January 8, 2013

Improving U.S. Housing Markets

In the latest sign of a housing recovery in U.S. housing markets, the number of metropolitan areas on the National Association of Home Builders/First American Improving Markets Index (IMI) rose for a fifth consecutive month to 242 in January for a net gain of 41, more than the number of improving markets one month earlier.

Florida’s improving markets in January include Cape Coral, Deltona, Jacksonville, Lakeland, Miami, Naples, North Port, Ocala, Orlando, Palm Bay, Panama City, Pensacola, Punta Gorda and Tallahassee.

Overall, five markets dropped off the list in January because at least one month showed at least a slight decline in market improvement. In Florida, Sebastian and Crestview lost their improving status.

242 out of 361 metros nationwide (67 percent) appear on that list, including representatives from almost every state in the country. The story is no longer about exceptions to the rule, but about the growing breadth of the housing recovery even as overly strict mortgage requirements hold back the pace of improvement.

For more information on the IMI click HERE

 

South Florida Foreclosure Filings Poised To Top 350,000 Since 2007

 

According to a new report from CondoVultures.com, a recent surge in foreclosure filings in 2012 pushed South Florida to the brink of surpassing the threshold of 350,000 notices of default being initiated since the real estate crash began in 2007.

Lenders filed nearly 14,700 foreclosure actions in the tricounty region stretching from Miami north to West Palm Beach in the fourth quarter of 2012, representing a 41 percent surge in filings on a year-over-year basis compared to the same October through December period in 2011.

For the year, lenders filed more than 50,300 notices of default in the 12 months of 2012 in Miami-Dade, Broward, and Palm Beach counties after filing less than 34,100 actions during the same January through December period in 2011.

Despite the spike in South Florida foreclosure actions, the 2012 total number of filings initiated in the region is down compared to the same 12-month period in previous years when more than 57,600 actions were filed in 2010 and nearly 98,300 actions were filed in 2009.

Many are blaming the administrative irregularities caused by “robo-signing”.  The problems caused during the repossession process first surfaced in late September 2010, creating a “foreclosure freeze” that prompted many lenders to slow the number of defaults being initiated against borrowers in South Florida between October and December 2010 compared to the same three-month period in 2009.

The slowdown in the foreclosure filing process continued throughout 2011.

In February 2012, the nation’s five largest mortgage servicers reached an agreement with the federal government and the attorneys general from 49 states to provide at least $25 billion in relief to borrowers.

The settlement agreement incentivizes the mortgage services to consider various options – including principal reductions, mortgage modifications, and short sales before filing to foreclose on borrowers who owe more than their residences are worth currently.

Posted by Scott R. Lodde

Headlines – Week of December 16, 2012

December 21, 2012

PKF: U.S. hotel market set to prosper through 2016

Another positive outlook for the hotel can this week when PKF Hospitality Research stated the U.S. lodging industry will see perpetual gains in demand, occupancy, ADR and RevPAR through 2016.

RevPAR for U.S. hotels is projected to grow at a compound annual average rate of 7.2% for the next four years … more than double the historical long-run average.

The report cautions, however, that the U.S. federal government’s ongoing “fiscal cliff” budget standoff is clouding what would otherwise be a sunny outlook for 2013.

Without falling off the fiscal cliff, the PKF believes RevPAR will increase by 6.0% in 2013.  However, if budget negotiations fail, it can be assumed that RevPAR growth will be well below that.  Under almost every economic scenario, 2014 is shaping up to be a year of strong gains in both occupancy and ADR.  

By year-end 2013, PKF-HR is forecasting the national occupancy rate to be 62.1%. While this is below the pre-recession peak of 63.1%, it does surpass the long-run average occupancy level of 61.9% per STR.

Much of the gains in ADR will be experienced by properties in the luxury, upper-upscale and upscale chain segments. Occupancy levels for these properties are projected to remain above 70% through 2016.

Roughly 85% of future RevPAR growth will be driven by increases in ADR.

PKF-HR is forecasting net operating income to grow at a compound annual rate of 10.0% through 2016.

Expectations High for Existing-Home Sales and Pricing

According to the National Association of Realtors (NAR), November, existing-home sales rose 5.9 percent from October to an annual rate of 5.04 million, the highest level since November 2009.

In addition, the median price of an existing-single family home rose to $180,600 in November, up 10.1 percent from November 2011.

In a related report from J.P. Morgan Chase & Co., the firm expects U.S. home prices to rise 3.4% in its base-case estimate and up to 9.7% in its most bullish scenario of economic growth.

Standard & Poor’s said it expects a 5% rise in 2013.

According to a monthly economic outlook released by Fannie Mae’s Economic & Strategic Research Group, despite lower expectations for the economy’s progress as a whole this quarter, home sale and price trends suggest housing finally represents “a tailwind to growth,”

Home prices have seen strengthening year-over-year gains over the last several months and prices are expected to end the year on a positive note for the first time in six years according to Fannie Mae economists.

They projected the median price of an existing home would rise 4.2 percent on an annual basis in 2012, to $173,000. They expected the median price of a new home to increase 4 percent, to $236,000. Fannie Mae is projecting that median prices of both new and existing homes will rise an additional 1.7 percent in 2013.

Existing-home sales, new-home sales and single-family housing starts are expected to see substantial increases from last year. Fannie Mae predicts each will rise 9.6 percent, 19.5 percent and 25.7 percent, respectively, in 2012 compared to 2011. They expect further improvement next year with increases of 6.4 percent, 21.9 percent and 22.4 percent, respectively.

Posted by Scott R. Lodde

Headlines – Week of December 9, 2012

December 13, 2012

STR Year-End 2012 Forecast for US Hotels

Smith Travel Research (STR) released its preliminary year-end data.  STR projects that the U.S. hotel industry will finish 2012 by posting strong performances in all major metrics.

Based on STR data through November, preliminary 2012 year-end results for the U.S. hotel industry include:

  • ·         Increases in supply (0.5 percent) and demand (2.8 percent);
  • ·         a 2.3-percent increase in occupancy to 61.3 percent;
  • ·         a 4.3-percent rise in average daily rate to US$106.17; and
  • ·         a 6.6-percent jump in revenue per available room to $65.08.

Record demand along with limited supply growth, has fueled the increases in the other measurement categories.

STR’s latest forecast was issued at its Hotel Data Conference in September and included a 0.5-percent increase in supply, a 2.6-percent increase in demand, a 2.1-percent increase in occupancy, a 4.4-percent increase in ADR and a 6.5-percent increase in RevPAR.

 

Homes Fuel Economy

Once considered a drag on growth, real estate has reversed course and is now a key economic driver at a time when other sectors are slowing.

Macroeconomic Advisers projects the economy will grow at a 1.4% annual rate in the fourth quarter, with housing contributing 0.4 percentage point. IHS Global Insight is projecting a 1% growth rate, with housing contributing 0.53 of a percentage point—the largest contribution since 2005.

Home prices rose 3.6% in September from a year ago, according to a recent S&P/Case-Shiller National Index. Prices are up 7% through the first nine months of 2012, which is the strongest rise since 2005 and puts prices on a trajectory to beat even the most optimistic forecasts from earlier this year. The gains also are broad-based, with the 20 cities tracked by the Case-Shiller index—except Chicago and New York—showing year-over-year gains.

Rising home values make homeowners feel better about their finances. A recent index of confidence by the Conference Board rose to 73.7 in November, the highest level since February 2008.

While rising prices now are driving the housing market forward, that couldn’t have happened without a painful cycle of losses. Lower prices and rock-bottom interest rates have boosted affordability. The average monthly mortgage payment on a median-price home in October, assuming a 10% down payment, fell to $720 at prevailing rates, down from nearly $1,270 at the end of 2005.

 

Highlights from the NAR 2012 Profile of Home Buyers and Sellers

The annual survey conducted by the NATIONAL ASSOCIATION OF REALTORS® of recent home buyers and sellers provides insight into detailed information about their experiences

Here you can find highlights from the latest report.

  • 39 percent of recent home buyers were first-time buyers, a slight rise from 2011, but closer to the historical norm of 40 percent.
  • 65 percent of recent home buyers were married couples—the highest share since 2001. Conversely there was the lowest share of single buyers since 2001.
  • For 52 percent of home buyers, the first step in the home-buying process was taken online.
  • The typical home buyer searched for 12 weeks and viewed 10 homes—a decline from 12 homes in prior year, which speaks to the tightened inventory in many areas.
  • 89 percent of buyers purchased their home through a real estate agent or broker, similar to last year’s report—a share that steadily increased from 69 percent in 2001.
  • 88 percent of sellers were assisted by a real estate agent when selling their home.
  • Only 9 percent of recent sellers sold via FSBO sale. Among FSBO sellers who did not know the buyer prior to the sale—20 percent sold via FSBO because the buyer directly contacted them.
  • Approximately two-thirds of home sellers only contacted one agent before selecting the one to assist with their home sale.

 

Posted by Scott R. Lodde

Headlines – Week of November 4, 2012

November 18, 2012

Single-Family Rental Demand is Outstripping Supply

As reported in a Wall Street Journal article, according to a report by real-estate firm CoreLogic, demand for single-family rental housing is outstripping the available supply of homes.  Some housing markets that have been hit hardest by the foreclosure crisis have seen rental demand jump by more than 25% in the past year.

The article points to the fact that many families who have lost their homes to foreclosure or that can’t qualify for mortgages given tighter underwriting standards are now renting.

The magnitude of rental-demand gains are eye-opening as markets such as Port St. Lucie, Fla.; Riverside, Calif.; and Tucson, Ariz., have all seen rental demand jump by 25% over the past year .  22 of 30 markets tracked by CoreLogic have seen year-over-year leasing gains.

Slightly more than 50% all rental units in the U.S., or around 21 million units, are single-family homes. Around four in five of those unit owners are individual investors.

The CoreLogic reports shows that investor demand for rentals shows little signs of weakening.

Leasing activity was up 7% from one year ago in August and up 12% from the beginning of this year, even though the inventory of homes for rent is down by 11% from one year ago.

As a result of this increase, it would take just 2.6 months to rent the available stock of for-lease homes in August, down from 3.2 months of supply last year and over 5 months in 2007.

Single-family rents rose by 2% last year and have increased by 1% so far this year, after declining in 2009 and 2010.  CoreLogic expects rent growth to increase throughout 2013, though at a lower rate.

The largest rent increases were found in North Port, Fl; Cape Coral, Fl; and Honolulu, where rents increased by more than 6%.

 

Warren Buffett Makes a Huge Bet on the US Housing Market

Legendary investor Warren Buffett is buying up real-estate brokerages around the country and is betting on a housing turnaround.  Buffett is partnering with Brookfield Asset Management, a Canadian real-estate investor, to more than double the size of his brokerage business.

Berkshire’s HomeServices of America Inc. unit will be the majority owner of the venture to manage a U.S. residential real-estate affiliate network. The firms plan to offer a new franchise brand, Berkshire Hathaway Home Services, starting next year. Brookfield’s network has operated under the Prudential Real Estate and Real Living Real Estate brands.

Berkshire has also purchased a brick maker, won the loan portfolio of bankrupt mortgage lender Residential Capital LLC at auction and built its HomeServices unit by agreeing to acquire real-estate brokerages in states including Oregon and Connecticut.

4 Top Real Estate Markets for Foreign Buyers

A recent National Association of Realtors study estimated that foreigners and immigrants who’ve lived here less than two years spent $82.5 billion on U.S. homes in the 12 months ended March 31. That’s about 9% of the total paid for all U.S. housing purchases during the period.

The NAR study found that foreigners spent more on average — $400,000 per property vs. $252,000 for the overall market — and paid cash for homes 62% of the time instead of taking out mortgages.

Foreigners and recent immigrants are diving into U.S. real estate because buyers consider housing here a good investment and see America as a safe haven for assets.

Many also need a place here for business trips, vacations or retirement or expect their children to study at U.S. colleges and need housing.

Additionally, some foreigners buy property in conjunction with buying U.S. businesses. Under the EB-5 program anyone who invests $1 million in a U.S. company and creates 10 jobs can qualify for an “EB-5” visa and eventual citizenship. (The requirement drops to $500,000 if you invest in a depressed U.S. locale.)

NAR found that Mexicans accounted for 8% of all sales to foreigners and recent immigrants during the 12-month period studied.

Other top sources for foreign buyers included Canada (24% of all sales to non-U.S. nationals), China (11%), India (6%) and Britain (6%).

Buyers from different countries favor different parts of America.

For instance, the NAR found that lots of Germans have bought property in southwest Florida, while many Canadians gravitate toward Arizona.

 Canadian Home Buyers in Florida

In Florida, 2013 is shaping up to be the ‘Year of the Canadians’ according to many of the state’s real estate professionals and industry experts. On the tourism front, 3.6 million Canadians visited Florida in 2011, spending approximately $4 billion. The total number of Canadian tourists more than doubles Florida’s second-largest source of tourists: Brazil.

Once Canadians get a taste of Florida, they’re increasingly putting up more permanent roots. Canadian buyers represented 31 percent of Florida’s international real estate purchases in 2011, according to the National Association of Realtor’s August 2012 report, “Profile of International Home Buyers in Florida.”

The next four closest countries are: Brazil (9 percent); United Kingdom (5 percent); Venezuela (7 percent) and Argentina (5 percent).

Almost half of the Florida home purchases in 2011 by Canadians were condos or apartments (48 percent) and about 90 percent were cash deals.

Conservative by nature, more than half of the properties purchased by Canadians were priced below $199,999 (65.4 percent). Canada’s top three destinations for property include the Bradenton-Sarasota-Venice area on Florida’s west coast with 14.4 percent of all purchases in 2011. Fort Lauderdale was second with 12.9 percent and Naples-Marco Island was third at 11.9 percent. 

Posted by Scott R. Lodde

Headlines – Week of October 28, 2012

November 9, 2012

U.S. Home Values Jump the Most Since 2006

Two separate reports provide evidence that home values are rising.

According to a new study by CoreLogic, U.S. home prices jumped 5 percent in September compared with a year ago, the largest year-over-year increase since July 2006.

The data provided in the report also said that prices declined 0.3 percent in September from August, the first drop after six straight increases. The monthly figures are not seasonally adjusted and the company believes the monthly decline reflects the end of the summer home-buying season and not a softening in the housing recovery.

Steady price increases should give the housing market more momentum when home sales pick up in the spring. Rising prices encourage more homeowners to sell their homes and entice would-be buyers to purchase homes before prices rise further.

Other measures have also shown healthy gains in home prices over the past year. The Standard & Poor’s/Case Shiller 20-city index rose 2 percent in August compared with a year ago, a faster pace than the previous month.

The price gains in the past year reported by CoreLogic were widespread. Prices have risen in all but seven states. And they declined in only 18 out of 100 large cities that are tracked by the index.

Some of the biggest increases were in states that suffered the worst from the housing bust. Home prices in Arizona jumped 18.7 percent in the past year, the most of any state. Home prices in Idaho rose 13.1 percent, the second largest. Nevada’s home values rose 11 percent.

Home prices jumped 22.1 percent in Phoenix, the metro area with the biggest gain. Prices in Houston rose 6.6 percent, the second-highest increase. The states with the biggest drops were Rhode Island (3.5 percent) and Illinois (2.3 percent).

CoreLogic’s price index is based on repeat sales of the same homes and tracks their price changes over time.

Sales of both new and previously occupied homes are still below levels that are consistent with a healthy housing market. That’s partly because the supply of available homes for sale remains low. And many prospective homebuyers are struggling to qualify for a mortgage or scrape together the bigger down payments that many banks are requiring.

 

 

CoreLogic HPI monthly updates leverage the full authority of CoreLogic’s industry-leading real estate databases, covering 6,783 Zip codes, 623 Core Based Statistical Areas (CBSAs), and 1,188 counties in all 50 states and the District of Columbia.

 

 

In a separate report, Zillow also announced that U.S. home values jumped 1.3 percent in the third quarter, the biggest gain since 2006 as the recovery was uneven across the country.

The median value rose to $153,800 from $151,800 in the previous three months on a seasonally adjusted basis. It was the biggest increase in Zillow’s Home Value Index since the first quarter of 2006, when values rose 1.5 percent.

According to the report home prices are rising nationally as the U.S. unemployment rate declines and buyers compete for a tightening supply of homes listed for sale.

Values fell from the second quarter in 52 percent of markets covered by the index as the traditional home buying season ended.

Zillow also reported that in Phoenix, where investor demand is helping to boost prices, home values rose the most of the 30 largest U.S. metropolitan areas, with a 5.9 percent increase from the second quarter.  They climbed 3.9 percent in Las Vegas and 3.8 percent in Denver.

Atlanta had the biggest drop in values, falling 2.2 percent from the previous three months, the data show. New York, Philadelphia, St. Louis and Cleveland were among other large metro areas where values declined.

Zillow showed a drop in values for 17 of the 41 states it covers.

Values nationwide will increase 1.7 percent over the next year, according to Zillow’s projection. Of the 253 markets tracked by the forecast, 183 areas have hit bottom and another 41 will reach a floor in the next year, the company said.

Zillow measures the value of 100 million U.S. homes, regardless of whether they sold during the quarter, and calculates the median for its index. Other gauges, such as the S&P/Case-Shiller index, track purchase prices.

Posted by Scott R. Lodde

Headlines – Week of October 21, 2012

November 2, 2012

Are Banks Holding onto REOs?

In September, the HousingPulse Distressed Property Index (DPI) from Campbell Surveys, which measures the proportion of purchase transactions involving distressed properties, hit a record low of 38.6 percent based on a three-month moving average.

The drop marks the fifth consecutive monthly decline and is more than 10 percentage points lower than the February’s near-record-high of 48.7 percent.

According to HousingPulse, the lack of foreclosures and REOs available for sale is the reason for the steep decline in distressed sales.

According to HousingPulse, major banks seem to be keeping many REO properties off the market this year, but suggested banks may look to release “significant amounts” of bank-owned properties next year which could lead to lower prices.

Foreclosures ‘boil over’ in Judicial Foreclosure States

In an article posted in the last Headlines, RealtyTrac reported that foreclosures are continuing to fall across the country, reaching five-year lows, but states where foreclosures don’t have to be approved by courts are posting some of the largest drops.

While foreclosure-related filings were down sharply from a year ago, there was an increase in foreclosure activity in 20 states, particularly in states where courts handle the foreclosure process, including New Jersey, New York, Maryland, Illinois and Pennsylvania.  

The increase in short sales and foreclosures was predicted in judicial foreclosure states after the nation’s five largest mortgage servicers reached a $25 billion settlement in March over “robo-signing” allegations.

While foreclosure-related filings were down 31 percent collectively from a year ago in the 24 nonjudicial states and District of Columbia, some judicial foreclosure states saw big annual increases in foreclosure activity, led by Kentucky (up 73 percent), New Jersey (up 65 percent), New York (up 56 percent), and Maryland (up 54 percent).

Foreclosure-related filings were up from a year ago in 20 states in August, including Illinois, which posted the highest rate of any state with 1 in every 298 housing units. A total of 17,781 Illinois properties were subjected to a foreclosure-related filing in August, a 42 percent increase from a year ago.

Florida climbed to second on RealtyTrac’s list of states with the highest rate of foreclosure-related filings, with 1 in 328 properties subjected to a filing.

Until August, the top two spots on the list have been held by one of four nonjudicial foreclosure states since December 2010: Arizona, California, Georgia and Nevada.

10 states with highest foreclosure rate

Rank

State

August 2012 Properties with Foreclosure Filings

1/every X Housing Units

Percent change from July 2012

Percent change from Aug. 2012

1

Illinois

17,781

298

29.09

42.33

2

Florida

27,422

328

7.39

16.35

3

California

40,200

340

-4.47

-32.30

4

Arizona

7,899

360

-3.87

-28.72

5

Nevada

2,921

402

3.33

-69.82

6

Georgia

9,478

431

-12.73

-19.29

7

Ohio

9,218

556

-5.15

-6.33

8

Michigan

7,648

593

-12.66

-41.24

9

Delaware

665

610

180.59

1.68

10

Colorado

3,584

617

24.66

-27.35

Source: RealtyTrac

A New Housing Boom by 2015?

According to a recent article by CNNMoney, the housing market has been showing several signs of recovery, including home prices and home sales on the rise, new construction up, foreclosures falling and mortgage rates near record lows. As a result, some economists are getting very bullish about the housing recovery and even predicting that the market will return to its “boom” level days in just three years.

In a recent report, Barclays Capital predicts that home prices could be back to peak levels by 2015. Barclays is predicting home prices to rise 5 percent to 7.5 percent a year.

In the article, an analyst at Barclays is quoted as saying that the housing market underwent a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that will spark a rapid rise in housing starts.

Home construction is also expected to soar, rising 20 percent or more a year for the next year, according to some economists’ forecasts. The new-home market could return to its pre-bubble average of about 1.5 million new homes a year by 2016 according to the CNNMoney report. That would double the construction level expected this year.

Full Article

Posted by Scott R. Lodde

Headlines – Week of October 14, 2012

October 25, 2012

Remodeling Boom Seen into 2013

According to a recent study published by The Harvard Joint Center for Housing Studies remodeling and home improvement activity will see strong gains over the rest of 2012 and the first half of next year.

The Center’s Leading Indicator of Remodeling Activity (LIRA) suggests a recovery in the remodeling industry is underway and there could be double digit growth in home improvement spending over the next eight months.

The study uses the Department of Commerce’s Value of Construction Put in Places series (or C-30) to project the value of residential improvements.

The Department of Commerce defines home improvements as remodeling, additions, and major replacements to owner-occupied properties after the completion of the original building. This definition include additions to existing buildings, finishing basements and attics, improvements to the exterior building or lot, and replacement of major systems and equipment such as furnaces or water heaters. It does not include spending for painting, landscaping, or routine maintenance.

The study cites strong growth in sales of existing homes and housing starts, coupled with historically low financing costs which are providing the thrust to produce a favorable outlook for home improvement spending over the coming months.”

Southwest Florida Real Estate Recovery Strengthens

According to a recent article in the Fort Myers New Press, we are on the upside of recovery. Both notable shifts in forward-looking indicators, and overall outlook from prudent real estate investors, point to very positive signs of improvement.

In Florida, and particularly here in Southwest Florida, the industrial sector of the commercial real estate market is leading the pack with newly released data showing a top-three placement for lowest industrial vacancy rates in the nation.

According to a recent Cushman and Wakefield market statistical report, the Naples metro area ranked No. 2 in the nation for the lowest industrial vacancy rates with 4.2 percent overall vacancy.

Moreover, Florida claimed three of the top 10 metro areas with the lowest industrial vacancy rates (Lakeland at No. 1, Naples at No. 2, and St. Petersburg/Clearwater at No. 7). Lee County ranked 38th on the list with a 9.3 percent vacancy rate, slightly higher than the national average of 8.7 percent vacancy.

Both nationally and statewide, prices and home sales increased year over year in August. According to the National Association of Realtors, existing home sales jumped 7.8 percent in August to the highest level in more than two years, the highest level since May of 2010 when sales were fueled by a federal home-buying tax credit.

Foreclosure activity was down sharply in Lee County according to statistics recently released by the Southwest Florida Real Estate Investors Association. In September, lenders filed 567 foreclosure lawsuits, down sharply from 765 in August and about the same as the 570 in September 2011. Decreases in foreclosure filings further constrain the amount of future inventory available to buyers paving the way for the resurgence of new construction.

 

9 States Where Foreclosures Are Dropping the Most

According to information from RealtyTrac, foreclosures are continuing to fall across the country, reaching five-year lows, but states where foreclosures don’t have to be approved by courts are posting some of the largest drops.

The following states with a “non-judicial” process reported the largest annual decreases in foreclosure activity in the third quarter:

  1. Nevada: 71 percent decrease
  2. Oregon: 63 percent
  3. Utah: 60 percent
  4. Virginia: 34 percent
  5. California: 29 percent
  6. Michigan: 28 percent
  7. Arizona: 23 percent
  8. Colorado: 21 percent
  9. Georgia: 20 percent

Florida is a judicial state in which foreclosures must be approved by the courts.

Some of the largest drops in foreclosure activity are attributed to recent laws adopted in some states such as Nevada, Oregon, and California that have added requirements for lenders to meet before they can foreclose on home owners.

 

Posted by Scott R. Lodde

Headlines – Week of September 30, 2012

October 10, 2012

Declines in Shadow Inventory Foreshadow Rise in Prices

According to the financial information services company CoreLogic, current residential shadow inventory fell to 2.3 million units as of July 2012, representing a supply of six months. The information was published in the company’s most recent Shadow Inventory report.

This was a 10.2 percent drop from July 2011, when shadow inventory stood at 2.6 million units, which is approximately the same level the country was experiencing in March 2009. Currently, the flow of new seriously delinquent (90 days or more) loans into the shadow inventory has been roughly offset by the equal volume of distressed (short and real estate owned) sales.

Highlights of the report:

  • As of July 2012, shadow inventory fell to 2.3 million units or six-months’ supply and represented just over three-fourths of the 2.7 million properties currently seriously delinquent, in foreclosure or in REO.
  • Of the 2.3 million properties currently in the shadow inventory, 1 million units are seriously delinquent (2.9 months’ supply), 900,000 are in some stage of foreclosure (2.5-months’ supply) and 345,000 are already in REO (1.0-months’ supply).
  • The dollar volume of shadow inventory was $382 billion as of July 2012, down from $397 billion a year ago and $385 billion last month.
  • Serious delinquencies, which are the main driver of the shadow inventory, declined the most from April 2012 to July 2012 in Arizona (3.2 percent), Pennsylvania (2.8 percent), New Jersey (2.3 percent), Delaware (2.2 percent) and Maine (2.2 percent).
  • As of July 2012, Florida, California, Illinois, New York and New Jersey make up 45 percent of all distressed properties in the country.

 

Population Growth Rate ‘Fueling’ South Florida’s Latest Condo Boom

According to a new report from the Federal Reserve Bank of Atlanta, a “significant” increase in the growth pace of Florida’s population is contributing to the wave of newly proposed condo units. 72 towers with 10,500 units are slated to be developed in the tricounty South Florida region of Miami-Dade, Broward, and Palm Beach.

The bank’s EconSouth Third Quarter 2012 report believes that some of the recent and projected condominium construction in Miami is a result of renewed in-migration to Florida.  After experiencing a dramatic slowdown in population growth following the recession (down to about 140 people a day), Florida is seeing significant growth again of about 700 net new residents a day.

According to the report, the resurgence in Florida’s population growth has put the state on pace to surpass 20 million people by 2014, and in the process replace New York as the third most populous state in the nation behind California and Texas,.

The big question posed by the report is whether the changes in construction financing as a result of the crash are sufficient to prevent a repeat of a similar crash.

Highlights from the report:

  • Nearly 150 cranes “filled” the South Florida skyline at the height of the last condo boom.
  • As of Sept. 30, 2012, one new condo tower has already been completed in the tricounty region and 11 other high-rises are under construction as the post-crash development era gains momentum, according to a recent report by CondoVultures.com.
  • Developers have “sold” about 18 percent of the 10,500 newly proposed condo and condo-hotel units expected to be constructed in the coastal South Florida region through the third quarter of 2012.
  • A majority of the newly proposed condo units are not expected to be completed until 2014 when the unsold developer inventory from South Florida’s last real estate boom and bust is projected to be sold, according to the Proposed Condo Projects list from the licensed Florida brokerage CVR Realty™.
  • Fueled by investors primarily from overseas, less than 3,400 new condo units remain unsold from a supply of nearly 49,000 units created since 2003 in South Florida’s seven largest coastal markets of Greater Downtown Miami, South Beach, Sunny Isles Beach, Hollywood / Hallandale Beach, Downtown Fort Lauderdale and the Beach, Boca Raton / Deerfield Beach, and Downtown West Palm Beach and Palm Beach Island as of June 30, 2012.
  • To overcome the obvious financing hurdle, most of the newly proposed projects are requiring prospective buyers to commit to deposits – to be paid in phases – of as much as 80 percent of the preconstruction contract price.  This is a dramatic change from the most recent South Florida condo boom, preconstruction buyers were generally asked for deposits of about 20 percent.  For example, a buyer may bring anywhere from 30 percent to 80 percent to the table and then pay in increments as the building moves through the development process. The developer brings 20 percent to the table.

Foreclosure Filings Spike in South Florida Region

According to a new report from CondoVultures.com, lenders initiated more than 13,200 foreclosure actions in the tricounty South Florida region in the third quarter of 2012, representing a 36 percent surge in filings on a year-over-year basis compared to the same July through September period in 2011.

For the year, lenders have filed nearly 35,700 notices of default – the first step in the repossession process – in the first nine months of 2012 in Miami-Dade, Broward, and Palm Beach counties after filing less than 24,000 actions during the same January through September period in 2011.

Despite the spike in South Florida foreclosure actions in the first nine months of this year, the 2012 total number of filings initiated in the region is down compared to the same nine-month period in previous years when nearly 49,000 actions were filed in 2010 and nearly 75,500 actions were filed in 2009, based on filings with the Clerks of the Court for each respective county.

According to the report, lenders are stepping up their foreclosure efforts South Florida some two years after the ‘robo-signer’ controversy first surfaced late in the third quarter of 2010.  

Barring some dramatic change, the peak of the foreclosure filing activity in South Florida appears to have occurred in 2009 when nearly 100,000 actions were initiated in Miami-Dade, Broward, and Palm Beach counties.

Compare this to 2012 where the South Florida region is on pace to experience more than 47,500 actions based on the filing activity in the first nine months of the year.

 Posted by Scott R. Lodde

Headlines – Week of September 16, 2012

September 29, 2012

Case-Shiller News

According to Case-Shiller, U.S. home prices continued to increase in July, with its 20-city index up 1.6 percent from June and the 10-city index up 1.5 percent. The 10-city index rose to its highest level since November 2010 and the 20-city index to the highest level since October 2010. Prices rose month-over-month in all of the 20 cities.

Year-over-year, the 10-city index was up 0.6 percent, and the 20-city index rose 1.2 percent.

Existing Home Sales at Highest Level since May 2010

The National Association of Realtors recently reported that existing home sales rose 7.8 percent to 4.82 million in August, the highest level since May 2010. The median price of an existing single-family home in August was $187,400, down from $187,800 last month and up from 171,200 a year ago.

Real Estate Flipping Back in Southwest Florida

Flipping houses is back again in Southwest Florida as buying and quickly reselling homes and condominiums to pull in large profits.

According to new data released from RealtyTrac, there have been 889 properties flipped from January to June in Manatee, Sarasota and Charlotte counties. That was a 45 percent increase from the same period last year and a 97 percent increase from the same six months in 2010.

RealtyTrac categorized flips as resales within four months after the initial deal.

Buyers in this region held on to the houses for an average of 99 days and sold them for an average gain above the previous sale price of $30,975, according to a Herald-Tribune analysis of the RealtyTrac data. The highest per-county average gain was in Sarasota County, at $32,901. Charlotte County was second at $30,348. Manatee’s average was $29,676.

Florida overall saw more than 14,000 flips during the same six-month time period, a 70 percent increase since 2010. The homes were kept for an average of 103 days and the average gain was $13,240.

Dwindling Home Inventory Drive Prices Up in Naples

According to a report released by the Naples Area Board of REALTORS® (NABOR®), which tracks home listings and sales within Collier County (excluding Marco Island), the Naples area real estate median price increased a remarkable 10 percent for the 12-month period ending August 2012,

Looking at the inventory statistics it is worthy to note that in less than eight months, the area reached an overall inventory of 6,043 in August 2012 from 7,860 in January 2012. 2003 was the last time Naples saw inventory this low.

Highlights:

  • The overall median closed price increased 10      percent, from $176,000 to $194,000, for the 12-month period ending August      2012.
  • Overall pending sales increased 16 percent in      the $500,000 to $1 million category, from 939 units to 1,091 units, for      the 12-month period ending August 2012. Overall pending sales increased 10      percent in the $1 million to $2 million category, from 424 units to 466      units, for the 12-month period ending August 2012.
  • Overall inventory decreased by 13 percent, from      6,930 in August 2011 compared to 6,043 in August 2012. Pending sales with      contingent contracts are included in the overall inventory number.
  • The average DOM (Days on the Market) decreased      by six percent, from 178 days on the market in August 2011 to 167 days on      the market in August 2012.
  • Overall pending sales in the Naples coastal      area increased 10 percent from 1,779 units to 1,950 units, and closed      sales increased 9 percent, from 1,586 units to 1,732 units, for the      12-month period ending August 2012.

According many realtors, the strong numbers clearly reflect the economic model of Supply and Demand. As inventory decreases and demand for homes remains high, prices increase. The statistics from the last three months have capped off a strong summer and the Naples area is no longer as seasonal as it used to be.

Posted by Scott R. Lodde

Headlines – Week of September 9, 2012

September 20, 2012

Moderate Hotel Growth Underway

According to a new report from Lodging Econometrics (LE), moderate growth in U.S. hotel pipeline metrics has been underway for a while.

In Q2 2012, hotels under construction stood at 525 projects/66,917 rooms. LE said room counts are up from the bottom of 387 projects/49,028 rooms for the fourth consecutive quarter, signaling that the industry has entered the early stages of a new real estate growth cycle.

The annualized four-quarter trend line for construction starts is up from the bottom for the sixth consecutive quarter and is at its highest level in 10 quarters. LE suggests the uptick in construction starts is due largely to the commencement of previously stalled projects in the pipeline while developers were awaiting evidence of a sustained operating recovery.

The most significant indicator of future pipeline growth is new project announcements. At 1,180 projects/147,447 rooms, the annualized four-quarter trend line is up from the previous cyclical bottom for the third consecutive quarter and is at the highest level in six quarters.

Based on current construction trends, these pipeline metrics support LE’s initial forecast for new hotel openings in 2014 of 446 projects/48,335 rooms. This is a 31% room count increase and the first substantial upturn from the bottom of 346 projects/37,200 rooms set in 2011.

While the recovery in the U.S. lodging industry has been slower than hoped for, LE expects that both ADR and RevPAR will exceed previous cycle highs in 2013.

The firm’s expects that once the election season is over, the administration will be able to build a bi-partisan political consensus to ensure that job growth policies are at the top of the nation’s agenda.

We all know that job growth is the key to improving consumer spending, which is necessary to trigger investment by the business community. That environment will spur lodging demand and move hotel development at a faster pace.

 

RevPAR forecasts up for remainder of 2012

PKF Hospitality Research, PwC and STR all recently revised their 2012 RevPAR forecasts up for the remainder of the year compared to their mid-year forecasts.

Average daily rate has been the driver behind growing revenue per available room for the last few quarters.

New data from STR and TravelClick projects RevPAR, ADR and occupancy gains for U.S. hotels over the remainder of 2012.

For 2012, STR projects a 2.1% increase in occupancy to 61.2%, an ADR gain of 4.4% to US$106.15 and a RevPAR increase of 6.5% to US$65.01.

Supply and demand are expected to end the year with increases of 0.5% and 2.6%, respectively.

TravelClick data shows committed occupancy for August to December this year is up 5.4% and ADR is up 5%, with the growth driven by the transient segment with an occupancy increase of 5.6% and an ADR increase of 5.5% in comparison to the same time last year

In 2013, STR predicts occupancy to be virtually flat with a 0.3% increase to 61.4 percent, ADR to rise 4.6 percent to US$111.01 and RevPAR to grow 4.9% to US$68.17. Supply and demand are forecast to end 2013 with increases of 0.9% and 1.2%, respectively.

 

Hotel Real Estate Boom on Miami Beach

According to a recent article in Herald Online as well as my personal observations, there’s a major real estate boom going on in Miami Beach in small to mid-size luxury hotels that are being bought, sold, managed and renovated.

According the article, in just the last few months the following activity:

  • $85 million SLS South Beach Hotel on Collins Avenue
  • Royal Palm Hotel was sold for $130 million and is being rebranded as the James Hotel
  • Gansevoort hotel was sold and renamed The Perry and is being managed by Starwood
  • Kimpton signed a contract to manage the Surfcomber Hotel which sits at a prime location at 17th and Collins Avenue
  • The Delano hotel is for sale (although its owners still want to manage it after the sale)
  • David Edelstein, the owner of the W South Beach purchased the Raleigh hotel for $55 million

According to experts in the market, this recent activity is and indicator of the strength and demand of Miami as a destination.

Other factors contributing to the demand includes:

  1. The areas consistent placement in the top ten of varied Best Of lists,
  2. The continued allure in a competitive vacation market
  3. Ongoing infrastructure updates
  4. Sophisticated cultural, gastronomic and social options and
  5. Great weather

Renovation projects currently underway include:

  • B Hotel (the former Continental)
  • Saxony hotel
  • The historic beachfront Seville Hotel (to be branded a Marriot Editions)
  • A number of properties are also actively courting buyers – if the price is right.
  • Other luxury properties which have opened in recent years include:
  • SLS South Beach
  • Mondrian
  • W
  • Standard
  • Setai

Other properties getting significant renovation include:

  • The Betsy
  • Surfcomber
  • Fontainebleau
  • Loews

Posted by Scott R. Lodde

Next Page »

Our Philosophy

Our philosophy revolves around a simple goal - To achieve the objectives of our clients. Our plan is to introduce the necessary talents and resources to our clients and enhance their business goals and profitability

Our Services

*Hotel Management---------------------- *Asset Management---------------------- *Advisory Services----------------------- *Distressed Property Services------------- *Insurance Claim Support Services------- *Development Services-----------------