Continue Reading Add comment April 30th, 2009
Lenders continued to rewrite troubled mortgages at a fast clip during March, but the weakening economy still sent foreclosure starts soaring to a record high. Read more »
Continue Reading Add comment April 30th, 2009
Money man Sam Zell’s reputation has been somewhat tarnished by the record speed bankrupty of the Tribune Co., the newspaper publisher he bought for $12 billion. But the self-made mogul made billions over the years in distressed real estate. His thoughts on the market are still worth hearing. Here’s what he said April 27 at the annual Milken Institute Global Conference in Los Angeles.
“We all drank too much Kool-Aid. Between 2003 and 2007, 50% of all commercial real estate traded. It ended up being over-leveraged. All cash buyers like Calpers played the leverage game instead of buying for cash. Very few who bought from 2003 to 2007 are above water. You can call it credit crunch, seller’s strike, buyer’s strike, either way you have more debt than you have value. We won’t see new equity players until the banks foreclose. It’s going to be a couple to three years before the ownership structure changes. Prices are down 25% to 30% on what’s sold. The reality is there ain’t much trading. One of the great lessons of Confucius is bankruptcy courts don’t respect maturities. That’s your General Growth (Properties) story. Sales occur when there are prospects. Tell me where the prospects are? I’m happy to buy a hotel when you can tell me the President will stop pissing on conventions. If owners have no equity, owners have no incentive to do anything. Who’s going to put up tenant improvement money? Publicly held REITs have gone down 65%, arguably too far. That’s real daily pricing. You have a lot of loans at floating rate, you don’t miss payments at 1-2%.”
Continue Reading Add comment April 29th, 2009
Remember when mortgage companies lured home buyers with low payment interest only, adjustable rate loans that spiked after a few years? Now condo developers are doing the same thing. Here’s a pitch from the Barker Block, a loft development in downtown Los Angeles, a market that has a glut of lofts for sale.
There is a big difference between now and the boom. A few years ago, buyers were lured into a paying a lot of money for properties. Now prices are lower. A couple of years ago, the developer would have been asking $600,000 for this condo.
Barker Block’s Residence #238 -
It’s Yours.
Barker Block continues to put stylish and spacious living within reach. We’ve always made home ownership easy and affordable. And now, with new financing tools in place, we’re taking that one step further.
Here’s how, what, why, when & where:
• Residence: #238
• Price: $369,000
• Approx size: 1,020 sq.ft. (that’s big)
• First year interest rate: 2.375%
• First year mortgage: $1,150
(we’re picking up the HOA!)
• Second year interest rate: 3.375%
• Second year mortgage & HOA: $1,693
• Years 3 through 30 interest rate: 4.375%
• Years 3 through 30 mortgage & HOA: $1,862
For less than rent, you can own access to our rooftop pool, spa, outdoor fireplace and cabanas, fitness center, serene courtyard - all just steps from Urth Caffé.
A 30-year fixed, 4.375% interest loan gives you buying power that has never been seen - and will most likely not be seen again. Plus, there is still a small window of eligibility for the $18,000 in Federal and State tax incentives! But know: these numbers are only valid on Residence #238 and will surely soon be sold. Check it out today!
That’s the deal - what you see is what you get, no surprises or hidden fees. This truly is a rare and phenomenal opportunity to purchase a new home.
Give us a call today and make an appointment to speak with our onsite lenders and to view this home. We’ll tell you everything there is to buying at Barker and show you why we’re downtown’s best value.
Enjoy!
The Barker Block Sales Team
Continue Reading Add comment April 29th, 2009
The nation’s air has gotten marginally better over the past 10 years, according to an annual report released Wednesday, but many cities still suffer from severe pollution problems. Read more »
Continue Reading Add comment April 29th, 2009
Just days after Opus South Corp., a division of Opus Corp., filed for bankruptcy, one of the firm’s sister companies is reportedly some $160 million in debt.
Continue Reading Add comment April 28th, 2009
The Obama administration said Tuesday it is expanding its foreclosure prevention program to cover second mortgages and to direct more troubled borrowers to the Hope for Homeowners program. Read more »
Continue Reading Add comment April 28th, 2009
I wrote a story last week saying that the California Association of Realtors were readying to announce the first monthly home price rise in two years (one of a handful of signs that home prices might be bottoming). Turns out the median California home price did, indeed, increase by 2.2% in March compared to February, the Realtors group said April 28. But the $253,000 median was down 39% from March 2008.
The increase is encouraging, but it will have to happen consistently before it is safe to call a bottom in California. The unemployment rate is rising and more foreclosures are expected in coming months. So, prices could easily head back down into negative territory.
Continue Reading Add comment April 28th, 2009
Guest blog from BusinessWeek Banking Editor Mara Der Hovanesian: We highlighted the problems that some small businesses are having with paying their mortgages in a recent issue of the magazine. Small business employs about half of all U.S. workers and creates well more than half of new jobs in any given year, according to the Dept. of Commerce. They have also so far accounted for half the 5 million jobs lost. According to Jim King, state director for the New York Small Business Development Center in Albany, many struggling business owners are holding out hope that they’ll get a piece of TARP to tide them over during tough times.
But so far, federal funding has yet to trickle down to the smallest companies. “The longer we go without access to capital, the worse it gets,” says King. “With the housing bubble bursting, you’ve got the collateral that’s backing some small business loans deteriorating rather quickly. It’s a double whammy on the small business person. Meanwhile banks have totally clamped up lending.”
That double-whammy is particularly acute in California, where exotic mortgages proliferated and where most of the resets to higher interest rates are poised to occur. My colleague Prashant Gopal cited new research that says the resets may not be as dire as originally predicted
but that doesn’t mean people aren’t already nervous and having a problem making ends meet now. “A lot of folks used their homes to finance their business and a good percentage of those folks overextended and are having trouble making their payments now,” says Darren Waddell, vice president of marketing at MerchantCircle, an online networking community of 750,000 small businesses nationwide. Waddell surveyed some 70,000 members in California to find out how they were handling the recession and housing bust. He says that many of his members are worried about higher rates on their mortgages: “Many don’t know how their going to pay once that resets, which speaks to this waterfall that is out on the horizon.” Here’s a link to the survey questions and the results
Continue Reading Add comment April 28th, 2009
This video came to use courtesy of two Kiwis, Hugh Pavletich, an urban planner in New Zealand, and Mike “Mish” Shedlock, a financial advisor. It shows brand new homes in California being torn down by the bank that foreclosed on them.
Mish’s Global Economic Trend Analysis: Extreme Home Makeover Depression Edition
This video from California illustrates how “extreme” the situation has got - as the massive housing bubbles are deflating. In this case – the residential developers have failed – leaving the (un named) Bank with the subdivision and the few houses.
These new houses are being torn down. The video suggests that the regulatory code violation costs are excessive – and it is therefore more cost effective to demolish the new houses and have a subdivision of clear lots available for sale. However – it is likely there is more to the story than this………………….
It would appear the new houses being demolished are rather large and totally unsuited to prospective low income buyers – and that a clear subdivision is likely more saleable to prospective developer / builders of more affordable housing. The subdivision appears to be in the middle of a desert.
What is therefore being torn down, could be described as “bubble housing” – where - as the California bubbles were inflating, existing home owners were using their “bubble equity” to leverage their way in to this larger more expensive housing. A false and obviously extremely risky market situation.
As the California housing bubbles have collapsed to half their bubble peak prices – this “bubble equity market” has now evaporated. In a normal market – this bubble housing would never have been built. There is likely to be considerable volumes of “bubble housing” in the United States and elsewhere where artificial regulatory housing bubbles have been created. Much of it is likely virtually unsalable.
This “bubble stock” should not be confused with normal surplus new housing stock of affordable markets where housing did not exceed three times annual household income (e.g. Dallas Fort Worth, Atlanta, Houston). California with its population of 37 million and residential stock of approximately 13 million units (with the United Kingdom) – currently has the worst build rate per thousand population in the English speaking world of around 1 unit / 1000 population per annum. Normal replacement requires about 2 to 3 units / 1000 population.
The California housing bubbles triggered the Global Financial Crisis.
Continue Reading Add comment April 28th, 2009
The lastest S&P/Case-Shiller Home Price Index numbers suggest, every so slightly, that the worse of the housing slump may be behind us.
The two indices, which include 20 cities and 30 cities, were both down 18% year-over-year in February. That was a slight improvement over January when both set new record, being down 19%. This was the first time in 16 months that the indices failed to post new record declines.
Overall the data shows home prices are back to their 2003 levels. Phoenix, Las Vegas and San Francisco remain the hardest hit. Dallas, Denver and Boston are holding up the best, although all were still down.
The Booby Prize winner? Phoenix, which has seen its average home price fall 50% since the peak in June 2006.
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