Doors Close for Real Estate Speculators

Investors are pulling out of the real estate market in the Washington, D.C. metropolitan area, dampening home sales, especially of new condominiums, which fell 43% during the first quarter of 2006 compared to the same period last year. “We think the softness of the market is largely due to the pulling out of investors,” said Gopal Ahluwalia, staff vice president for research at NAHB. “They have not pulled back, they are cancelling purchases.” Robert Toll, chairman and chief executive of Toll Brothers, said that the Washington market was the hardest-hit in the nation by investors who bought properties intending to flip them and have now put the homes up for sale. “We can feel the impact of speculative play coming back to the market,” he said. Delta Associates, a real estate research firm in Alexandria, Va., said that there are almost 26,000 new condos being marketed locally now, but only about 2,000 new condos were sold in the first quarter, down from 3,520 in the same period of last year. And listings of mostly previously owned properties by the Metropolitan Regional Information Systems showed about 5,500 condos and co-ops for sale in March in Washington and its close-in suburbs, up from 1,400 in March of 2005. (www.washingtonpost.com)
Washington Post (4/22/06); Kirstin Downey

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The Long and Grinding Road; The Rat Race Is Turning Into a Marathon — 'Extreme Commuters'

“Extreme commuters” who travel more than 90 minutes each way to and from work are the fastest-growing group of commuters, according to the U.S. Census Bureau, which counts more than 3.4 million commuters in that category, double the number of 1990. And nearly 10 million people now drive more than an hour to work, up 50% from 1990, a trend that is growing because more people than ever are willing to trade time in their car for the big house and big yard they can’t afford at a closer-in location. Today’s average commute takes 25 minutes, up 18% from two decades ago. In California, real estate agents call the phenomenon “driving 'til you qualify.” In places like Southern California, each exit along the interstate can reduce housing prices by tens of thousands of dollars, the reason why Chris Neeley, a 43-year-old resident of Lancaster, drives 80 miles to work in Los Angeles. Last year he moved his family of five into a $400,000 3,000-square-foot home that is twice the size of his former home closer to the city. He now spends three to six hours a day on the road. “I love being out in the middle of nowhere,” he says, “and seeing no people around.” (www.newsweek.com)
Newsweek (5/1/06); Keith Naughton, with Hilary Shenfeld, Raina Kelley, Nadine Joseph and Jennifer Ordonez

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Builders Fret Over Immigrant Debate; Construction Would Halt Under Stricter Laws, the Industry Warns

Facing serious labor shortages from the housing boom and Hurricane Katrina rebuilding efforts, the residential construction industry has become increasingly reliant upon the immigrant workforce. More than one-quarter of workers on overall construction jobs are immigrants, according to government statistics, and on a typical day 117,600 mostly immigrant workers around the country either work as day laborers or are looking for such work, according to a recent survey. “The immigrant workforce is still keeping the housing market afloat to some extent,” said Jerry Howard, chief executive of NAHB. Immigrants are taking on dangerous and grueling work often for less pay than native-born Americans would demand and in many instances are performing jobs that native-borns won’t do. Economists and construction workers say that new housing would cost much more and take longer to build without these workers. For example, a recent study found that the absence of Hispanic workers would have cost North Carolina up to $10 billion in lost construction-related revenue in 2004, including up to 27,000 homes that would not have been built. (www.dallasnews.com)
Dallas Morning News (4/23/06); Katherine Yung

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Nation’s Flood Insurance Plan Faces Overhaul; Premiums Will See Hefty Increases

Looking at claims from Hurricanes Katrina and Rita, which will cost the National Flood Insurance Program almost as much as all the other floods since the program began decades ago, Congress is debating a series of changes, including jacking up the premium as much as 15% a year until the program is back on solid ground. Among major flaws plaguing the program, property owners pay less in insurance than the claims the programs pays out, some properties are repeatedly flooded and the program covers vacation homes that are often build along the ocean, according to various analysts, who also say that the insurance program’s financial outlook is dire because going on half of the $2.2 billion collected in premiums each year is used to pay claims. NAHB President David Pressly told the Senate Banking Committee that reforms should not represent an overreaction to the unusual circumstances of last year’s exceptionally powerful Gulf Coast storms. He said that his association would accept a “slight” increase in the premium rates but urged “careful study” before Congress expands the rules on which properties must carry flood insurance. (www.fortwayne.com)
Fort Wayne Journal Gazette (4/23/06); Sylvia A. Smith

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Builders: Energy Use Becoming Selling Point

A growing number of builders in the Ft. Worth, Texas area are stepping up the energy efficiency of their homes as a selling point, with several builders meeting or exceeding Energy Star standards for tighter construction, temperature-resistant windows and better insulation. The builders are making the homes look virtually identical to their less-efficient models in the same subdivisions. “You don’t have to go weird to go green,” said Jennifer Walsh of the Green Building Initiative, a home-building group supported by materials manufacturers and building associations with about 5,700 members a little more than a year after it was created. “We’re getting more building programs around the country,” said Calli Schmidt, director of environmental communications for NAHB. “We’re pretty close to a tipping point.” Home Depot said it increased the number of green building products on its shelves by 43% last year. Those products include insulation made from recycled materials, compact fluorescent light bulbs, flooring made from renewable materials such as bamboo and solar landscaping lights. (www.star-telegram.com)
Fort Worth Star-Telegram (4/23/06); Andrea Jares

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Condo Conversions Still Abound in Las Vegas

Real estate investor Louis Birdman of Florida-based SunVest Communities is bullish on condominium conversions in Las Vegas, even as the housing market generally cools, because escalating land and construction costs in the area have deterred developers from building new apartments. His company has sold 1,500 condos so far this year in Florida, Arizona and Nevada, including 400-500 units in Las Vegas. Condo conversions in the city were triggered by housing price appreciation of as much as 50% in 2004 and a shortage of affordable homes available to the thousands of new residents relocating there every month, according to Randall Friend, co-founder and principal of Anaheim, Calif.-based Eagle Real Estate Group. “I think condo conversions will continue to be a more feasible option for people looking to buy,” said Michelle Johnson, sales director for the Coldwell Banker Condo Store in Las Vegas. “As opposed to the higher priced high-rises, and with the median price for all condos continuing to rise, the value provided by conversions makes them more palatable for a lot of buyers.”  (www.reviewjournal.com)
Las Vegas Review-Journal (4/22/06); Hubble Smith

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