Headlines – Week of February 12, 2012
February 20, 2012
Time to Buy in Florida?
According to a recent article in Barron’s now may be the time to pull the trigger on a purchase in Florida.
Yes and No … depending upon the area, demographics, age of properties, levels of tourism, commerce and industry, as well as dozens of other issues that most buyer-owners and investors never bother to consider.
According to the author, don’t buy the hype. And beware of the “developers’ hype”, especially in over-condoed areas like Miami.
That being said, there is a positive reality. Don’t go out and buy the junk condos being peddled in Miami or one of the hundreds of single-family homes sitting empty in areas like Port St. Lucie and Cape Coral.
At the moment, Florida offers an unusual window of opportunity for individual buyers and investors.
While interest rates are low and prices are down by 50% or more the picture is clouded by the South Americans and Europeans, who fear currency collapses in their countries and are buying without regard for quality, maintenance costs or resale value. And Russians flush with cash are purchasing indiscriminately in South Florida.
Canadians, flush with the very strong Canadian dollar, are also buying, but they are far more discerning. For the most part, they are avoiding South Florida and looking for better value, more amenities and future appreciation north of there.
U.S. baby boomers on the edge of retirement and looking for serenity—not the hustle of Miami, Naples, Tampa and other overbuilt markets—also are buying.
Jupiter Island, toward the southern edge of Florida’s Treasure Coast, is among the areas worth considering, according to the author.
He also would consider looking at the barrier islands north of Palm Beach County, such as Hutchinson Island. He doesn’t buy the story that Miami’s popularity will jump because of casinos as there is no infrastructure to build casinos in Miami.
Traffic and crime are already a problem there; the city doesn’t need more. If Florida licenses additional casinos, they will generally be in run-down areas where land is cheap and roads can be built to handle the traffic.
Biotechnology is actually Florida’s brightest star, getting brighter by the nanosecond. There are three main centers: northern Palm Beach County, St. Lucie County and the Orlando area.
If you want the best of all worlds, look at the area between northern Palm Beach County and St. Lucie County. In the middle sits Martin County, with good schools, a relatively low-growth market, a no-high-rise policy and magnificent choices for owners and investors.
830,000 Completed Foreclosures in 2011
According to the December 2011 Foreclosure Report prepared by CoreLogic, completed foreclosures for all of 2011 totaled 830,000 compared with 1.1 million in 2010.
In December 2011 there was a month-over-month decrease in completed foreclosures to 55,000 from 57,000 in November 2011. The December 2011 completed foreclosures figure was also down from one year ago when it stood at 67,000. From the start of the financial crisis in September 2008, there have been approximately 3.2 million completed foreclosures.
Highlights as of December 2011
- The percent of homeowners nationally who were more than 90 days late on their mortgage payment, including homes in foreclosure and REO, was 7.3 percent for December 2011 compared to 7.8 percent for December 2010, and 7.2 percent in November 2011.
- The five states with the highest foreclosure inventory were: Florida (11.9 percent), New Jersey (6.4 percent), Illinois (5.4 percent), Nevada (5.3 percent) and New York (4.6 percent).
- The five states with the lowest foreclosure inventory were: Wyoming (0.7 percent), Alaska (0.8 percent), North Dakota (0.8 percent), Nebraska (1.0 percent) and Washington (1.3 percent).
- Of the top 100 markets, measured by Core Based Statistical Areas (CBSAs) population, 34 are showing an increase in the foreclosure inventory in December 2011 compared to a year ago, an improvement from November 2011 when 46* of the top CBSAs were showing an increase in the foreclosure inventory compared to a year ago.
Fannie Mae to Partnership with Investors to Sell Foreclosures
According to a recent announced by President Barack Obama, Fannie Mae plans to convert foreclosed homes into rentals through sales to investors hinges on offering concentrated packages of properties in areas such as Florida, Arizona and Southern California where a real estate recovery may happen soonest.
The mortgage agency, controlled by the U.S. government is inviting investors to apply to become joint-venture partners in the first bulk sale of some of its 122,616 foreclosed homes. It disclosed few details of a plan that is part of a series of programs unveiled this week aimed at lessening the impact of defaults on the housing market.
The portfolios of foreclosed properties will be geographically focused and consist of vacant or occupied homes, according to Fannie Mae’s website. Investors said they’re concerned that the first properties to be made available will come from the hardest hit areas of the U.S., which have limited appeal to investors because the prospect for population or employment growth restrain the outlook for a housing recovery.
GTIS Partners, a New York-based investment company, and GI Partners, a private-equity fund in Menlo Park, California, each announced plans in January to spend $1 billion on bulk-buying foreclosed homes as rentals.
GTIS wants to invest in Arizona, California and Florida cities with a high concentration of foreclosures and a strong likelihood of price appreciation. Financing from Fannie Mae will make the portfolios even more attractive.
Fannie Mae had 122,616 real estate owned homes, or REOs, as of Sept. 30. A minority of the properties will be offered in bulk to investors, while most will go to buyers who will live in them.
The REO strategy revolves around selling properties to owner occupants which the agency believes will help to stabilize neighborhoods and provides a better return to Fannie Mae and taxpayers.
California had the largest number of Fannie Mae REOs, with 6,987, followed by Michigan, Florida, Georgia and Illinois, as of Dec. 26, according to the FHFA.
It will be difficult for private-equity funds to generate high returns renting foreclosures because of the complexity and cost of managing single-family houses according to some experts.
Many doubt the ability to earn a profit if they have to create a whole organization to manage these homes since it requires a lot of personal attention.
Demand for rentals has risen as more homeowners lose their properties to foreclosure, prices fall and lenders tighten standards to qualify for a mortgage.
Posted by Scott R. Lodde
Headlines – Week of February 5, 2012
February 13, 2012
CMBS Delinquencies in the “Calm Before the Storm”
According to recent reports in both Trepp and Morningstar, CMBS delinquencies dropped sharply in November after rising the previous two months. However, it may be the “calm before the storm” in this market as researchers expect that as 2007-vintage loans mature further delinquencies rise.
Through October, Trepp reported the CMBS delinquency rate at 9.77%, the second highest point on record trailing only July’s figure of 9.88%. Morningstar, meanwhile, said the delinquency rate had hit 8.35% in October. Both firms measured rates rising in September and October after having fallen in August. In addition, Trepp’s latest report showed that the delinquency rate dropped 26 basis points to 9.51% in November.
Going forward, however, Trepp sees trouble.
According to their report, CMBS loans that were made at the height of the commercial real estate bubble will become distressed as they begin to mature. The 2007 vintage was the weakest in terms of underwriting standards and it is widely expected that many of these loans will have trouble paying off at their balloon date. In total, about $15.5 billion of these loans will come due in 2012, with the majority reaching their balloon dates over the next six months.
More Than 750 Banks at Risk of Failure over Next Two Years
According to an analysis by Invictus Consulting Group, despite last year’s dip in U.S. bank failures, at least 758 lending institutions are at risk of failure over the next two years. Invictus conducts stress and sustainability tests on all FDIC-insured banks for regulators, banks and investors.
Based on all publicly available data on banks for the third quarter ended Sept. 30, 2011, absent corrective action to raise capital or merge, the 758 banks it identified are unlikely to remain viable primarily due to the weak recovery, which could trigger a new wave of loan defaults. Approximately 200 of these banks are subsidiaries of publicly traded bank holding companies.
After stress-testing all FDIC-insured banks using its own proprietary model, Invictus found 758 banks with total assets of around $440 billion, or roughly $580 million on average, at risk.
That number of banks is nearly double the total number of banks that failed in past three years. Over the past three years, 389 banks and thrifts failed, including 90 in 2011, according to FDIC figures.
What makes this situation even more dire is that the demise of any of these banks would adversely affect local communities, especially smaller business people and those seeking to buy or improve their homes.
The state of Florida has the largest number (72) and highest share (31%) of vulnerable banks among its institutions. Those banks have average assets of $539 million each and represent almost 25% of Florida’s total bank assets of $158 billion.
Other states with the largest number of most vulnerable banks include Illinois (69), Georgia (66), Minnesota (37) Missouri (33) and Tennessee (31). The only states with no banks rated at risk by Invictus are Alaska, Hawaii, New Hampshire and South Dakota.
Four U.S. Cities Classified as Having ‘World Class’ Recoveries
According to The Brookings Institution in its Global MetroMonitor, the world’s 200 largest metro economies continued to drive global growth. The study reveals that emerging-market metro areas in Asia, Latin America and Eastern Europe were the fastest growing last year, while most American and Western European metros struggled to rebound from the Great Recession.
The analysis of per capita GDP (income) and employment changes in the 2010 to 2011 period for 200 of the world’s largest metropolitan economies, which account for nearly one-half (48%) of global output but contain only 14% of world population and employment, reveals the following:
- 90% of the fastest-growing metropolitan economies among the 200 largest worldwide were outside North America and Western Europe. By contrast, 95% of the slowest-growing metro economies were in the U.S., Western Europe, and earthquake-damaged Japan.
- The U.S. and United Kingdom collectively accounted for one-half of the bottom 40 metro performers, which registered either lackluster growth or small losses in income and employment.
- Only two metro areas in the U.S. – Houston and Dallas – ranked among the 40 strongest economies in 2010-2011. The World Bank rated these developed metro economies highly for their recent strong performances relative to regional peers, including expansion in high value commodities, manufacturing, and business and financial services sectors.
- The report also noted, however, that income and employment grew much faster in 2011 than the year before in Seattle and Milwaukee. Both markets benefited from resurgence in manufacturing, according to the report.
Less than one-half of the 200 metro areas surpassed their pre-recession levels of employment and/ or income by 2011. While nearly all developing Asia-Pacific and Latin American metro areas achieved new highs in both income and employment in 2011, Houston was the only North American metro area did so.
Developing countries should prepare for further downside risks, as Euro Area debt problems and weakening growth in several big emerging economies are dimming global growth prospects, says the World Bank in its newly released Global Economic Prospects 2012.
Posted by Scott R. Lodde
Headlines – Week of January 29, 2012
February 3, 2012
5 Housing Markets Expected to Outshine All the Rest
Inman News recently released a report highlighting metro areas that are expected to “outshine many other markets in real estate performance this year.”
Inman searched metro areas with populations over 150,000 to find where real estate sales volume is rising, job markets are growing, foreclosure activity is low, sales prices are appreciating, and home affordability is at high levels.
The following are the metro areas topping the list, including the third quarter 2011 median sales price and the percentage change in sales price year-over-year.
1. Raleigh-Cary, N.C.
Median sales price: $224,300
Median sales price change year-over-year: 7.3 percent
2. Wichita, Kan.
Median sales price: $120,900
Median sales price change year-over-year: 5.5 percent
3. Rochester, N.Y.
Median sales price: $123,400
Median sales price change year-over-year: 1.4 percent
4. Des Moines-West Des Moines, Iowa
Median sales price: $157,900
Median sales price change year-over-year: 0.8 percent
5. Chattanooga, Tenn.-Ga.
Median sales price: $128,700
Median sales price change year-over-year: 7.3 percent
To see the full article and the other cities that made the top ten list click HERE
MSAs with the Fastest Rising Median List Prices
In related news, Inman published a table from Realtor.com data showing the Metropolitan Statistical Areas (MSAs) with the fastest rising median list prices in 2011. The data comes directly from actual listings posted on the site by 933+ multiple listing services throughout the country.
Note that the Fort Myers-Cape Coral MSA ranks number three on the list with a compound growth rate of 1.73%.
MSA January 2011 December 2011 Compound Growth rate
- Miami, FL ($200,000 $265,000) – 2.59%
- Boise City, ID ($128,000 $154,900) – 1.75%
- Fort Myers-Cape Coral, FL ($190,000 $229,375) – 1.73%
- Punta Gorda, FL ($150,000 $179,000) – 1.62%
- Daytona Beach, FL ($154,900 $179,900) – 1.37%
- West Palm Beach-Boca Raton, FL ($188,894 $219,000) - 1.35%
- Naples, FL ($315,000 $365,000) - 1.35%
- Washington, DC-MD-VA-WV(DC) ($320,000 $369,000) - 1.30%
- Sarasota-Bradenton, FL ($209,000 $241,000) - 1.30%
- Grand Rapids-Muskegon-Holland, MI ($119,900 $137,000) - 1.22%
CoreLogic Releases 2011 Home Price Statistics
CoreLogic recently released its December Home Price Index (HPI) report. Including distressed sales, home prices in the U.S. decreased 4.7 percent in 2011 compared with December 2010. Florida, however, fared a bit better than the national average with a price decline of only 3.3 percent. According to CoreLogic, 2011 was the fifth consecutive year for a decrease in the HPI.
The HPI also calculated price changes if distressed sales are excluded. Nationally, prices declined just 0.9 percent after backing out non-homeowner sales in 2011. Florida matched the national average with a 0.9 percent drop for the year. Distressed sales include short sales and real estate owned (REO) transactions.
The report also shows that national home prices decreased 1.4 percent in December compared to the month before if they include distressed sales – its fifth consecutive monthly decline. However, national home prices actually rose 0.2 percent month-to-month if distressed sales are backed out of the equation. It’s the first time the price non-distressed sales rose for the month since July 2011.
Highlights as of December 2011
• Including distressed sales, the five states with the highest appreciation were: Montana (+4.4 percent), Vermont (+4.0 percent), South Dakota (+3.1 percent), Nebraska (+2.5 percent) and New York (+1.7 percent).
• Including distressed sales, the five states with the greatest depreciation were: Illinois (-11.3 percent), Nevada (-10.6 percent), Georgia (-8.3 percent), Ohio (-7.7 percent), and Minnesota (-7.5 percent).
• Excluding distressed sales, the five states with the highest appreciation were: Montana (+7.7 percent), South Dakota (+3.5 percent), Indiana (+3.3 percent), Alaska (+3.1 percent), and Massachusetts (+2.9 percent).
• Excluding distressed sales, the five states with the greatest depreciation were: Nevada (-9.7 percent), Minnesota (-5.2 percent), Arizona (-4.9 percent), Delaware (-4.2 percent) and Michigan (-3.5 percent).
• Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to December 2011) was -33.7 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.0 percent.
• The five states with the largest peak-to-current declines including distressed transactions are Nevada (-60.0 percent), Arizona (-51.9 percent), Florida (-50 percent), Michigan (-43.7 percent), and California (-43.5 percent).
Posted by Scott R. Lodde
Hotel Selling’s ‘S’ Factors: Six Serious Selling Sins & Sound (Rx) Solutions
February 3, 2012
by Ed Iannarella
January 2012
1. SKIPPING RAPPORT: Would we BBQ chicken without 1st greasing the grill? No way! Too sticky a situation. Same applies to all other aspects of selling without 1st establishing rapport. For most selling situations, whether we like it or not, whether it’s fair or unfair, a good rapport is the single most important part of the sales process. We naively think of closing as wearing that label, but study after study shows that human connection reigns supreme in selling. Did you know that of all customers who left for a competitor, 80% of those said they were satisfied with their previous purchase (source: Harvard Business Review)? So, satisfaction does not translate into loyalty. But bonding emotionally is at the heart of rapport and loyalty. That same Harvard source reports that 97% of loyal customers are loyal for life! Although there certainly are other reasons people buy from us especially in a difficult economy (e.g., discounts we offer, their addiction to our brand or location, they literally must have our product/service due to a command from above or a demand from their client base, etc.), people typically “buy” us before they buy what we’re selling. Buyers like to buy from people they like, feel comfortable with, and/or trust. This is the essence of rapport.
Let’s recognize that although rapport building is generally taught as the 1st step in a sales call, it must be an ongoing process throughout the entirety of any sales interaction. Yes it’s often difficult to do with some prospects who are just different from us or who won’t allow us to bond for any number of reasons. Sometimes, lack of time inhibits our ability as well. Researching your prospects (via Linked In, social media, organizations’ websites, addictomatic.com, and even listening to vocal clues about prospects from their voice mail messages) can often offer opportunities that may give you an edge to connecting with them. As other studies tell us, words (i.e. verbal communication) are the weakest way to connect with others. This tells us we have to master the other 2 “V’s” of communication: Visual (body language) and vocal (voice related) clues that comprise 93% of our effectiveness as salespeople (check out FAQ’s on nlp.com).
2. SUBSTANDARD “ASKING” SKILLS: As doctors (and great salespeople) all know, “prescription” (solutions) without proper diagnosis (qualifying) is malpractice (poor selling).
To get what we want from someone (like a prospect with roomnights), keep these principles in mind: We have to ask specifically by stating exactly what we want, do it quickly, and ask at the right time (in the selling cycle and when the prospect is ready, willing, and able). We must also learn to ask for the same thing in different ways on occasion, and always ask someone who can actually help us (decision makers/influencers)! Quick tip: Never ask, “Are you the decision maker?” If they are, they may think you’re challenging their authority, and if they’re not, they may feel humiliated. Much better is to ask, “Who else, besides you, is involved in the decision-making process?”
3. SALES PRESENTATION “ERRORS OF OMISSION“: We’re all sometimes guilty of “errors of commission,” things we did wrong such as mentioning too many features, addressing the wrong needs, and taking too long to address the correct needs. However, far more frequent are “errors of omission,” things we neglected to say or do. Here are some of the most common (and dangerous) errors of omission: not addressing the prospect’s most important needs first (or worse yet, ever!), not directly comparing ourselves to other prospect options during our presentation, missing prospect “signals,” passing on the chance to validate our worth, and not asking for confirmation from our prospect before closing.
Diffuse stress associated with a prospect’s most important needs by tackling them before other, less critical needs. Don’t shy away from direct comparisons. Instead, “Dare to compare!” We owe it to our employers and fellow workers who depend on our revenue-generating skills. Remember to point out your product (amenities/services) and your personal points of differentiation (what makes you different/better as handlers of their account). Be sure to include your “USA’s”: Unique Selling Advantages© especially if the competition offers similar things. Notice prospect signals by closely observing them through active listening to their tone as well as watching their body language. Validate during your presentation by offering 3rd party testimonials (what others said about you/your hotel: provide visual proof later via e-mailing attached testimonials) as well as by mentioning any awards you/your property/brand has recently won. Verify prospect receptiveness on occasion during the presentation (How’s that sound so far?) and do so at the end of this “meeting needs” step before quoting rates and attempting to close.
4. SELF-DESTRUCTIVE LAST IMPRESSION: We’ve all heard about the critical 7 seconds of an initial prospect interaction, but equally important is the way we exit (a phone call, an outside appointment, a site tour, a group presentation, etc.), as it’s pretty easy to undo an otherwise good call with a weak parting handshake, a lack of eye contact, or a far-too-casual “See you ‘guys’ later.”
Practice a sincere “Thank you for your time” and a reasonably firm handshake, or if you dare to emulate me, “mirror” their handshake to establish “physical commonality.” Sound too “New Age” for you? Call me for a 1 minute explanation or purchase/download “Reading People” by Jo-Ellan Dimitrius and delve into the area salespeople MUST master to be at the top of their profession: Neuro-Linguistics (NLP).
5. SLIGHTING (OR TOTALLY) IGNORING MENTORS: There are 2 basic ways to learn anything (including how to be the best salesperson we can be): 1) experiential which is learning from our mistakes or 2) through being mentored. The 1st (AKA trial and error) can teach us things we’ll never forget, but all too often that’s due to the high price we pay in excessive time, money, and hardship required. We are taking the test 1st, and learning the lesson second. Being mentored saves us time and usually reduces the pain of making unnecessary mistakes. Here, we learn the lesson 1st (from others who have excelled at the task and are willing to help us succeed), and then take the test second. Sadly, so many of us still choose to do things the hard way, only to find that there are plenty of painful experiences for us compliments of prospects, clients, co-workers, and bosses. Ouch! Why be a grouch? Be a “mentee!”
If you’re lucky enough to have access to live mentors, don’t think twice. Just say yes! These can be supervisors at your hotel, elsewhere in your management company, or at the brand level (if applicable) who can make themselves accessible to you on a consistent basis. Ask 100 questions, take lots of notes, try their suggestions on for size ASAP, and report back for a critique to discuss what worked and what didn’t. Ask your mentor if you can do anything for them in return. But what if no actual (or willing) mentors are available? All is not lost especially with recent enhancements in technology and communication. Simply look for virtual or surrogate mentors to fill the niche. Available surrogate mentoring sources include CD’s from subject matter experts (surf the American Hotel and Lodging’s Educational Institute), live seminars or classes, webinars, and downloads (audible.com is great!). If you’re part of a chain, tap into your brand’s many e-resources. Remember that many programs are archived in case you were unable to “attend.” And speaking for other live mentors, we can’t compete with the 24/7 availability factor offered you by CD’s, archived sessions, and downloads. Find your mentors and start your learning engines right now. Learning isn’t a spectator sport!
6. SHOWING LITTLE OR NO RESPECT: Even if we have a great product or service to sell, or if we have excellent sales skills, we may finish last in getting a prospect’s commitment if we’re initially perceived as selfish or uncaring before or during a sales call. We may not even get to do a call if we seem disrespectful.
Begin with the end in mind. When calling someone to qualify, to present, or to simply introduce yourself, try this question (or a close variant) immediately after you identify yourself: “Is this a good time or a bad time to speak with you about your …(upcoming conference/business travel, hotel needs, etc.)?” Some prospects will say it’s OK, but due to suspicions about salespeople (compliments of our selling ancestors back in the last century), most will tell you it’s not a great time and even give you a reason or 2. This is potentially a good thing for you as you reply with, “No problem. I respect your time and that’s why I asked. When would be a better time for us to speak?” Though not always, prospects frequently will then offer an alternate time frame (and despite not verbalizing it, they will be pleasantly surprised at the respect level you demonstrated and that’s about as good a 1st impression as you can expect!). And, by the way, you went from a cold call to an appointment call (ending with your “OK great. I’ll try you Thursday after 1:00 and thanks for your time, sir.”), and your prospect set the appointment! Remember that you “never get a second chance to make a first impression.”
About the author:
Ed is President of Stonehenge Consulting Group and an affiliate of the Alliance Group. Stonehenge provides hotel sales performance and top line revenue consulting. Ed is a frequent speaker/trainer at national brand and management company conferences, HSMAI chapters, and U.S. Navy-operated hotels. People from over 30 countries have attended his U.S.-based selling workshops, and he has delivered hotel sales training in 8 countries.
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
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.
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.
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:
- The Island of Bali, in Indonesia
- Paris, France
- St. John in the U. S. Virgin Islands
- Cairo, Egypt
- Bonaire, one of the “ABC” islands of the southern Caribbean
- Yachats, the Oregon Coast
- Chiang Rai, Thailand
- New York City’s Greenwich Village (and its Off-Broadway theaters)
- 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.
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.
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”
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
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
Posted by Scott R. Lodde
Headlines – Week of December 11, 2011
December 27, 2011
Florida’s Housing Market Bouncing Back
According to three leading U.S. economists, despite national and global headwinds, the state’s real estate market is entering 2012 on an upward trend, according to three leading U.S. economists on Wednesday.
The economists predicting a recovery were part of a panel at the state association’s 2012 Real Estate & Economic Forecast Conference in Orlando. The panel included Florida Realtors chief economist John Tuccillo, Wells Fargo senior economist Mark Vitner and Lawrence Yun, chief economist for the National Association of Realtors.
The panelists believe the State is in a mini-recovery with sales trending up, listing inventories falling, the supply of lender-related properties stabilizing, and the start of a trend which includes multiple offers on homes in some local markets.
Many Florida markets are showing sharp drops in inventories of homes for sale – a sign that demand is picking up and prices are stabilizing.
Because of Florida’s appeal to international buyers, Yun was optimistic about the outlook for South Florida, in particular. He expects to see a gain in home prices in the Miami and Naples markets in the next 18 months. From there, the recovery is likely to roll northward to Central Florida and then North Florida.”
In October, there was a 6 percent increase in home sales in northeast Florida, when compared to 2010.
The Great $2 Trillion Global Real Estate Liquidation
According to U.S. hedge fund Fortress Investment Group, more than $2 trillion of global real estate assets is up for sale, either as a result of distress or deleveraging. The firm believes global markets are coming to grips with an historic, generational rebalancing.
This unprecedented volatility has prompted a real estate sell-off which eclipses several times over that seen after the U.S. Savings and Loans crisis from the late 1980s to mid-1990s, and the Asian currency crisis, which began in Thailand and South Korea in 1997.
The S&L crisis generated real estate sales in excess of $260 billion, while the Asian crisis by its end in 2000, prompted a circa $345 billion sell-off, according to Fortress research.
Fortress estimates that real estate asset sales, from all around the world will be several times more than the current $2 trillion it has identified, which far exceeds the total of all asset sales over the entire 20th Century.
Fortress believe calls the current situation … the Great Liquidation and coupled with what they call the Great Litigation will drive a supply-demand imbalance of distressed, illiquid assets that exceeds anything experienced before.
Stressed borrowers, whether countries, banks or real estate investors are trying to survive as long as possible before resorting to selling their assets. The inevitable, Fortress argues, can only be forestalled for so long and eventually, they state, “gravity brings everyone back to earth.”
Where the Work is Heading: 6 Top Job States
According to an article at Forbes.com, Texas is expected to add the most jobs over the next five years on a percentage basis.
Employment in Texas is expected to increase by 2.9 percent annually through 2015, or add 1.6 million new net jobs in that period, according to research from Moody’s Analytics.
Here are the states expected to grow the most with jobs in the next five years, according to Forbes:
1. Texas – Projected 5-year annual job growth: 2.9%
2. Nevada – Projected 5-year annual job growth: 2.9%
3. Arizona – Projected 5-year annual job growth: 2.8%
4. New Mexico – Projected 5-year annual job growth: 2.6%
5. North Dakota – Projected 5-year annual job growth: 2.6%
6. Utah – Projected 5-year annual job growth: 2.4%
Posted by Scott Lodde
Headlines – Week of December 4, 2011
December 19, 2011
Florida Leads U.S. in Mortgage Fraud Cases
According to industry publication Mortgage Daily, Florida retained its top ranking in the nation for mortgage fraud litigation through September as millions of dollars in bad boom-time loans continue to be discovered by law enforcement and lenders.
The report showed that Florida’s activity during the third quarter included more than $144 million in suspect loans that were questioned in court.
California ranked second on the activity index, but with more than $204 million in allegedly fraudulent loans, it came in first based on dollar amount.
Many investors continue to pressure banks to buy back mortgages that didn’t meet underwriting standards or were bogus for other reasons, such as falsification of the borrower’s income.
As an example, Bank of America bought back $2.87 billion in bad mortgages from federal mortgage backers Fannie Mae and Freddie Mac.
Nationwide, the mortgage fraud index climbed 16 percent in the third quarter, compared with the same time in 2010, with cases totaling more than $1.3 billion in questionable loans.
The five states with the worst index ranking were, in order: Florida, California, Minnesota, New York and Texas.
In Florida, the mortgage fraud index was up 45 percent compared with the previous quarter. It was 18 percent higher than in the third quarter of 2010.
A report issued by the federal Financial Crimes Enforcement Network in September that found Palm Beach County ranked sixth in the nation per capita for suspicious loan activity.
“There is a lot of fraud in South Florida, and we will see heavy enforcement in the future,” Thomas said “It’s taking a lot of time to catch up, but there are paper trails for all of this and they will eventually get to most of it.”
Investors Blamed for Bubble in Housing
According to a new federal report from Federal Reserve Bank of New York speculative real estate investors played a larger role than originally thought in driving the housing bubble that led to record foreclosures and sent economies plummeting in Nevada, California, Arizona, Florida and other states.
Researchers with the found that investors who used low-downpayment, subprime credit to purchase multiple residential properties helped inflate home prices and are largely to blame for the recession. The researchers said their findings focused on an “undocumented” dimension of the housing market crisis that had been previously overlooked as officials focused on how to contain the financial crisis, not what caused it.
More than a third of all U.S. home mortgages granted in 2006 went to people who already owned at least one house, according to the report. In Arizona, California, Florida and Nevada, where average home prices more than doubled from 2000 to 2006, investors made up nearly half of all mortgage-backed purchases during the housing bubble. Buyers owning three or more properties represented the fastest-growing segment of homeowners during that time.
Investors defaulted in large numbers after home values began to drop in 2006. They accounted for more than 25 percent of seriously delinquent mortgage balances nationwide and more than a third in Arizona, California, Florida and Nevada from 2007 to 2009.
As a result, millions of homeowners saw their home values decline so that they were worth less than the original purchase price. Foreclosures skyrocketed. Residential construction also languished, putting hundreds of construction workers in the hardest-hit states out of work.
Florida is Aging Much more Slowly
According to data released in a report by the U.S. Census Bureau, about 17.3 percent of the state’s population was 65 and older in 2010 down from 17.6 percent a decade earlier, according to a U.S. Census analysis released Wednesday. By comparison, 13 percent of the total U.S. population is now over 65, up from 12.4 percent in 2000.
As a result, some are saying it’s time for Florida to shed the “God’s waiting room” image and revive its slogan as the Fountain of Youth.
The country’s overall population has been skewing older the past 10 years in tandem with aging baby boomers. Florida can’t escape that trend, but it is aging much more slowly than practically anywhere else.
Only half-dozen states posted a drop in their percentage of older residents, with Florida showing the steepest drop.
Economists and demographers point to several reasons for the disconnect. The biggest reasons? Florida has been drawing younger workers over the past 20 years, particularly in fields like construction. Meanwhile, its inflow of retirees has slowed amid not just the housing bust but fierce competition from states like North Carolina and Georgia.
Nationally, the 65-and-up club grew by 15.1 percent between 2000 and 2010 while the total U.S. population grew 9.7 percent.
Florida still has the greatest share of population 65 and older among all states. But the gap is shrinking. No. 2 West Virginia (with 16 percent over 65) and No. 3 Maine (15.9 percent) both were among states that have been getting older the past 10 years, relatively speaking.
Numbers from the report:
17.3: Percent of Florida’s population 65 and older, the highest rate in the country.
19.8: Percentage of Clearwater residents who are 65 and older, the second-highest rate in the country among cities of 100,000 or more, trailing only Scottsdale, Ariz.
3.5: Percentage of Clearwater residents 85 and up, tied with urban Honolulu for highest in the country.
5: Number of Florida cities in the Top 10 list of those with the highest percentage of elderly residents.
1: Number of states that had fewer residents 65 and up in 2010 (Rhode Island).
Posted by Scott R. Lodde