In Times Like This, Only the Freshest Comps Will Do
In soft and declining housing markets, lenders are making a big deal of “comps," the comparable sales of properties used as benchmarks in home real estate appraisals. Some sellers are forced to renegotiate lower prices with buyers, even after they have a signed contract. Rather than accepting sales of similar properties that closed as much as six to 12 months ago, lenders and mortgage investors are demanding that appraisers include only the freshest comps, ideally those closed within the previous 90 days, to support their valuations. In Richmond, appraiser Perry Turner of P.E. Turner & Co. said his firm has seen numerous cases where using newly mandated 90-day or more recent comps, as opposed to those six months or older, has contributed to valuations lower than the price on the sales contract. Turner said that in 95% of those cases, the listing and selling agents have gotten together and renegotiated the contract rather than lose the deal. (www.washingtonpost.com)
Washington Post (11/8/08); Kenneth R. Harney
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Energy Efficiency Drives Home Building
First came the push for fuel-efficient cars. Are fuel-efficient houses next? As builders look for ways to move homes in a lousy market, they’re increasingly taking their cue from automakers and turning toward energy efficiency as a selling tool. In Atlanta, builders are pushing what the head of the Greater Atlanta Home Builders Association calls “high-performance homes” that sip water and electricity like a Toyota Prius might sip gas. Just like with car buyers, home buyers “don’t want to feel like they’re getting a house that’s like yesterday’s SUV,” said Rick Andreen, president of Shea Homes’ Trilogy division, which sells homes in Deland, Fla. as well as Arizona, California and Washington. “They want to feel like they’re getting a leading-edge, efficient product.” Some builders are teaming up with energy companies for marketing help and added credibility. In Florida, for instance, Florida Power & Light Co.’s “BuildSmart” program certifies builders whose homes are constructed with a higher standard of energy efficiency. “BuildSmart” homes that come with features such as sealed air ducts, high-efficiency air conditioners and upgraded insulation can save up to 30% on monthly energy bills, FPL estimates. According to the U.S. Energy Department, the average U.S. family spends about $1,500 a year on energy costs. The department’s Energy Information Administration predicts home heating costs will rise by 15% nationally this winter. Parts of the South that rely on natural gas could see heating bills rise by 26%. (www.ajc.com)
Atlanta Journal-Constitution (11/9/08); Bob Keefe
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Builders Making No Big Plans for 2009
The year 2008 has not been a good one for home builders. Unfortunately, it is not at all clear that 2009 will be any better. There are too many variables, too many uncertainties tied to unemployment, the credit markets, the rising number of foreclosures and the government's bailout plans. Builders large and small are just too unsure of their businesses — and the overall economy — to embrace Daniel Burnham's motto of "make no little plans." The Ryland Group, a national builder that has developments in a dozen Chicago-area communities, acknowledged last month that it was having discussions about whether it made more sense to just pull out of some markets rather than cut prices more. Buyers backed out of almost 40% of sales contracts during the last quarter. Meanwhile, Pulte Homes Inc., which has developments in communities from Lake Zurich to Yorkville, said last month the housing market's bottom "may not come for some time." It told Wall Street analysts it was looking to amend some of its credit agreements with banks. Local firms are experiencing the same difficulties. Montalbano Homes, which opened six new Chicago-area developments in the fourth quarter of 2007, has no new projects planned for next year. (www.chicagotribune.com)
Chicago Tribune (11/7/08); Mary Ellen Podmolik
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International Investment in American Real Estate Slows
With the U.S. property market in turmoil, real estate agents around the country are increasing their efforts to woo the Russian oligarchs, Korean industrialists and other international buyers who have been making news with splashy top-dollar purchases. ''They are the most aggressive buyers in the market right now,'' said Kevin McBride, an agent with Atlanta Fine Homes Sotheby's International in Atlanta. In international hubs like Atlanta, overseas clients now account for anywhere from 10% to 30% of sales, industry experts say. Immobel, a company based in Warsaw that specializes in translating online real estate listings into 13 languages, has seen the number of American agents using its services jump by 30% in the last year, said Janet Choynowski, the company's chief executive. Agents are ''really eager to reach out to buyers proactively by any means they can,'' Choynowski said. But even before the financial meltdown of the last few weeks, there was growing concern that the flow of international buyers into the United States was slowing. A study by the National Association of Realtors® found the number of agents who sold a home to an international buyer actually decreased in the last year, from 18% to 13.3%. And the dollar has strengthened in the last six months, diminishing the so-called ''currency exchange discount'' that helped make American property a bargain for many foreign buyers. The euro was worth $1.60 in July; it has been about $1.30 recently. ''The dollar has gotten stronger and that makes the investment appeal that much weaker,'' said Melissa Cohn, president of Manhattan Mortgage Company. Cohn said the number of international buyers in New York City has dropped by 50% in the last six months. And with credit tight, the list of mortgage companies in the city willing to finance a purchase by a foreign resident has dropped from 10 to four, she said. (www.nytimes.com)
New York Times (11/6/08); Kevin Brass
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Green Building: Marketers Emphasize Energy Savings, Workmanship in Economic Downturn
With construction and mortgage lending reining in credit in virtually all segments of the housing economy, some industry experts say there is a chance the “green housing” niche market might buck economic headwinds as developers emphasize savings and workmanship. Findings released in October by NAHB and McGraw-Hill show that even in a down economy, 40% of builders said they had an easier time marketing homes that were built to green specifications, even if such houses cost more than properties built using conventional techniques. In particular, builders reported strong interest in energy efficiency measures, including airtight construction, additional insulation, high-efficiency plumbing fixtures and Energy Star appliances that require less electricity to operate. Moreover, the report found that a growing number of consumers chose such features because they associate green construction with “quality,” as opposed to “doing the right thing” for the environment. “This seems to indicate that green home buyers in today’s market are not just ‘green consumers’ but are also buying a green home for investment and performance reasons,” said the report, “The Green Builder: Navigating for Success in a Down Economy.” (www.greenwire.com)
Greenwire (10/28/08); Daniel Cusick
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From Housing Rubble, Sprouts Green Furniture
Every year in Cleveland, a thousand homes are demolished to make way for parking lots, businesses and new homes, or to remove blighted remnants of the foreclosure crisis. During the demolition process, most items such as concrete, brick and wood are recycled — crushed and ground for other uses. But that process still brings it one step closer to the landfill because that material cannot be recycled yet again. A Piece of Cleveland (APOC) takes the two-by-fours, framing lumber, doors and wooden floors of those wood-frame homes and buildings and gives them new life — as chairs, lamps, tables, bookcases, cutting boards, countertops and conference tables. The wood that held up houses for generations will have a new purpose that will last generations longer. Most of the housing stock in the Cleveland area is made of wood, providing a ready supply. APOC is now forming its own green deconstruction company — Urban Lumberjacks of Cleveland — to find its raw materials. “There’s no shortage of opportunities for getting materials,” says APOC partner Chris Kious. Even older suburbs are contacting APOC about deconstruction. It’s an opportunity built out of the devastation of foreclosures that have hit the Cleveland area. Communities want to remove magnets of blight. But it’s expensive to pay for the more exacting nature of deconstruction. Kious says the difference — on a typical single-family house — can be as extreme as $18,000 for deconstruction versus $8,000 for demolition. “We need to learn the best practices to bring those costs more in line so that cities can afford deconstruction as an alternative,” he says. (www.csmonitor.com)
Christian Science Monitor (10/29/08); Wendy A. Hoke
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Ann Arbor Area Builders Seek Edge in Troubled Housing Market
In a county where new-home demand is off 44% this year so far, one local Ann Arbor, Mich. builder recently added guaranteed buy-backs and expanded leasing to the list of options available to potential buyers. Jim Haeussler of Saline-based Peters Building Co., now says he’ll buy back any new home in the third year of occupancy for the original price. He said that offers some protection for buyers concerned about having to relocate for job-related reasons. He also provides “lease-to-own” and “lease-to-build” programs designed to allow residents to contribute to the eventual purchase of a spec or newly built home. Haeussler said he was looking for something to pull potential home buyers away from the existing home market and its decreasing prices, and his programs offer a way to try to stabilize the values of already-purchased homes in his subdivisions. “We want to protect our existing buyers,” he said. “If we offer discounts…it doesn’t help the people we sold to in the past.” At the same time, enticing people to buy new homes when existing ones are historically inexpensive is a challenge. “I think it’ll help us at this point. It at least gets people talking about us,” he said. Potential buyers who take advantage of the leasing options can put half of their rent payments toward the eventual purchase of the home, up to $13,500. (www.mlive.com)
Ann Arbor Business Review (10/27/08); Dan Meisler
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Unconventional Wisdom: In a Difficult Market, an Arizona Company Grows Its Management Portfolio
In today’s challenging economic times, Mark-Taylor Residential, an apartment management company based in Scottsdale, Ariz., has managed to grow its portfolio by 26% in terms of properties in 2008. It comes down to experience and results. Owners of apartment communities are turning to Mark-Taylor to maximize their investments by focusing on the basics, which is essential in such a topsy-turvy market. Since October of 2006, Mark-Taylor has added 16 communities to its portfolio, which currently includes 35 properties. Ten of the 16 joined in 2008. The multifamily firm now has more than 10,000 units under its management, a new record for the company, which was founded in 1990. Market conditions change but confident and thoughtful management does not,” said Dale Phillips, president of Mark-Taylor Residential. “We certainly feel the effects of increased competition with home rentals and failed condo conversions. However, we have nearly doubled our size in the past two years. Owners are calling us to ensure their investments are getting the best care possible. Our team is comprised of dedicated, hungry and talented people who want the best for the company, and it really comes through during the tough times.” (www.marketwatch.com)
MarketWatch (10/28/08)
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Home Libraries Elicit Comfort
In a 2007-08 NAHB survey, 13% of potential or recent home buyers described a library or den as essential in a new home, and another 50% called it desirable. Home builder Fred Zimpano thinks he knows why. In tough times, “I think there’s a comfort there,” he said. When the economy sours, Zumpano said, people lean toward the traditional and its soothing familiarity. A traditional library — heavy on wood paneling and beamed ceilings — had long been a dream for Mary Lohman, a Hudson, Ohio, resident with a love for literature and a burgeoning collection of books. So when she and her husband, ophthalmologist Larry Lohman, bought a home more than a year ago, they had a chance to make that dream a reality. With the help of an interior designer, the Lohmans transformed a 12-by-12-foot den into a library and office with an Old World feel. Mahogany bookshelves cover two walls, a window seat stretches in front of a recessed window and a couple of unmatched armchairs provide places to loll next to the fireplace. Glazed wood, antique accents and faux-aged, molded plaster give the room the appearance of antiquity, but it’s lighted for comfortable reading and wired for the computer equipment Mary Lohman needs for her ophthalmic consulting business. (www.projo.com)
Providence Journal (10/26/08); Mary Beth Breckenridge, Akron Beacon Journal
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Urban Developer Predicts Housing Shortage in Downtown San Diego by End of 2009
A housing shortage in the downtown San Diego real estate market is on the horizon in the near future, according to Douglas Wilson, whose company developed The Mark, a 244-unit condominium building in the downtown’s East Village. He said that a study his firm commissioned earlier this year of downtown San Diego condos forecasts the current number of completed units, as well as those now under construction, will be sold out by the end of 2009. Real estate economist Alan Nevin of MarketPointe Realty Advisers, who conducted the survey for Wilson, said there are no new condo buildings in pre-construction phases, meaning no new units will be coming on line in 2010 or 2011. In fact, there are only four for-sale condo projects currently under construction in the downtown area, and according to a more recent study, fewer than 550 new units to be sold in the seven condo projects completed in the past year. Wilson’s study said that a 1,500-square-foot condo in a newly completed building such as The Mark, selling today for the high $800,000s, would have to sell for as much as $1.1 million in a project starting construction today, given the steady rise in construction and financing costs in the San Diego real estate market. “As construction costs continue to rise, it is likely the next round of condominiums downtown would be far more expensive,” Nevin said. (www.prweb.com)
PR Web Newswire (10/14/08)
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