Headlines – Week of January 22, 2012

January 27, 2012

Florida Ranked No. 5 nationally as ‘Best for Business’

According to the Tax Foundation’s State Business Tax Climate Index, Wyoming, Florida and Texas rank among the 10 best states for taxes on business, while companies in states like New York, New Jersey and California have a far less pleasant tax climate.

The Tax Foundation says it looks at dozens of state tax provisions to create the ranking –a single easy-to-use score that measures each state’s tax climate against every other state. While some similar studies focus on residents’ tax burden they pay each year, the Index focuses on how a tax system enhances or harms a state’s businesses.

The 10 best states in this year’s Index

1. Wyoming

2. South Dakota

3. Nevada

4. Alaska

5. Florida

6. New Hampshire

7. Washington

8. Montana

9. Texas

10. Utah

The 10 lowest ranked states in this year’s Index

41. Iowa

42. Maryland

43. Wisconsin

44. North Carolina

45. Minnesota

46. Rhode Island

47. Vermont

48. California

49. New York

50. New Jersey

A copy of the latest report is available HERE.

Population Projections and the Effect on Real Estate

Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) recently wrote a blog posting entitled Population Projections: United State and the World in which he tried to explain another reason why real estate prices have dropped in the recent past.

In the U.S., he ignores the claim that the large number of people retiring and an eventual dying off of the baby boomers will mean less housing demand in the future since the broader population are not just the baby boomers.

Every year about 3 million additional people live in the U.S. The projection by the Census further calls for more people for the foreseeable future with the total tally rising to 436 million by 2050 from the current total of 311 million people. Such growth assures steady housing demand.

While he admits it is hard for even a smart economist to understand what all this means, demand for real estate is automatically created.

Below is an interested chart from the posting on global population growth projections.

Click to Enlarge

Homeowners by Age

In another interesting blog posting, the NAR noted that in 2000 (a very normal housing year without a bubble), 67 percent of Americans lived as a homeowning household. The easy credit conditions that followed fueled home buying beyond normal and the ownership rate rose to 69 percent. The subsequent housing bust brought the ownership rate down to today’s 66 percent.

Click to Enlarge

Not all age groups had similar experiences throughout this cycle. The very young were mildly impacted. The very old did not on average feel any pain. The big impact was felt among people in their 30’s, who have much the same homeownership rate today as back in 2000, well before the bubble. It is also this group where there is potential for re-entering into the homeownership market in the near future.

International Buyers Help Miami Break All-time Sales Record in 2011

Accord to a recent article WORLD PROPERTY CHANNEL, Miami was the fastest rebounding residential property market in US in 2011.

According to the Miami Association of Realtors and the Southeast Florida Multiple Listing Service (SEFMLS), total 2011 sales, including both condominiums and single-family homes, in Miami-Dade County were 24,929, up four percent from the 24,025 in 2005 and 46 percent from 17,068 in 2010. Year-end closed sales of condominiums surged 54 percent, from 9,760 in 2010 to 15,009 in 2011. Total single-family home sales increased 36 percent from 7,308 in 2010 to 9,920 in 2011.

Unlike other markets throughout the U.S., Miami has recovered faster and stronger than expected and is poised for further growth and double-digit price appreciation in 2012.

International buyers and investors continue to play a major role in boosting market performance in Miami, according to the Miami Association of Realtors. Miami is the top area in the U.S. for international real estate buyers. These buyers from worldwide markets will continue to strengthen the Miami market long into the future.

The inventory of residential listings in Miami-Dade County dropped 39 percent from 24,278 in to 14,087 over the last year. Currently, there is a 4.9-month supply of condominium inventory and a 5.8-month supply of single-family homes in Miami-Dade County, reflecting a very healthy marketplace. Total housing inventory nationally fell 9.2 percent at the end of December.

Heightened demand for bank-owned (REO) properties and improved processing of short sales has resulted in rapid absorption of distressed listings and price appreciation. In December, 54 percent of all closed residential sales in Miami-Dade County were distressed, including REOs (bank-owned properties) and short sales, compared to 59 percent in December 2010 and 56 percent the previous month. Contrary to a year ago, there are now more short sales being transacted than REOs.

In Miami-Dade County, 63 percent of total closed sales in December were all-cash sales. Cash sales accounted for 42 percent of single-family and 77 percent of condominium closings. Nearly 90 percent of international buyers in Florida purchase properties all cash.

Nationally, all-cash sales accounted for 29 percent of transactions, reflecting the stronger presence of international buyers in the Miami real estate market.

Posted by Scott R. Lodde

Headlines – Week of January 15, 2012

January 22, 2012

U.S. Hotel Values to Increase 25% in 2012

According to a bullish report in the 2011 edition of the HVS U.S. Hotel Valuation Index, the U.S. lodging market experienced strong demand recovery throughout 2011. Strong occupancy growth continued in 2011, as well as some initial recovery in average rates.

The transaction side of the business has increased considerably from the downturn witnessed in 2009 as numerous high-profile assets have come to market, and fierce bidding is commonplace among active institutional buyers and investors.

Highlights of the report include:

• Value for a typical U.S. hotel is forecast to increase by 28% and 25% in 2011 and 2012, respectively

• U.S. hotel values are projected to exceed 2006 peak levels by 2012

• Relative to the hospitality industry, investors aggressively re-entered the hotel market in 2011, and continue to do so now

• Hotel transactions in 2011 have involved larger and more expensive properties.

• Hotel capitalization rates and other rates of return have fallen to one of the lowest points in history — this is due to low mortgage interest rates, the large amount of equity capital chasing very few acquisition opportunities and the fact that there is huge upside potential in future NOI

• Las Vegas and Tampa are expected to register the most growth from 2009 (low point) to 2015

• San Francisco, New York City, and Oahu are expected to be the most valuable markets for hotel owners on a per-room basis by 2015

• On an annual compounded basis from 1987 to 2015, Austin, Texas; New York City; and Miami; have/are expected to exhibit the strongest yearly increases

• Markets with low risk but high return on investments are San Diego, New Orleans, San Antonio, and Seattle, based on market volatility analysis

• San Francisco leads the race to hotel value recovery

Full Report

Florida soon could be the third most-populous state.

Florida had the nation’s third-largest population growth in the past year. The U.S. Census recently reported that Florida grew by 256,000 residents from April 2010 to July 2011.

Texas and California were the only states with larger growth.

The 10 States with the Largest Numeric Increase from April 1, 2010, to July 1, 2011

1. Texas 529,000

2. California 438,000

3. Florida 256,000

4. Georgia 128,000

5. North Carolina 121,000

6. Washington 105,000

7. Virginia 96,000

8. Arizona 90,000

9. Colorado 88,000

10. New York 87,000

Florida now has 19.1 million residents, making it the nation’s fourth most-populous state. The Sunshine State is within striking distance of surpassing New York in population. All it takes is an additional 400,000 residents.

If current growth trends continue, Florida could pass New York in population size in two years. New York added 87,000 people between April 2010 and July 2011.

Full Report

Fed issues housing market white paper

The Federal Reserve Board studied the U.S. housing market to analyze existing problems and has suggested possible solutions.

The white paper, “The U.S. Housing Market: Current Conditions and Policy Considerations,” calls for increased lending to creditworthy homebuyers, and more loan modifications, mortgage refinancings and short sales to reduce the rising inventory of foreclosed homes and help stabilize the housing industry.

The Fed white paper says the current problem with mortgage credit “reflects not only a correction of the unsound underwriting practices that emerged over the past decade, but also a more substantial shift in lenders’ … willingness to bear risk.” However, the Fed says that fixing the current real estate market must not simultaneously repeat the mistakes of the past.

The Fed paper also addresses converting foreclosed properties into affordable rentals. Many real estate groups, including the National Association of Realtors (NAR) support any change that makes it easier for owner-occupants and small investors to get financing, such as opening the Federal Housing Administration 203(k) program to investors.

The NAR is concerned about proposed bulk sales of distressed properties, which could lead to greater losses for taxpayers and a negative impact on housing values.

Full Report

Posted by Scott R. Lodde

Headlines – Week of January 8, 2012

January 20, 2012

Frommer Selects Sanibel Island as No. 1 Favorite Travel Destination

Sanibel Island is the number one travel destination in the world, according to travel guru Arthur Frommer, the mastermind behind Frommer’s guidebooks and budget travel magazine.

Frommer recently ranked his ten favorite places to visit and listed Sanibel first above destinations like Bali and Paris.

Sanibel Island residents are celebrating the top honors from such a respected travel writer.

The island has won many travel awards and high rankings, but this carries special weight because it is Frommer’s personal favorite.

On the web site Frommer noted, “Off the west coast of the Sunshine State, a few miles from Fort Myers, is this idyllic haven of white-sand beaches, condos whose seafront apartments are available for weekly rentals, excellent restaurants, good shopping and most important, the Ding Darling Nature Preserve, visited by thousands of birds of every species, who bask in the sun after diving for fish, and are one of the great natural sights of wildlife in America.”

The other destinations in the top 10 list include:

  1.  The Island of Bali, in Indonesia
  2.  Paris, France
  3.  St. John in the U. S. Virgin Islands
  4.  Cairo, Egypt
  5.  Bonaire, one of the “ABC” islands of the southern Caribbean
  6.  Yachats, the Oregon Coast
  7.  Chiang Rai, Thailand
  8.  New York City’s Greenwich Village (and its Off-Broadway theaters)
  9.  Kenya

Click HERE to see link to NBC2 news video.

Click HERE to see the full article and list.

Foreclosures Take Twice As Long To Process Now As They Did In 2007

A recent article in the The Huffington Post it is taking twice as long for foreclosures to work their way through the process of selling or auctioning than it did in 2007.

In 2007, the average foreclosure process in America, from beginning to end, took 253 days, or about eight months. Today, according to LPS Applied Analytics, the average foreclosure takes 674 days. That’s a year and ten months, almost triple what it was four years ago.

The foreclosure epidemic is one of the main factors inflicting damage on the housing market, which has still not made up for the losses it suffered a few years ago when the real estate bubble burst. In neighborhoods across the country, foreclosed or vacant properties are distorting their local markets, dragging down the values of the surrounding houses and wiping out vast sums in homeowner wealth.

The ubiquity of foreclosures, and their depressing effect on housing prices, has been cited as both a symptom and a cause of the country’s persistent unemployment problem. Many homeowners enter default after losing their jobs — and on the flip side, as the Wall Street Journal recently noted, plummeting home values tend to trap people where they are, making it harder for them to move to other towns where employment opportunities might be more plentiful.

The conundrum is expected to get worse in 2012. New foreclosures climbed by about 21 percent in the third quarter of 2011, with a total of almost 1.33 million foreclosures underway by the end of September.

Analysts believe the volume of foreclosures will grow much greater this year as banks begin re-submitting documents that had to be discounted in the wake of the robo-signing scandal, when some of the country’s biggest lenders were found to have approved reams of mortgage paperwork without reading it first.

Experts have offered a range of predictions for when the market might touch bottom and housing prices will begin to rise again. Even the most optimistic forecasts don’t see a recovery happening until late 2012 or early 2013.

Full Article

Ten U.S. Metros with Largest Drops in Real Estate Values

According to data from online real estate site Zillow, the top 10 U.S. metro areas with the greatest year-over-year median home-value declines, by percentage, from October 2010 to October 2011, were clustered in two regions.

The 10 metro areas, clumped in the Southeast and the far West, declined an average of 13.4 percent, from No. 1 Gainesville, Fla.’s 17.2 percent drop to an 11.8 percent decline for No. 10 Reno, Nev.

The chart-topping Gainesville, Fla., metro area’s 17.2 percent decline settled the area’s median home value to $111,300 in that time span.

Just 40 miles away, the Ocala, Fla., metro area, No. 7 on the top 10 list, showed a 12.7 percent decline in median home value, to $85,200. Nearby, Atlanta and Mobile, Ala., rounded out the Southeast metros on the list at No. 2 and No. 5, respectively.

The far West portion of the top 10 features six metros in a Pacific-leaning band that curves from No. 3 Medford, Ore., in the Northwest to No. 6 Tucson, Ariz., in the Southeast.

The Mobile, Ala., metro area, at No. 5, has the lowest median home value on the list at $78,200, and is counterbalanced by No. 9 Santa Barbara, Calif.’s highest median home value of $371,200. After Santa Barbara, Calif., the next highest median home value on the list takes a steep drop to No. 4 Chico, Calif., metro area’s $169,300.

U.S. metro areas clustered in the Southeast and in the far West experienced the greatest 2011 year-over-year declines in median home value, by percentage, according to Zillow data.

Full Article

Ten States in the U.S. with the Highest Foreclosure Rates

A related article from Realtor Magazine ranks the ten states in the U.S. with the highest foreclosure rates in 2011. Most of the results weren’t a surprise, as the states that began showing signs of heavy foreclosures years ago continue to lead the pack.

As whole, U.S. foreclosure filings actually dropped from 2.23 percent in 2010 to 1.4 percent in 2011.

Nevada came in first again with 6 percent of its homes in some state of foreclosure during 2011. One out of every 16 homes in Nevada received a foreclosure filing. While down somewhat, this puts Nevada at the top of the list for the fifth consecutive year.

Arizona came in second, with 4.14 percent of its homes receiving a foreclosure notice, or one out of every 15 homes. In third was California, at 3.19 percent.

Michigan, Florida, and a number of other states still have significant foreclosure percentages, but AZ, CA, and NV are ahead by a large gap. These states fell victim to “building out in the sand”. The warm climates attracted many second-home and vacation-home buyers with new construction, high value appreciation, and seemingly close proximity to large urban areas.

The full list of the top 10 state with the highest foreclosure rates:

1. Nevada: 6 percent (1 in 16 housing units received at least one foreclosure filing in 2011)

2. Arizona: 4.14 percent (or 1 in 24)

3. California: 3.19 percent (or 1 in 31)

4. Georgia: 2.71 percent (or 1 in 37)

5. Utah: 2.32 percent (or 1 in 43)

6. Michigan: 2.21 percent

7. Florida: 2.06 percent

8. Illinois: 1.95 percent

9. Colorado: 1.78 percent

10. Idaho: 1.77 percent”

Full Article

Posted by Scott R. Lodde

Headlines – Week of December 25, 2011

January 3, 2012

PKF U.S. Hotel Forecast: Recovery Better For Some, Not All

According to the recently released edition of Hotel Horizons®, PKF Hospitality Research (PKF-HR) forecasts that rooms revenue (RevPAR) for U.S. hotels will rise 8.1 percent in 2011, and increase another 6.1 percent in 2012.

PKF-HR is forecasting the continued recovery of the U.S. lodging industry. How well a hotel does in 2012, however, will vary depending upon the price of the room and where it is located.

Looking forward, PKF-HR sees familiar signs along the road to recovery. Owners and operators are now focused on more aggressive pricing policies, which in turn will translate into strong growth in hotel profits.

Recovery Disparities

PKF-HR is cautioning its clients that the national statistics may, or may not, apply to the type and location of hotels they own or operate. Looking deeper into the data, PKF-HR finds a continued bias favoring the future performance of hotels in the upper-tier segments of the industry.

Hotels operating in the upper-tier (luxury, upper-upscale, upscale) segments are all forecast to achieve occupancies above 70 percent in both 2012 and 2013, which will exceed their long-term average occupancy levels. Conversely, hotels in the lower-priced chain-scales will continue to achieve occupancy levels below their long-term average through 2013.

The unevenness of the recovery is also apparent when analyzing the performance of the 50 markets for which PKF-HR prepares Hotel Horizons® forecast reports. In 41 of the 50 markets, hotels are renting more guest rooms today than they ever have in their history. However, the distribution of demand recovery varies by segment. In 49 of the 50 markets, upper-tier hotels have passed their previous peak levels of accommodated demand, but lower-tier hotels have reached the same milestone in only 16 cities.

The Pricing Challenge

With national occupancy levels approaching their long-term average, and no meaningful new hotel supply additions in the foreseeable future, the pace of ADR growth is forecast to accelerate.  PKF-HR is projecting the ADR for all U.S. hotels to increase 4.7 percent in 2012 and another 5.3 percent in 2013. The long-term annual average for ADR growth is 2.8 percent.

PKF-HR is forecasting U.S. lodging demand to grow 2.0 percent in 2012. This is less than the annual growth rates observed in 2010 (+7.4 percent as reported by Smith Travel Research) and projected for 2011 (+4.8 percent).

Best Places to Invest in Real Estate

Money Magazine released the top cities to be a landlord, based on home prices, projected rent increase, and job growth. The top four cities to make its list are:

1. Houston
Projected rent increase in the next 3 years: 18%
Median home price: $174,000
Average monthly rent: $818

2. Grand Rapids
Projected rent increase in the next 3 years: 15%
Median home price: $128,000
Average monthly rent: $636

3. Rochester, N.Y.
Projected rent increase in the next 3 years: 25%
Median home price: $148,000
Average monthly rent: $785

4. Dallas
Projected rent increase in the next 3 years: 16%
Median home price: $166,000
Average monthly rent: $877

Full Article

 

Cities That Boast the ‘Best Value’

Kiplinger’s Personal Finance magazine recently ranked metro areas by best “value,” factoring in low cost of living, strong economies, and personal amenities.

The following are the six metro areas that topped its list, including each city’s unemployment rate, median household income, and cost-of-living index (the index is based on the national average of 100; cities with a score below 100 have a lower cost-of-living).

1. Omaha, Neb.
Unemployment rate: 4.6%
Cost-of-living index: 90.3
Median household income: $53,457

2. Charlotte, N.C.
Unemployment rate: 10.4%
Cost of living index: 93
Median household income: $53,168

3. Nashville, Tenn.
Unemployment rate: 8.5%
Cost of living index: 90.7
Median household income: $51,352

4. Colorado Springs, Colo.
Unemployment rate: 9.3%
Cost-of-living index: 92.0
Median household income: $56,576

5. Knoxville, Tenn.
Unemployment rate: 7.7%
Cost-of-living index: 89.7
Median household income: $45,727

6. Lexington, Ky.
Unemployment rate: 7.8%
Cost-of-living index: 89.1
Median household income: $48,158

Full Article

Posted by Scott R. Lodde

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