Charles, Author at Real Estate Industry Watch

Tax Credit Coming to an End?

February 8, 2010 By Charles 3 Comments

The First Time Home Buyer Tax Credit of 2009 was given new life late last year. President Obama extended the original credit end date until April 30th for purchases and buyers under contract before then have until the end of June to close escrow and claim the credit. The credit has been a success to this point, helping to drive consumers back into the ailing real estate market.

There has been some talk in the media about 2010 being the rebound year for the economy. Home sales in several areas around the country are up and prices have stabilized or increased. However, foreclosures are still a problem in several states coupled with high unemployment. Considering the overall state of the union, I wonder if the government isn’t considering an extension of the credit into the fall.

Interest rates are still very low and there is plenty of surplus housing available. Consumers have been buying but new inventory coming on the market is still a factor.

What do you think?

Real Estate Downsizing

November 22, 2009 By Charles 1 Comment

With so many businesses having to count every penny, some have decided to give up one of their biggest costs: office space. An Associated Press article states that more and more small businesses are shrinking staffs and encouraging telecommuting—-in order to be able to maintain small offices or eliminate the location altogether. According to article, not only are these businesses saving money on property leases, taxes, etc but also on auxiliary costs like utilities and office equipment.

Whether this trend has had any significant impact on the commercial real estate market is hard to say. Given the current climate of the market, businesses seeking smaller spaces and eliminating locations has probably help drive up the vacancy rate and reduce rents across the country. Vacancy rates in commercial properties have hit record highs in several major markets across the country and show no signs of decreasing. It begs the question whether the Federal government will step in as they have done with the residential market.

You can read the rest of the AP article here.

Could there be a Tax Incentive in the works for Commercial Real Estate

October 25, 2009 By Charles Leave a Comment

We have all witnessed how proactive the Federal government can be. Cash for Clunkers, the First Time Home Buyer Tax Credit are successful examples. It is no secret that the commercial real estate market is experiencing the same problems as the residential side has. Commercial properties are going into foreclosure, new loans are getting more and more difficult to obtain and large projects are being stalled or canceled.

In an article on Wall Street Journal, Phil Izzo brings up an interesting point citing the Federal Reserve’s latest beige book. The Feds are getting increasingly concerned about the state of the commercial market (as they well should be). Whenever the Feds get overtly concerned about something, they tend to act (at least the new administration has). He notes that the only sectors that show any grow are all federal projects supported by stimulus dollars.

The numbers show that the First Time Home Buyer tax credit has helped sales in the residential market over past several months.

So….is it too far fetched to think that the government may try to offer the something similar in the commercial market to stimulate sales?

Using a Sidekick for Real Estate? Think Again

October 13, 2009 By Charles Leave a Comment

T-Mobile and Microsoft suffered a serious blow over the last few days. The company announced that Sidekick users on T-Mobile service may incur data loss that can’t be recovered. Users have been warned to not turn the phone off or let the battery get to low otherwise it could result in permanent data loss. Lost data could include contacts, photos, emails, calendar entries and appointments. If that wasn’t bad enough, Sidekick users have been suffering from a major outage all last week as well.

The data loss is a result of a cacophony of errors including failed server backups by Microsoft. The Sidekick relied on cloud backups through the company Danger, which was acquired by Microsoft (cloud computing services allow devices to remotely store data elsewhere instead of on the device itself). T-Mobile is offering a credit of one month of service for the users effected and up to a $100 per user for data loss. Techcrunch has posted a copy of the letter sent to Sidekick users on their site.

Hand held email devices have gained popularity for real estate professionals over the last couple of years. In light of the problem at T-Mobile, having a redundant system for your email, contacts and other pertinent data is definitely a must. If you aren’t sure how your information is being stored, contact your provider. You’ll be glad you did.The Skulls III video

A Clear Choice for Realtors

September 30, 2009 By Charles Leave a Comment

Technology has been rapidly advancing, especially in the real estate industry. Virtual tours a few years ago were the pinnacle of marketing in the industry. Now, high definition videos are rapidly becoming the standard. Consumers are also less patient than they were a few years ago. They want access to information immediately as well as instant access to their agent.

A relatively new company could be the Realtor’s new best friend. Clearwire is an up and comer in the high speed broadband market actively competing against cable providers. Granted many Realtors already have full access to their email via a Blackberry or similar device so why should Clearwire interest them?

Clearwire is the first company to offer true mobile high speed internet access in several major cities and the list is growing. The company is already located in several major markets like Las Vegas

and Atlanta with plans to expand into 16 major cities within a year. With their mobile device and a laptop, agents can access the MLS from virtually anywhere instead of having to stop at a “hot spot” and hope for a clear connection. Add a mobile printer and there is no reason why any agent will need to stop at the office again.

Some companies have offered similar services in the past, but the speeds were much slower and the cost higher. The company also offers some bundled deals that include a home service at a higher speed and regular telephone service.

Will Congress address the Commercial Market?

September 4, 2009 By Charles 2 Comments

Those of us in the real estate industry have been aware that the problems facing it aren’t just confined to residential markets. According to a story on Globest, Congress is finally waking up to the fact that the commercial industry is in trouble as well. Federal Deposit Insurance Corp president Sheila Blair acknowledged as much on a recent television interview.

The real question is will the government act swiftly enough. Outrage over the mishandling of tarp funds put a damper on the Fed’s will to act for a moment. However, recent successes like the Cash for Clunkers program may motivate the Fed to step in sooner. The other looming question is how do they intend to pay for a bailout if one occurs.

New Jersey Senator Robert Menendez sent a letter Fed chairman Ben Bernake and Secretary of the Treasure Timothy Geithner requesting that they take forceful measures to address the declining commercial market. Considering the huge amount of loans coming due in 2012 for property worth a fraction of the debt, I don’t see how they can’t take immediate action of some sor.

Pulte Completes Merger With Centex

August 23, 2009 By Charles 2 Comments

Well, it’s official. On Tuesday, August 18, the merger between Pulte Homes and Centex was completed. This officially makes Pulte Homes the largest home builder in the United States, knocking D. R. Horton out of the top spot.
Looking in from the outside, the merger was a perfect fit. Both companies produced above average energy efficient homes in similar configurations and communities and have won numerous awards for quality. Pulte Homes had been on the brink of being the largest builder of new homes when it acquired adult community builder Del Webb a few years ago. With the acquisition of Centex, Pulte Homes is poised to dominate the new home market in the coming years.

Centex is now another “brand” that Pulte Homes has to offer home buyers. The company’s headquarters will remain in Bloomington Hills, Michigan.

Industrial Sales Down

August 12, 2009 By Charles 2 Comments

The real estate bubble has caught up with the commercial section, especially in industrial sales. According to Grubb & Ellis, a paltry $2.2 billion worth of industrial properties valued over $5 million sold in the first five months of 2009. Compared to historic figures, sales were down 81% from the same period in 2008. Distressed industrial properties also increased more rapidly than other segments in the first quarter accoring to Marcus & Millichap.

Cap rates are also going up. According to Grubb & Ellis’ calculation, the average cap rate is 8.1%, compared to 7.4% in 2008 and 6.9% in 2007.

Even though industrial properties only make up a small percentage of the total value of distressed US assets, the rate of increase has been dramatic (over 1% increase in the last year). As with the residential market, the increase in inventory has depressed prices. But even with the significant drop in prices, these properties aren’t selling. The decline isn’t that surprising, given the rates of unemployment across the US and the decline of sales overall in the retail sector.

While some experts blame the lack of financing, others feel that the state of the economy is to blame, thinking that investors are waiting until they feel the economy is really on the path to a recovery before committing their resources. Whatever the reason, it seems the commercial real estate market is in for a long haul.

Sources: Grubb & Ellis, GlobestCloak & Dagger the movie

FHA Suspends Lender

August 5, 2009 By Charles 3 Comments

The Federal Housing Administration (FHA) has suspended Taylor, Bean and Whitaker Mortgage Corporation (TBW) of Ocala, Florida after

TBW failed to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor. The auditor has uncovered irregular transactions that raised the flag of fraud and had ceased their investigation.

HUD Secretary Shaun Donvan had this to say in a HUD press release:

Two for the Money trailer

“Today, we suspend one company but there is a very clear message that should be heard throughout the FHA lending world – operate within our standards or we won’t do business with you,”

The Government National Mortgage Association (Ginnie Mae) is also defaulting and assuming control of TBW’s nearly $25 billion Ginnie Mae portfolio. Ginnie Mae has assured TBW’s customers that a new servicer will be found and the transition will be seamless. You can read the rest of the release here.

TBW may appeal the suspension by submitting a written request for a hearing in front of a Administrative Law Judge within 30 days.

Commercial Lending Heading for another Credit Crunch?

July 28, 2009 By Charles 2 Comments

An article in the Wall Street Journal is saying that when it comes to the commercial real estate market, history may be repeating itself based on the latest earnings reports from many U.S. banks. Mounting losses from loans for office space, housing complexes, strip malls, etc are heading towards record levels.

The current trend is reminiscent of the saving and loan crisis under the Reagan/Bush administration. According to RBC Capital Markets, late stage delinquencies on commercial real estate loans peaked at 6% at the height of the S & L crisis. And only a little more than 2% of outstanding loans became losses. Currently banks that have a significant portion of capital tied to properties in hard hit foreclosure areas are feeling the pinch in their portfolios.

With so many banks on the edge of trouble, commercial financing may be harder to come by. Some banks have already started to reduce their exposure in the market, while others are just starting to experience trouble in their commercial accounts. Could this be the start of a self imposed credit crunch in the commercial market?