Real Estate Market Bulletin

How far to the bottom?

admin — Mon, 15 Mar 2010 19:36:37 +0000

A number of conflicting reports suggest that while the housing market recovery has yet to start, we are closer to the end of the carnage than the beginning.

Recent stats:

The Massachusetts Housing Partnership reported that a potential 65,000 or more homes could add to the state’s inventory of unsold homes due to pending foreclosures, or homes likely to be foreclosed on even after mortgage modifications. This possible 2nd foreclosure wave would add as many homes to the market as are typically sold in a given year, suggesting further price depression.
At the same time, the Fed’s March 3 Beige Book reports slow but steady strengthening of the economy, including stabilizing employment and rising wages, all of which will help reduce the chance of future foreclosures as those who still have their homes and jobs will be in a position to keep both.
Ultimately, home prices are the best gauge of market health. Those prices have been stopped declining in most parts of the US and are starting to rise in some, according to the Case Shiller index. See S&P PDF file with the current national home price rate of change.

Mortgage Rates Still Low, But Ready to Move Up?

admin — Wed, 09 Dec 2009 18:01:46 +0000

As of the writing of the post, mortgage rates are as low as 4.625% for 30 year convential mortgages (where the buyer has excellent credit of course). A few years ago, these rates would have stoked the real estate bubble further and invited criticism of easy money, but the fact that most lending activity continues to be primarily for refinancing (despite an overall increase of 8.5%) indicates that the housing market itself is still not healing.

The frozen housing market is one argument that rates will remain where they are (or possibly decline), however if other macroeconomic indicators continue to improve such as GDP or jobs (which has shown stabilization), expect the Federal Reserve to consider increasing the discount rate in early 2010, which will likely force mortgage rates up (by increasing the cost of borrowing to lenders).

We probably have at least 1 - 2 quarters before major movements in rates, but if you are considering purchasing a home or refinancing, start to plan it now!

Massachusetts Home Sales Rise Again

admin — Tue, 29 Sep 2009 20:22:01 +0000

According to the Warren Group, which compiles statistics on the housing market, Massachusetts home sales rose for the second straight month. August sales rose 2% year over year, following an 11% YOY increase in July.

Still, there’s quite a ways to go - the median sale price for homes in te Bay State remains 10% below last year’s median price, according to the press release.

Commercial Real Estate: On The Verge of Explosion?

admin — Mon, 20 Jul 2009 01:53:09 +0000

Carolyn Maloney, joint economic committee chairwoman of congress was quoted as she exited a committee hearing last week that commercial real estate is a “ticking time bomb”.Following that comment, multiple news sources including the AP, the Washington Post, Reuters, CNBC, and Bloomberg starting reporting bad news in the commercial real estate industry.

One question many people may be asking upon hearing this news or even just reading the headline is “How can commercial real estate be a ticking time bomb when we’re already more than two years into the sector’s decline?”Well the answer isn’t as simple as looking at the facts and figures. The June store sales data released several weeks ago shows that overall sales came in down between 4.3 and 5.1 percent.Also recently released was a report showing regional mall vacancies hitting 17-year highs.A real estate analysis company, Capital Analytics shows that commercial real estate worth about $108 billion is now defaulting.

The problem facing the industry right now is that much of the real estate needs to be refinanced in the next few years.That will prove to be extremely difficult in the current economy.In lieu of traditional sources of funding such as commercial banks, life insurance companies, etc. commercial real estate owners will need to start turning to government programs that have been put into place including the “TALF” and the “PPIP”.

The commercial real estate market is certainly a mess right now, and it’s safe to assume the defaults, foreclosures and delinquencies are only going to increase in the near future before anything gets better. It’ll be interesting to see the future of commercial real estate and whether or not the government will ultimately need to bail out yet another industry.

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Manhattan Apartment Prices Fall 19 Percent

admin — Mon, 06 Jul 2009 01:16:51 +0000

In time of economic hardship, Manhattan rarely reflects any sort of economic suffering. However with the most recent data released all that has changed. During the second quarter of the year, the average price for an apartment had fallen between 13 and 19 percent from a year ago.

Dottie Herman, president of Prudential Douglas Elliman a large real estate brokerage in New York said, “The city did a nosedive. There was virtually no business.”

On top of that, and not surprisingly the price of luxury apartments declined at an even steeper rate, between 17 and 26 percent. Luxury buyers disappeared when Wall Street jobs subsided and the so-called “jumbo loans” (anything totaling more than $730,000) disappeared along with the jobs.
Sales of new condos also suffered a similar fate. Fannie Mae, one of the largest mortgage lending houses enforced new rules requiring 75% of a new condo development to be outright sold before it would issue any mortgages to the potential condo buyers.

On a positive note sales started to show signs of recovery at the end of the second quarter, especially on the lower side of the market. This could be aided by the $8,000 federal tax rebate offered to new home buyers.

StreetEasy.com stated, “Sellers are beginning to adjust to the market. In the second quarter, the number of price cuts more than doubled from a year ago, with reductions averaging between 8 and 9 percent for condos and cooperatives.”

“It’s the beginnings of the new reality,” said Pamela Liebman, CEO of The Corcoran Group, “that 2007 and 2008 were not the norm, but the peak.” Time will naturally regulate the prices and adjust sellers to match buyers’ demands.

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New-Home Sales May Measure the Recession

admin — Mon, 29 Jun 2009 01:23:03 +0000

Since World War II the United States has never seen such a down market for the sales of new homes as we’ve seen in the past two years. This fact can be attributed to several things and can/has raised more questions about when to expect the current recession to end.

Will the houses built during the boom ever be sold? Have home builders kept up with the market in lowering their prices?

For the past thirty plus years existing home sales and new home sales have tended to fluctuate up and down by the same minimal percentage (as pictured in the chart). In past recessions sales of new homes have certainly been less successful however their levels have never reached what we’re currently seeing for as long as we’re currently seeing it.

Floyd Norris of the New York Times said, “At the peak of the housing boom in 2005, sales of both existing and new homes were running at twice the 1976 rate. This year, the sales rate for existing homes seems to have stabilized at about one-third higher than the 1976 rate. New-home sales also seem to have stabilized, but at about half the 1976 rate.”

Even worse than new home prices according to the graphs are the prices of existing homes, at one point this year the median price for existing homes was 29% off from the peak. Norris add, “Median home price figures need to be used with caution, since there is no way to know how the median home sold in one month compares, in terms of size and location, to the median home sold in a different month. But in past recessions, new-home prices have tended to be weaker than existing-home prices, the opposite of what has happened in this cycle.”

Time will only tell what happens to new homes and the prices of existing homes,

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Celebrities Have Real Estate Issues Too

admin — Mon, 22 Jun 2009 01:49:03 +0000

Just like the average American, celebrities are having financial issues often springing from their real estate or leading to the sale or foreclosure of their real estate. It shouldn’t really come as a surprise to anyone given the size and cost of celebrities’ homes these days. On top of the size and cost of celebs mansions, the current housing market is anything but thriving. Let’s take a look at a few current celebrities facing real estate hardships.

Case 1: Timothy Geithner. After reducing the price of his home to $1.575 million he was attempting to sell he finally resorted to renting his New York suburb mansion out for just $7,500 a month, surely not covering his $27,000 a year taxes and two loans covering the cost of the house.

Case 2: 50 Cent. After having his Farmington, CT house on the market for 2 years he gave up on selling the mansion. It had gone from selling originally at $18.5 million eventually creeping down to $14 million, and even at that price it couldn’t sell. It didn’t help that the house had been known for its legal issues stemming from an issue where 50 Cent had the house repaired for $6 million whereas it had been appraised at only $500,000. On top of that a real estate appraiser leaked to the Hartford Courant that the house isn’t worth a $1 over $5 million.

Case 3: Mel Gibson. Only a short drive away from Mr. Cent in Greenwich, CT Mel Gibson has been having problems selling his mansion (not to mention his divorce). The mansion, nicknamed “Old Mill Farm” had been originally put on the market for a price of $39 million. Even with its 15 bedrooms and 17 bathrooms it couldn’t fetch that price. So Gibson lowered the price to $29 million where it has been sitting for some time now.

Case 4: Elle McPherson. The British model took $2 million off her asking price for her 1850s Victorian house which has been on the market for almost 2 years now. The 6 bedroom home hasn’t attracted much attraction from potential buyers apparently.

It may console you to know that it’s just the average joe having real estate problems. Then again, it confirms the fact that the real estate market is pretty stagnant.

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Celebrity Real Estate

$150,000 in Real Estate Around the World

admin — Sun, 14 Jun 2009 22:52:12 +0000

The entire world has felt the pains of the current economic crisis that originated in the United States, however some countries have felt the effects more than other countries. In this brief article you can see there are certainly some real estate bargains to be had out there.

New Zealand: Foxton

Price: $125,500

Bedrooms: 4 Bathrooms: 2

Czech Republic: Prague

Price: $144,000

Bedrooms: 2 Bathrooms:1

Croatia: Istria

Price: $150,700

Bedrooms: 3 Bathrooms: 2

Portugal: Evora

Price: $150,500

Bedrooms: 2 Bathrooms: 1

South Africa: Jeffery’s Bay

Price: $152,500

Bedrooms: 5 Bathrooms: 3

Russia: Chrystye Prudy Area, Moscow

Price: $152,000

Bedrooms: 2 Bathrooms: 2

Argentina: Buenos Aires

Price: $149,000

Bedrooms: 2 Bathrooms: 1

So there you have it, all the real estate you could buy around the world with a mere $150,000. Read More

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International Real Estate

Most Expensive Real Estate Markets For 2009

admin — Mon, 08 Jun 2009 01:07:10 +0000

The only United States location to find its way onto the list of most expensive real estate markets for 2009 was New York City coming in at an average price per square meter of $14,989. It should come as no surprise that Monte Carlo comes in first place more than three times more expensive per square meter than New York City at $47,578.

London and Moscow come in at a close 2nd and 3rd. Both coming in at just above $20,000 per square meter for real estate. The price index was based off of a 120 sq. m. good condition high-end apartment in 110 cities around the world.

Most expensive property markets (based on 120 sq. m. apartment in city-centre )
RANK	COUNTRY	CITY/REGION	AVE PRICE (US$/sq. m.)
1	Monaco	Monte Carlo	47,578
2	Russia	Moscow	20,853
3	UK	London	20,756
4	Japan	Tokyo	17,998
5	Hong Kong	Hong Kong	16,125
6	USA	New York	14,898
7	France	Paris	12,122
8	Singapore	Singapore	9,701
9	Italy	Rome	9,166
10	India	Mumbai	9,163

As you can see from the table, several Asian cities have been on the rise in the past several years. Tokyo and Hong Kong came in 4th and 5th respectively overtaking Paris and Rome a phenomenon that has taken place only several times in the past half a decade.

For those who are bargain hunters, some of the cheapest real estate was detailed as well. The cheapest coming in at just $574 per square meter was found in Cairo, Egypt. In general the cheapest real estate was found in the Middle East, Asian and Latin America. It’s interesting to note that some of the cheapest real estate is found in Asia as well as some of the most expensive.

Least expensive property markets (based on 120 sq. m. apartment in city-centre)
RANK	COUNTRY	CITY/REGION	AVE PRICE (US$/sq. m.)
112	Egypt	Cairo	574
111	India	Bangalore	657
110	Chile	Concepción	669
109	Ecuador	Quito	820
108	China	Chengdu	999
107	Nicaragua	Managua	1,080
106	Indonesia	Jakarta	1,102
105	Jordan	Amman	1,150
104	Peru	Lima	1,154
103	Chile	Santiago	1,221

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Real Estate Internships on the Decline

admin — Mon, 01 Jun 2009 15:33:03 +0000

In the current market it should come as no surprise that paid and unpaid real estate internships are becoming harder and harder to find. Interns are typically viewed as expendable to companies and in the current economic downturn it seems only natural to cut back on hiring interns. But could this initiave hurt companies more than they know? Interns are often hired as full-time entry level employees upon graduation since they already know the philosophy, mission, and environment of the companies they interned for. However without this natural progression, companies will be hiring their new employees from a much bigger pool of potentially lesser qualified individuals.

College students in Texas attending Texas Christian University are finding it harder and harder to get their foot in the door in the Real Estate Market. Kelly Faerber, a senior majoring in TCU’s real estate market was lucky to get an internship with N3 Real Estate, saying ““I talked to a lot of companies and a lot of them said they are having to cut back, but I think students see how important it is to get the experience…I would much rather not get paid and get the experience than have to miss out on the opportunity.”

Glen Hahn, the CEO of Fort Worth-based Innovative Developers Inc. commented on the situation saying “We have offered an internship for several years, but what we’re seeing different this year is the number of activities that we have for an intern to do, we want the experience to be productive for that intern; be able to bring them in and show them the inner workings of a real estate development company and give them some job experience. But at the moment, our number of new projects has skinnied down a little bit, so it’s disappointing, but I don’t know that we’ll have an intern this year.”

Real Estate isn’t the only market where students are struggling to attain internships but it certainly is one of the hardest hit markets in this economy making it increasingly difficult for interns to get their foot in the door.