Slim Pickings for Real Estate Vultures
Home prices may have to fall further to create the bargains that are being sought by the vultures who have begun to circle the nation’s slowing real estate market. In the meantime, in Manhattan there are so many home buyers looking for bargains that they have been cancelling each other out. Any sign of price weakness attracts them, which is creating competition that keeps prices from decreasing. “Buyers may be negotiating more, but sellers are mostly holding firm,” said Pam Liebman, CEO of the Corcoran Group. “There’s been a drop in sales volume but not in prices.” Jonas Lee, a co-founder of Redbrick Partners, which makes a living by buying residential properties at the right price, says the general slowdown in the market nationally should create some buying opportunities for vultures in some once bubbly markets, such as South Florida, condos in the Washington, D.C. area and California’s Central Valley cities, including Bakersfield, Stockton and Modesto. Lee thinks San Francisco will hold up. “Everyone thinks it is overpriced,” he said. “But it’s a highly constrained market, difficult to build in and very wealthy.” (www.cnnmoney.com)
CNNMoney (8/7/06); Les Christie
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Are Housing Prices Headed for a Big Fall?
Economist Mark Zandi says that the concessions home sellers are making across the country, such as paying closing costs for the buyer, are obscuring a downward trend in prices. “So the effective price is lower and probably already falling, but you don’t see that in the market price,” said Zandi. “I’m expecting 5% to 10% peak-to-trough declines in a third to maybe half of the nation’s markets.” With a rise in mortgage interest rates, the volume of new and existing homes has plunged, and home builders are reporting a sharp drop in demand. Pulte Homes, the second largest U.S. home builder, reported a nearly 30% drop in orders, on top of a rise in unsold homes. Prices have remained relatively steady overall because home owners are holding out for their asking price and hoping to wait out the market downturn. “In the stock market you might get a quick adjustment and then things would start to recover,” said NAHB economist Michael Carliner. “I think the adjustment (in the housing market) is going to be a lengthy process, but it’s also going to be more of a flattening out than a real decline.” Zandi believes credit terms will continue to tighten and there will be rising credit problems with some home buyers. “That’s going to take some time,” said Zandi. “So the real weakness in pricing won’t be felt until this time next year.”
(www.msnbc.msn.com)MSNBC (8/3/06)
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Developers Nix or Delay Condo Projects as Sales Slow, Costs Rise
From coast to coast, developers are nixing or delaying condominium projects as home sales decelerate, construction costs soar and lenders start to balk at financing units that might not sell. Making matters worse, there is a glut of high-priced condos and too few people can afford them. Projects that have been cancelled include the $40 million Old City 205 in Philadelphia; the $600 million, 825-unit Aqua Blue that counted Michael Jackson as an investor and Ivana Trump’s $700 million, 945-unit tower, both in Las Vegas; and South Florida’s 1390 Brickell Bay and ICE in Miami, Fort Lauderdale’s the Waves Las Olas, and Promenate in Palm Beach County. WCI Communities Inc., a luxury home builder based in Bonita Springs, Fla., said in June that new orders for its high-rise condos fell 84% in the second quarter. The company this year is going forward with only three to five condo projects, down from as many as 15 to 17. Torto Wheaton Research in Boston reported in May that the volume of apartment-to-condo conversions plunged to $334 million from $1.65 billion a year earlier. The all-time high was $4 billion last September. (www.suntimes.com)
Chicago Sun Times (8/4/06); Deborah Yao, Associated Press
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Most Expensive Homes in the World 2006
For the second year running, Updown Court, a spanking-new palace in England, is at the top of the list of the world’s most expensive homes. It has 103 rooms, five swimming pools and a heated marble driveway. Built on speculation, it doesn’t yet have an owner in residence. Second on the list, Donald Trump’s massive oceanfront mansion in Palm Beach, Fla. lacks chandeliers and other details because nobody has lived there since Trump bought it two years ago and began refurbishing it for the potential new owner. The French Regency-style estate is in the final stages of a massive renovation and will come with a price tag of $125 million. The number of people in the world who can afford to buy these homes is quite limited. The most luxurious residences in the most desirable locations — the Hamptons, the Cote d’Azur, Australia’s Gold Coast or business centers like New York or London — share a shifting international pool of buyers who are increasingly crossing countries and oceans to get the homes they want. Among the 500 most expensive U.S. zip codes for homes are Beverly Hills, 90210, and New Vernon, N.J., 07976. California accounted for half of the zip codes on the list; New York took up 20% and the rest were primarily in Massachusetts, Connecticut, Arizona and Maryland. (www.forbes.com)
Forbes.com (7/25/06); Daniel Schuker and Cyrus Mossavar-Rahmani
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More Hispanics in Mid-Valley Pick a New Field: Construction
A growing number of Hispanic immigrants in Oregon are making the jump from employment in agriculture to construction. The number of Hispanics in the state working in construction jobs was 26,460 in 2002, the most recent data available from the U.S. Bureau of Labor Statistics, but that figure has almost certainly increased since then. “We could use many more,” said Larry Sharp, the vice president of Salem-based Sharp Cor, a home builder. “They’re the most consistent workers. They show up for work every day, work long hours, show a desire to learn, a desire to be productive, and they stay on the job.” NAHB said the number of foreign-born Hispanics in the construction industry has more than doubled in the past two decades. Nationwide, an estimated 2.4 million Hispanics work in construction, according to Labor Statistics. The bureau does not differentiate between Hispanic construction workers who are U.S.-born and those who are foreign-born. However, in Oregon it is estimated that almost eight out of 10 Hispanics are of Mexican descent. (www.statesmanjournal.com)
Salem Statesman Journal (8/5/06; Thelma Guerrero
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Wrecking Brawl
With a 77% jump in residential demolition permits last year to 352, Denver has appointed a task force to begin a review of the city’s zoning ordinance for the first time in 50 years. Neighborhood groups have been stopping teardowns through historic-preservation laws, but the process is time-consuming and costly. “We support the true intent of historic preservation, but we don’t support manipulating historic preservation just to prevent change in a community,” said J.J. Martinez, vice president of the Home Builders Association of Metro Denver. And Realtors® and home builders say teardowns are necessary urban renewal to rejuvenate the city and attract new residents, bolstering the tax base and keeping families in cities. NAHB estimates that about 75,000 houses are being razed each year and replaced with bigger homes. (www.denverpost.com)
Denver Post (8/7/06); Dave Curtin
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