out of every 445 homes in Coconino County, or 136 homes, was in some stage of foreclosure in October, according to RealtyTrac. That's more than seven times the foreclosure rate of October 2006, when Coconino County had 19 foreclosures.

A surge of foreclosures in Flagstaff that began with high-end homes is now plaguing homes in all price ranges - from a $150,000 house in Kachina Village to a $750,000 mansion in the University Heights neighborhood, said Cher Ferry, a housing counselor with the non-profit BothHands, which helps connect residents with affordable housing.

"It's almost like you have an abandoned area," Ferry said. "Ten families leaving one small rural area in Flagstaff is huge. And they have nowhere to go. So a lot of them just pack up and move out of Flagstaff."

Santa Cruz County

The onslaught of foreclosures is only part of a complex economic struggle in Nogales and nearby Rio Rico.

Businesses that rely on traffic from Mexico have been struggling with effects of SB 1070, Arizona's immigration law that has made many Mexicans fearful of crossing the border, said Arnold Quijada, chairman of the Nogales-Santa Cruz County Chamber of Commerce.

Further, recent media reports have highlighted the growing violence on the Mexican side of Nogales and other border towns, keeping visitors at bay, Quijada said. In response, the chamber is launching campaigns to reverse the effects of the immigration law, negative media portrayals and the foreclosure crisis.

"Nogales and Santa Cruz County are in a very unique situation due to the fact that we're so close to the border," Quijada said. "Definitely, we want to continue prospering. A town with many difficulties, it's hard to continue progressing."

Like Kingman and Flagstaff, Nogales has been hit with the economic impact of foreclosures. Santa Cruz County, with 17,578 homes in 2009, according to U.S. Census Bureau, had roughly 67 foreclosures in October, including 14 in Nogales.

Rio Rico, less than 10 miles north of Nogales, has been hit most severely by foreclosures, with 40 properties - or one out of every 110 homes - in the foreclosure process in October, according to RealtyTrac. That's 10 times higher than the foreclosure rate in October 2006.

"I've been hearing it's going to get a lot worse," said Santa Cruz County auctioneer Jamie Sainz, who now announces about 300 trustee sales per month. "There's no jobs down here. No jobs to keep."

MORE ON THIS TOPIC

October foreclosures

• Apache County - 14.

• Cochise County - 104.

• Coconino County - 136.

• Gila County - 61.

• Graham County - 23.

• Greenlee County - 3.

• La Paz County - 13.

• Maricopa County - 11,683.

• Mohave County - 502.

• Navajo County - 124.

• Pima County - 1,614.

• Pinal County - 1,544.

• Santa Cruz County - 67.

• Yavapai County - 453.

• Yuma County - 197.

Source: RealtyTrac







by Rebecca L. McClay Cronkite News Service Jan. 17, 2011 12:00 AM






Ariz. housing bust tests smaller towns

Brokerage makes move in Southeast

A locally based commercial-real-estate firm that specializes in buying and selling apartment communities has shifted into expansion mode despite the commercial-real-estate market's ongoing woes.

Hendricks & Partners, a commercial-real-estate brokerage, research and consulting firm based in Phoenix, reported that it has acquired two apartment brokerages in the Southeastern U.S. - one in Birmingham, Ala., and the other in Baton Rouge, La.

The two acquisition deals mark the beginning of a major push into the Southeast, according to Hendricks & Partners President Brent Long.

Hendricks & Partners acquired the Oakley Group, a Birmingham-based real-estate firm headed by industry veteran David Oakley, and Cordaro Companies in Baton Rouge, headed by broker Gregory J. Cordaro.

"We are in dialogue with key apartment firms and senior apartment advisers in the region and have begun our expansion with two very strong groups," Long said.

Terms of the purchase deals were not disclosed.

While most types of commercial real estate have been a tough sell during the past year, apartment communities have been the one notable exception.

Local brokers have pointed to one key reason: The U.S. Federal Housing Administration offers a program that guarantees repayment of apartment-building purchase loans in the same manner it guarantees home mortgages.

Without the FHA option, which compensates the lender if the borrower defaults, apartment buildings would not be the hot item they are today, they said.

Long said the company, which has brokers in 37 cities, is in the process of opening a new office in Jackson, Miss., and also is looking for possible acquisitions in Georgia, the Carolinas, Tennessee, Kentucky and Florida.

by J. Craig Anderson The Arizona Republic Jan. 16, 2011 12:00 AM





Brokerage makes move in Southeast

Fed stake in AIG is set to end

NEW YORK - The government and AIG, the giant insurer rescued with $182 billion at the depths of the 2008 financial meltdown, announced a plan Friday to end taxpayer involvement in the company over the next two years.

As part of the plan, AIG paid back its $21 billion outstanding balance to the New York branch of the Federal Reserve. The Treasury Department will now own a 92 percent stake in the company and begin unloading stock on the open market in March.

"Treasury remains optimistic that taxpayers will get back every dollar of their investment in AIG," Treasury Secretary Timothy Geithner said in a statement.

In a separate statement, AIG President and CEO Robert H. Benmosche said: "Today, AIG, with the support of countless people, has accomplished a huge goal that many people once thought impossible: completely repaying the Federal Reserve Bank of New York."

The rescue package for American International Group Inc., which included loans and guarantees, was the largest of any U.S. company that accepted government help during the September 2008 financial crisis.

At the time, federal officials worried that a collapse of AIG, which worked with hundreds of financial institutions around the world, would be a death blow to already-fragile credit markets and possibly bring down the financial system itself.

The insurer became a touchstone for public outrage over excessive risk on Wall Street.

Under the plan announced Friday, the government will sell its stock over two years as market conditions allow.

The government holds roughly 1.67 billion shares of AIG now. Those shares were handed over to taxpayers at a value of just under $30 apiece and were trading Friday at about $54.

The two-year unwinding of the federal stake in the company is similar to an arrangement to end government involvement in Citigroup and in General Motors, which returned to the stock market this year after going through bankruptcy.

AIG's repayment plan is being paid for with proceeds from a series of asset sales. On Thursday, it agreed to sell its nearly full ownership in the third-largest insurance company in Taiwan for about $2.2 billion.

Last year, it sold an Asia-based life insurer to Britain's Prudential PLC for $35.5 billion.

Besides repaying the U.S. government, AIG is restructuring to focus on its property-, casualty- and life-insurance businesses.

by Pallavi Gogoi Associated Press Jan. 15, 2011 12:00 AM





Fed stake in AIG is set to end

Foreclosures to hit peak in '11

The bleakest year in the foreclosure crisis has only just begun for the nation.

Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages, and industry experts say more people will miss payments because of job losses and loans that exceed the value of the homes they are living in.

"2011 is going to be the peak," said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc. The firm predicts 1.2 million homes will be repossessed this year.

However, the Valley's foreclosure rate likely peaked in 2010 based on steady drops in pre-foreclosures during the second half of the year. December's count of 5,475 pre-foreclosures, or notices of trustee sales, is the lowest level for notice-of-trustee sales in the region since March 2008.

Nationally, RealtyTrac is predicting foreclosures this year will top 2010, when a record 1 million homes were lost.

One in every 45 U.S. households received a foreclosure filing last year, a record 2.9 million of them. That's up 1.67 percent from 2009.

On Thursday, Freddie Mac reported that fixed mortgage rates dipped this week for the second straight time, extending a sliver of hope for some homeowners.

The average rate on a 30-year mortgage dropped to 4.71 percent from 4.77 percent the previous week. The rate on a 15-year loan, a popular refinance choice, slipped to 4.08 percent from 4.13 percent.

But both are a half-point higher than the lows they reached in November. The 30-year loan rate hit a 40-year low of 4.17 percent and the 15-year mortgage rate fell to 3.57 percent, the lowest level on records starting in 1991.

The dip has led more borrowers to apply for a refinance, but would-be buyers remain hesitant, according to Wednesday's mortgage indexes from the Mortgage Bankers Association. It will take more than low mortgage rates to jump-start a housing market plagued by high unemployment, falling prices and tighter credit standards.

The glut of foreclosures has compounded the problem, and although the pace moderated in the final months of 2010, that isn't expected to last.

The number of homes that received at least one foreclosure-related filing in December was the lowest monthly total in 30 months. Total notices fell 1.8 percent from November and 26.3 percent from December 2009, RealtyTrac said.

Banks temporarily halted actions against borrowers severely behind on their payments after allegations of improper eviction surfaced in September.

However, most banks have since resumed foreclosures and the first quarter will likely bear that out, Sharga said.

Foreclosures, known as trustee sales in Arizona, ticked up slightly in the Valley to 49,808 from 47,992 in 2009. Last year's foreclosure number is artificially low because of Bank of America's two-month moratorium during October and November. Foreclosures in the region will be artificially high during the next few months as that lender catches up on its backlog. But most market watchers still expect the area's foreclosure activity to decline this year.

More than half of the country's 2010 foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan.

Nevada posted the highest foreclosure rate in 2010 for the fourth straight year, despite a 5 percent decline in activity from the year before.

Arizona and California also showed sharp December increases in the number of homes that banks reclaimed, at 52 percent and 47 percent, respectively. Arizona, along with Florida, finished the year at No. 2 and No. 3 for the highest foreclosure rates.

by Janna Herron Associated Press Jan. 14, 2011 12:00 AM





Foreclosures to hit peak in '11

Metro Phoenix bankruptcy filings are stable but still abundant

The economy might be recovering, but it's not happening fast enough for thousands of Arizonans.

Plagued by high debt, sparse job prospects and slumping real-estate prices, a record number of people throughout metro Phoenix and the state filed for bankruptcy protection last year - eclipsing even the spike in filings that coincided with changes to the law in 2005.

And while filing numbers have started to stabilize at elevated levels, experts are cautioning against any quick improvements.

"We're finding it's not letting up," said Walter E. "Pete" Moak of the Moak Law Firm in Chandler. "Incomes have gone down and interest rates on credit cards have gone up, so you can pretty much tell which way we're heading."

A record 31,207 households and businesses filed for bankruptcy protection in metro Phoenix last year, surpassing the high mark of 28,277 in 2005, when changes to the law made it less favorable to file, reported the U.S. Bankruptcy Court in Phoenix. The 2010 tally included another 2,358 filings in December.

Statewide, the 41,579 bankruptcies in 2010 topped the prior record of 39,204. The new record included 3,057 Arizona filings in December.

The problems afflicting consumer finances have continued to persist well after the recession's official end.

Moak said he still sees a lot of people struggling with credit-card debt, often relying on their cards to meet living expenses but eventually hitting their limits.

Job losses and lower incomes are other problems that can make it difficult to dig out of a hole.

"I see a lot of people who are distressed who don't know what else to do," said Valeri A. James, a consultant and consumer advocate at Simple Solutions Credit Consulting/Training in Gilbert. "They think they must either pay it off or file for bankruptcy because that's what they hear on TV."

Alternatives to filing, she said, include bargaining to lower the principal amount of a debt, negotiating for reduced interest rates, enlisting the help of credit-counseling services and perhaps borrowing from family members.

Despite the records set in 2010, the recent trend has been one of stabilization, albeit at high levels.

Valley filings actually have dropped in eight of the past nine months since hitting a recent peak of 3,063 in March.

The December total was up just 1 percent from December 2009 - the smallest year-over-year increase since before the recession began.

A moderating trend also has been apparent on the national scene.

Consumer bankruptcies rose 9 percent in 2010 to 1.53 million, reported the American Bankruptcy Institute and the National Bankruptcy Research Center. But that was below the 1.6 million filings the institute had predicted. The December tally of 118,146 filings was up 3 percent from November and 4 percent from December 2009.

by Russ Wiles The Arizona Republic Jan. 12, 2011 12:00 AM





Metro Phoenix bankruptcy filings are stable but still abundant

PulteGroup to shutter Phoenix-area manufacturing facility

The nation's largest homebuilder, PulteGroup Inc., is phasing out a manufacturing facility in the West Valley that ultimately will result in the loss of 280 jobs.

Pulte Building Systems LLC is a Tolleson-based subsidiary of the publicly traded homebuilder that prefabricates and installs certain wood products used in home construction.

PulteGroup, based in Bloomfield Hills, Mich., has begun a gradual phase-out of the manufacturing operation.

The West Valley facility will close in August, said Jacque Petroulakis, a local spokeswoman for PulteGroup, which builds Phoenix-area homes under three brands: Pulte Homes, Centex Homes and the Communities of Del Webb.

Employees have been aware of the phase-out since October, Petroulakis said, although few layoffs have yet occurred.

"These changes are unfortunate and never easy," she said. "Meanwhile, it was important for us to communicate the news to employees as soon as possible."

Pulte Building Systems was created in 2003 to help boost homebuilding productivity in the Valley.

For the past eight years, the facility's manufacturing staff has been producing and installing engineered wood products such as doorframes, window frames, moldings and trusses.

There are about 50 employees on the manufacturing side and an additional 230 staffers involved in delivering the products to home sites and installing them, Petroulakis said.

With far fewer new homes being built in the Phoenix area, PulteGroup no longer could justify keeping the small Arizona-based subsidiary in business, she said.

The builder will return to using outside contractors to produce and install its engineered wood products as it had done before the housing boom.

According to local housing analysts, 2010 was a lean year in terms of new-home sales, forcing homebuilders to scale way back on their operations.

There were 5,280 new-home sales in Maricopa County during the first nine months of 2010, compared with 19,450 new-home sales during the same period in 2007, according to data from the realty-studies department at Arizona State University's W.P. Carey School of Business.

Petroulakis said the shutdown of Pulte Building Systems is part of her company's strategy to survive the slump.

"Ultimately, this change is necessary to support the company's return to profitability," she said, adding that existing and new customers can continue to expect quality service from the company.

by J. Craig Anderson The Arizona Republic Jan. 12, 2011 12:00 AM





PulteGroup to shutter Phoenix-area manufacturing facility

Saturday, January 15, 2011

NAHB: Housing starts to grow 21% in 2011 « HousingWire

Housing will see gradual improvements this year, establishing momentum for stronger gains in 2012, said economists at the National Association of Home Builders International Builders’ Show in Orlando this week.

“This year’s spring selling season will be better than last year’s,” said NAHB Chief Economist David Crowe, with job growth providing a stronger stimulus in the housing market than last year’s federal homebuyer tax credit.

Crowe forecasted 575,000 single-family home starts in 2011, a 21% climb over an estimated 475,000 units started in 2010, which in turn showed a 7% gain from the 442,000 homes started in 2009.

He attributed the brighter forecast to gradual improvements expected in the economy and jobs market.

Multifamily, which has seen the bottom of the market, is poised to profit from a disproportionate number of Gen Y’ers moving into the housing market. Multifamily starts will rise 16% this year to 133,000 units, with a predicted 53% increase in 2012 to 203,000 units, according to the NAHB forecast.

Builders’ access to credit remains the fragile component of the NAHB forecast, Crowe said. So far, small builders have experienced extreme difficulty in obtaining financing. Rectifying the situation as soon as possible is the top priority of the association.

New-home sales, Crowe projected, “will struggle” but begin following employment gains, reaching 405,000 for the year, up from an estimate of about 320,000 for 2010.

The housing recovery will start slowly this year, he said, because it will be driven by the relatively low housing-production Plains states, with Texas the most powerful of the bunch. Traditional bulwarks such as California and Florida will lag in the recovery.

Freddie Mac Chief Economist Frank Nothaft said that housing affordability and demographic trends will help support growing housing demand.

Citing research from the Harvard Joint Center for Housing Studies, Nothaft said that households should be growing at an average annual rate of 1.2 million to 1.5 million over the next five to 10 years, suggesting the need for a sharp increase in housing production; half of the 500,000 to 600,000 starts of the past two years were needed just to replace the number of homes being removed from the housing stock.

Nothaft said supply overhangs will persist in some important large markets, but expects the housing price slump to bottom out by the middle of this year.

“Potential buyers who have resources to buy but want to buy at the bottom are likely to start coming into the market in the springtime,” he said.

Fixed-rate mortgages will move up from their current 4.75% to the 5.75% range by the end of this year, he forecasted. This will push total single-family mortgage originations down about 30% below the 2010 level as refinancings fall sharply with rising mortgage rates.

by Kerry Curry HousingWire January 14, 2011





NAHB: Housing starts to grow 21% in 2011 « HousingWire

Builders Brace for Obama’s Plans for Housing Subsidy - Developments - WSJ

Housing economists and lobbyists will be listening closely to President Obama’s State of the Union address later this month.

Specifically, they want to hear his plans for the future of the mortgage interest deduction. A deficit commission had proposed reducing the deduction to 12% - and only for mortgageholders’ primary home - but did not get the votes necessary to proceed. Still, the idea alone ruffled the already-shaky housing sector-and they’re bracing themselves for a fight.

“It would not surprise me to see at least a hearing process,” said J.P. Delmore, the federal legislative director of the National Association of Home Builders, which is holding its annual convention here this week. “Changing it into a 12% nonrefundable tax credit for a couple today would be a significant cut,” he said. “The mortgage interest deduction is worth 25 cents on the dollar to them.” That, he said, could be result in a further depreciation of prices and a deterrant to buyers on the fence.




Builders Brace for Obama’s Plans for Housing Subsidy - Developments - WSJ

When Will Housing Recover? UBS Makes 10 Predictions for 2010 - Developments - WSJ

Housing will gradually begin to recover in the second half of this year, David Goldberg, UBS’ home-building analyst, writes in a client note today. That assertion comes with 10 predictions for the year. (We’ll be happy to check back in 2011 and see how he did.)

  1. “Fundamentals will remain ‘choppy’ in the first half of the year, with conflicting data points making it difficult to ascertain whether we’ve actually reached the trough in housing.” We can’t argue with this one: Data points have turned into a roller coaster.
  2. “Headline risk, primarily driven by the government’s efforts to extract itself from the mortgage market, will drive the homebuilding stocks down 15% or more from current levels.” Mr. Goldberg continues: “With the longer term path for fundamentals offering limited clarity, we expect the homebuilding stocks to remain quite volatile and extremely sensitive to news flow.” We don’t need to remind investors how far they’ve already fallen from peak levels — or how they bounce around day-to-day!
  3. “The previous prediction notwithstanding, the government is going to do everything in its power to protect home prices.” Mr. Goldberg says: “In the end, we believe that concerns about higher rates and declining mortgage market liquidity won’t amount to much. In our opinion, the government has continually made it clear that it is working to limit further home price declines given the serious ramifications these declines would have for both consumers and lenders.” Read: Housing is too big to fail.
  4. “Although we forecast that as many as 7 million foreclosures are likely to occur over the next several years, we believe the pace at which these homes will come to the market will be consistent with current levels. As such, the concerns around the negative impacts of rising inventory levels are overdone.”
  5. “An improvement in unemployment is the single most important predictor for the longer term health of the housing market—only by focusing on this variable can we truly understand the timing for a recovery.” Yes, but when will jobs improve? Mr. Goldberg writes that UBS expects payrolls will start to recover in the first quarter, followed by a sharp rise in 2Q. Much of this will be driven by the hiring of temp workers, labeled a key forward indicator.
  6. “An improving jobs picture will drive greater price stability and better demand. That said, given the level of excess inventory, the pace of price appreciation will be below trend for some time.” So buy to live, not to flip for a quick buck.
  7. “The builders will see sequential improvements in their quarterly results.” They almost have to, given how the sector’s crash left them battered.
  8. “Given the limited amount of high quality, finished lots coming to market, we expect the builders to increasingly consider purchasing undeveloped parcels, which represent a greater value. This trend will be magnified if conditions start to accelerate more meaningfully in the near term as builders look to rebuild their operations over time.”
  9. “Although residential construction lending standards might loosen in 2010, liquidity will be insufficient to drive starts towards current consensus estimates.” Mr. Goldberg writes that lenders are reluctant to commit new capital to residential construction. Consensus for 800,000 single- and multi-family starts is “too aggressive,” he writes, putting the figure at between 700,000 and 720,000.
  10. “The longer term outlook for housing will increasingly dominate investors focus toward the end of 2010.” Does this mean even more obsessing over daily, weekly and monthly data? Perish the thought!

Readers, what do you think? Do you agree with Mr. Goldberg?




When Will Housing Recover? UBS Makes 10 Predictions for 2010 - Developments - WSJ

Tuesday, January 11, 2011

Auction house REDC rebranding as Auction.com « HousingWire


One the biggest auction houses in the nation is getting a makeover. Real Estate Disposition, more commonly known as REDC, is rebranding itself as Auction.com, CEO Jeff Frieden told HousingWire Tuesday.

The rebrand spawned from a new initiative to develop the auction house's online platform in conjunction with the ever-growing digital revolution.

"We believe so much in this online revolution and platform that in February 2009, we purchased the domain Auction.com, for $1.7 million, and have rebranded the company," Frieden said.

In 2007, Auction.com began offering online bidding as a compliment to its live ballroom auctions, although a very small percentage of assets actually sold online. Today, every auction held in person is also available to online bidders and more than 50% of sales are occurring online.

In 2010, the firm auctioned off 35,000 residential and commercial assets, and commercial notes totaling $1.7 billion. Auction.com said all its commercial properties and notes sold online — 1,800 assets for $800 million. Of the residential assets, half were sold online — 17,500 assets for $850 million.

"It took two years to build our existing online platform because of our stringent regulations to recreate the live auction experience for our bidders," Frieden said. "We have taken our 20-plus years of expertise as real estate auctioneers and have translated the live auction experience into our best-of-class online platform."

REDC plans to officially announce its rebranding sometime in the next week or so.

by Christine Ricciardi HousingWire January 11, 2011



Auction house REDC rebranding as Auction.com « HousingWire

Sunday, January 9, 2011

Market Recap - Week Ending January 07, 2011

The volatility in mortgage rates continued during the first week of the year. Prior to Friday's Employment report, nearly all the economic data was stronger than expected, which was negative for mortgage rates. Rates improved after the Employment data, though, and ended the week nearly unchanged.

Over the last two months of 2010, investors began to focus on a trend toward stronger economic growth, which helped push mortgage rates higher over that period. Nearly every economic report released this week showed greater than expected improvement from last month, including Services, Manufacturing, and Construction. Stronger economic growth and job creation is positive for home sales, but it also results in higher inflation, which leads to higher mortgage rates.

The condition of the labor market is among the most important economic data every month, and this week there was some additional suspense. On Wednesday, ADP, a private payrolls firm, released its forecast for private sector job growth in December, and it was for an increase of an enormous 300K jobs. The ADP forecast has always been considered an imprecise labor market predictor, but the sheer magnitude of the ADP forecast caused many investors to increase their expectations for the government's monthly Employment report. Friday's data showed that the economy added 103K jobs in December, and revisions to prior months added an additional 70K jobs. The combined total of 173K jobs was close to the original consensus estimate, but was below the number that some investors expected after the ADP forecast, and mortgage rates improved after the news. Another big surprise came from a drop in the Unemployment Rate to 9.4% from 9.8% in November, far below the consensus forecast of 9.7%, and the lowest level in 19 months. Economists suggest that seasonal factors may have played some role in the large decline in the Unemployment Rate, so next month's results will be highly anticipated.

The most significant economic data next week will be the monthly inflation reports. The Producer Price Index (PPI) focuses on the increase in prices of "intermediate" goods used by companies to produce finished products and will come out on Thursday. The Consumer Price Index (CPI), the most closely watched monthly inflation report, will come out on Friday. CPI looks at the price change for those finished goods which are sold to consumers. In addition, Retail Sales, an important indicator of economic growth, will be released on Friday. Retail Sales account for about 70% of economic activity. Industrial Production, another important indicator of economic growth, is also scheduled for Friday. The Fed's Beige Book, the Trade Balance, Import Prices, and Consumer Sentiment will round out the week. There will be Treasury auctions on Tuesday, Wednesday, and Thursday.



Market Recap - Week Ending January 07, 2011

Reuters: Business News

National Commercial Real Estate News From CoStar Group

Latest stock market news from Wall Street - CNNMoney.com

Archive

Recent Comments