What Might Be Hurting Home Values
Growing numbers of appraisers and consumer groups think that low-balled value estimates on short sales and bank-owned foreclosures are artificially depressing property values. Their complaints focus on what are called “broker price opinions,” or BPOs, which substitute for appraisals. Unlike standard property valuations performed by licensed appraisers, which can cost hundreds of dollars, BPOs often cost $50 and are performed by real estate agents who may have minimal or no appraisal training and are subject to no regulatory oversight. BPOs have become a booming business as foreclosures and short sales have risen sharply. When banks that own foreclosed houses need to put values on them for resale, increasingly they order BPOs that can be delivered quickly at rock-bottom prices. Selling BPOs to value houses violates the law in 23 states, according to appraisal industry leaders. In other states, BPOs may not be prohibited, but critics say they may be far off the mark in accuracy, typically coming in below appraised value. When BPO-valued houses are listed at fire-sale prices, they pull down the values of other houses in the neighborhood because, under current lending industry underwriting guidelines, appraisers must consider recent listing prices as well as closed sale prices. (www.washingtonpost.com)
Washington Post (3/28/09); Kenneth R. Harney
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Signs of Life in the Housing Market
“Nine out of 10 lenders” have stopped making construction loans for projects with 100 or more units, according to developer David Barry, president of the Applied Companies in Hoboken, N.J. “But that leaves some that are lending money.” “A larger company, with a history,” like his, or the Roseland Property Company, another residential builder that has several projects under construction now, “can secure financing and begin work, and will be poised to take advantage of the next market cycle, at the start of it,” Barry said. His company’s development arm, called Ironstate, began work last fall on a 15-story rental tower in Jersey City, even as Wall Street, 10 minutes away by PATH train, had begun imploding. That structure has risen six floors at this point, and Ironstate is set to break ground on another one this spring, at its Shipyard complex in Hoboken. “We believe strongly in the fundamental health of the region,” said Barry, whose father, Joseph, founded his company almost 40 years ago. “Everyone thinks the world is literally coming to an end,” he added. “We try to remain conscious of the cycle and are poised to take advantage when the next one begins.” “It is a challenge bringing new buildings into a market like this, when the cycle is on the downside,” said Debra Tantleff, a vice president of Roseland, “but we are creating units at various price points that will be in place at the moment of the next uptick.” Both she and Barry said they expected some improvement in the economy and the housing market within the next six to 18 months. (www.nytimes.com)
New York Times 9(3/29/09); Antoinette Martin
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Early Numbers Indicate Columbus-Area Housing Market Is Thawing
Real estate professionals in the Columbus, Ohio area are hoping that interest rates below 5%, an $8,000 first-time home buyer tax credit and house prices that remain some of the lowest in years will begin to thaw the home buying iceberg after one of the toughest sales years in memory. Ashley Valentini, a loan underwriter with Synovus Mortgage Corp who typically handles between $60 million and $85 million in loans each year, said that in January she closed an all-time high of 78 loans worth $20 million. That compares to $40 million for all of 2008. Kristi Watkins, an agent with Coldwell Banker Kennon, Parker, Duncan & Key, calls 2008 “horrible” after closing only four home sales all year. What gives her hope this spring is that she already has sold four. And there are more shoppers out there. “It’s picking up,” Watkins said. “I guess it’s the interest rates. I think people are tired of waiting….We’re showing houses now, where we didn’t show as many last year.” (www.ledger-enquirer.com)
Columbus Ledger-Enquirer (3/30/09); Tony Adams
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Buyers Seek Smaller Homes
The lot that once housed the home of Roy Orbison’s widow is being transformed into a small subdivision of English Country-style homes. Although only two of the eight lots in the new Arundel Court neighborhood have sold, Castle Contractors owner Alan Looney said while the market may have slowed, the flow of potential buyers hasn’t. “Smart investors understand it is an incredible time to build a home due to lower material and labor costs, as well as very low interest rates,” Looney said. “Labor costs are really competitive right now. Lumber is at historic lows, hardwood flooring is lower, roofing has better prices. The suppliers have been willing to provide some price breaks, and that may be due to them getting some concessions from their manufacturer. Six months to a year from now, when home inventories are low, inflation will occur when people start to build and prices will go back up. I feel it really is by far the best time to build.” Built on relatively small lots, the homes average 4,000 square feet, and even though they are large, they are attracting potential buyers who are downsizing from larger homes and like the smaller floor plans, said a local Realtor®. (www.tennessean.com)
Tennessean (3/25/09); Angela Patterson
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Interest Grows in Home Remodeling
Low mortgage rates and falling construction costs are spurring some home owners to go ahead with long-delayed improvement projects. As a result, home remodelers in the Atlanta market are faring better than home builders who have failed in droves amid the housing market’s meltdown. “We’ve been pretty lucky,” said contractor Ed Turner, who is adding a family room and a second floor with two bedrooms and an office to the home of Ashley Lee. Turner said he has a handful of other projects going, including two investment properties he’s renovating and two he recently sold. The picture is still mixed, to be sure. Remodelers’ revenue has declined during the recession, and they’re facing stiff competition from home builders who have fled their industry. What’s more, the recession and depressed housing prices are making it difficult for some home owners to qualify for loans to bankroll their projects. “There is a lot of money in the stimulus package for remodeling,” said David Ellis, executive vice president of the Greater Atlanta Home Builders Association. Federal grants to weatherize older homes, mainly aimed at low-income elderly home owners, will jump from $200 million last year to $5 billion, Ellis said. The stimulus package also includes tax credits to encourage home owners to invest in “green work,” he said, such as installing energy-efficient windows. “There’s going to be a lot of opportunity,” he said. (www.ajc.com)
Atlanta Journal Constitution (3/22/09); Russell Grantham
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Wood Is Good
From the walls of Colonial log buildings to the floors of trendy urban lofts, wood has been at the heart of American residential life for centuries. “Nothing has ever replaced it,” says Rick Perrotte, owner of Perrotte Wood Refinishing in Lawrenceville, Pa. Whether it is in structural products, or in staircases and cabinetry, where fabricated products sometimes boast lower cost and more strength, wood maintains its popularity. It even shows up more frequently in window blinds and even countertops. “Wood is friendly, warm and clean,” says Chico Kadosh from Perfect Flooring in Squirrel Hill. He says some clients have no problem dealing with wood that goes to $40 a square foot when efficient alternatives are available at a quarter of that cost. In a structural sense, wood is overwhelmingly dominant, says Buddy Showalter, director of technical media for the American Forest & Paper Association. Wood frames make up 99.8% of all roofs, he says, and 89% of all interior walls. The latter figure is skewed a bit because of non-wood construction in Florida, where stucco is often used. Otherwise, Showalter says the figure would be about 95%. Anita Howard, communications director of the National Wood Flooring Association, says hardwood floors were installed in 10.5% of all new homes in 2007, down a bit from the amounts in the previous three to five years. (www.pittsburghlive.com)
Pittsburgh Tribune-Review (2/12/09); Bob Karlovits
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