55-story condo tower joins skyline-transforming rush

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55-story condo tower joins skyline-transforming rush

By Margaret Jackson
Denver Post Staff Writer
DenverPost.com

A Toronto company on Thursday announced plans to build a 55-story, 200-condominium residential tower in downtown Denver, adding to a frenzy of development proposals that could dramatically alter the city's skyline.

Great Gulf Group said it plans to spend about $165 million on the building east of Larimer Square at 14th and Lawrence streets, near Lower Downtown.

It would be among the city's tallest buildings.

The company on Wednesday purchased the 25,000-square-foot site from Denver-based Westfield Development Co. The sale price was not disclosed.

"I think it's the best location in Denver," said Gary Switzer, Great Gulf's executive vice president. "We're on the border of the central business district where the zoning changes in LoDo. It's the last opportunity to do a tall building and a very dense building without being restricted by the height limits of LoDo."

Some real estate skeptics doubt whether all of the proposed buildings will be built. But one competing developer praised the recent moves.

"I think it's good that we're finally starting to pull the residential base into the downtown core," said Michael Geller, who hopes to build a 31-story condo tower near 14th and Speer Boulevard. "The lack of a residential base is something that's been holding this downtown back. The more people we have downtown, the better chance we have of bringing better-quality retail. I strongly applaud any of those kinds of project that will start to bring people into downtown."

John Huggins, Denver's director of economic development, said he thought there's demand for at least the 1,000 or so downtown residential units now on the drawing board.

"Perhaps some of those proposed projects may change as they move to fruition, but I believe they all will be built in one form or another," he said.

Founded in 1975, Great Gulf developed a 36-story tower in Toronto, as well as a number of single-family subdivisions in Texas and Florida. Its Ashton Woods Homes subsidiary developed The Pinery, a 771-home development in Parker.

The company's proposed Denver tower is a few blocks from the Denver Center for the Performing Arts, across the street from a proposed Four Seasons hotel and condominium complex, and adjacent to the Larimer Square Historic District.

However, the site is not part of the historic district. Its zoning is consistent with the rest of downtown, so the project's height should not be an issue, said Julius Zsako, communications director of community and planning development for Denver.

The Four Seasons, proposed by Hotel Teatro developers Michael Brenneman and Jeff Selby, is expected to be about 50 stories tall and include 140 condominiums atop 20 floors of hotel rooms.

Asked about the plans for a competing residential tower across Arapahoe Street, Brenneman cautioned that Great Gulf needs to be sensitive "when you're backing up to Larimer Square. That's truly one of our gems. It's a very old brick block, and it needs delicate handling."

Also in the works

Other downtown projects announced recently:

A 41-story tower near the Colorado Convention Center from Clayton Lane developer Randy Nichols.

An age-restricted condo tower near the convention center by developer Charlie Woolley.

Osborn Development's 31-story One Lincoln Park.

Geller's 31-story condo tower.

Geller's site was part of a land swap in which Mayor John Hickenlooper's administration gave up the land in exchange for property it needed for the justice complex.

Geller has been seeking a boundary change that would put his property out of the historic district and allow the tower.

Councilwoman Judy Montero has convened a group of stakeholders to work with Geller on plans for the site.

"The tower is still being talked about, but we're also talking about what it would look like if he developed it within the historic district," said Kim Kucera, a Montero aide.

Geller said he also is considering several 55- to 85-foot shorter buildings interspersed over the site.

Units in Great Gulf's tower, designed by Peter Clewes of Toronto-based architectsAlliance, are expected to range from 1,200 to 7,000 square feet, with prices starting around $550,000. The building's amenities will include a doorkeeper, concierge, valet parking and on-site recreational director.

"I think there's a really strong market for those units from people who are living downtown in dated high-rises and on Cheesman Park," said Dee Chirafisi, broker/owner with Kentwood City Properties who is marketing the project for Great Gulf. "Fourteenth and Lawrence has the advantage of location. People who are looking for the high-rise lifestyle generally want to be right in the middle of everything."

"Working on a hunch"

The Denver project is somewhat of a gamble for Great Gulf, which is betting on people selling large houses to relocate downtown.

"We're working on a hunch because of what we've seen in other cities," Switzer said. "They really want to be downtown and close to shopping and have walkability. They don't want to get in their cars."

Whether all the projects will be built is a great debate in real-estate circles.

When plans for another of the proposed towers came to light in December, an official from the Downtown Denver Partnership said then that the flurry of proposed high rises was a testament to the demand for housing but warned not all could be built.

"The feasibility of all of them coming to fruition depends on the assemblage of land, financing options and all the different pieces that have to come together for development. That will probably weed some of them out," said Kate Peterson, housing program manager for the Downtown Denver Partnership.

Competing Developers Team up on Boston Condo/Retail Project

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Competing Developers Team up on Boston Condo/Retail Project

Friday, January 27, 2006

The Boston Globe Two competing developers have teamed up to build a residential condominium/retail project in the Theater District of Boston. Amherst Media Investors LLC of Summit, N.J., and local firm Abbott Real Estate Development LLC plan to work together to develop the 58,000-square-foot block. Amherst had proposed a 3.5-story glass building of commercial space while Abbott proposed a 90-foot building that would include housing. Now the Boston Redevelopment Authority board has approved the removal of a trailer housing the Hub Ticket Agency to make way for the venture's colorful gateway structure with nine floors of housing over a restaurant. Construction could start next year.

'Soft Landing' for Condo Investments in Most Markets, Report Predicts

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'Soft Landing' for Condo Investments in Most Markets, Report Predicts
January 30, 2006
By Gail Kalinoski, Contributing Editor

Greg Leisch

The condo conversion market "is largely played out for this housing cycle," according to commercial real estate expert Greg Leisch. But in a report to industry executives advanced today to CPN, Leisch also said he does not expect a national burst. He forecasted a soft landing in most major metro markets, but less gentle in others.

"The bloom is off the rose for condos as an investment," said Leisch, who is chief executive of Delta Associates, an Alexandria, Va.-based real estate information firm and research affiliate of Transwestern Commercial Services. Cities expected to be hit harder by falloff in condo activity include Las Vegas, Miami and Phoenix. He noted that those cities have several things in common: too much supply and condo conversion activity; cheaper housing than other parts of the country; high levels of speculation in the condo market; modest jobs growth and the possibility of a weakened regional economy.

"Prices have risen too dramatically recently and it's probably going to be a little harder landing there than, say, in places like New York City or Washington," he said. "The (condo market) will remain really quite firm in places like New York or Washington."

He also predicted a soft landing in Boston and Los Angeles in the Delta Outlook market report entitled "Condo Conversion: Boom or Bubble Waiting to Burst?" Cushioning the fall in most major metro markets will be high levels of job growth, pent-up housing demand, continued low interest rates and mortgage liquidity. He noted that's in contrast to 1983 and 1990, "when the market last took a dive." Also, there is more demand for condos as an affordable alternative to owning a single-family home after an unprecedented five-year run-up in housing prices, and more people choosing to live in urban areas--where condos tend to be built.

In his firm's report, Leisch pointed out that real estate investment sales have been at record levels since 2000 and no new alternatives have yet emerged. In the first half of 2005, speculators and investors made 85 percent of the condo purchases in South Florida. During that same period last year, 80 percent of the condos in Las Vegas were bought as investments. Those numbers are in stark contrast to Washington, D.C., where end users, according to Multifamilyexecutive.com and Delta Associates research, made 70 percent of the condo purchases. The report also noted that as of the middle of last year, real estate returns exceeded returns from alternative investments such as stocks and bonds for one-year, five-year and 10-year periods.

But Leisch noted that that might change for 2006. "When your stock broker called and said the market would be up by the end of the year," he said, "he hasn't been right for five years in a row. But I suspect he might be right this year."

Northern Trust Company Research: The Market is Slowing Down

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Housing Market Is Certainly Cooling Down

Sales of all existing homes fell 5.7% to an annual rate of 6.6 million units in December. For the
year, existing homes sold at a pace of 7.049 million units. Sales of existing single-family homes
dropped 6.8% to an annual rate of 5.720 million units during December. Sales of single-family
existing homes have dropped during each month of the fourth quarter, taking the quarterly
annualized decline in the fourth quarter to a hefty 17.1%. This is the largest quarterly decline since
the second quarter of 1994, when sales of existing single-family homes fell at an annual rate of
23.1%. (A decline in purchases of homes is not the only noticeably change in the fourth quarter,
sales of autos dropped at annual rate of 38.9% in the fourth quarter).

 

 However, 2005 closed as a banner year with the largest number of existing single-family homes sold since record keeping began in 1968.

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East Coast real estate sales fall

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East Coast real estate sales fall Condo activity defies trend in Bay State Monday, January 30, 2006 Inman News Home sales across Virginia and Massachusetts dropped in December from their year-ago levels, while prices continued to increase, according to the Realtor associations in both states. In Virginia, 10,565 transactions closed in December, a 10 percent dip from last December's 11,745, according to the Virginia Association of Realtors. Virginia's median existing-home price for December was $180,260, up 6.2 percent from $169,725 for 2004. The median is a typical market price where half of the homes sold for more and half sold for less. For 2005, the areas showing greatest increases in closed transactions in Virginia included the Charlottesville area, Harrisonburg-Rockingham County, Lynchburg, Chesapeake Bay & Rivers, Northern Virginia, South Central and Southwest Virginia, and Williamsburg. In Massachusetts, single-family home sales dropped 8.8 percent in December from a year ago, the Massachusetts Association of Realtors reported, marking the fourth straight month of declines. There were 3,574 closed home sales last month, down from 3,921 in December 2004. The median price of a single-family home was $354,000 in December, unchanged from November but up 2.6 percent from $345,000 a year ago. Sales of condominiums in the Bay State totaled 1,627 in December, up 3 percent from the 1,580 sales reported a year earlier. The median condo price rose 3.8 percent during the same period, from $264,950 to $275,000.

Conversion rules stiffen for condos

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Conversion rules stiffen for condos

By Lori Weisberg
UNION-TRIBUNE STAFF WRITER

January 25, 2006

Regulations governing the conversion of apartments into condominiums were tightened yesterday by the San Diego City Council, but the most controversial reforms will not be heard for months.

Yesterday's action follows nearly a year of discussions by council members and city planning commissioners on how to deal with the thousands of apartments, many of them in older buildings, that are being transformed into condos for sale throughout the city. Many of the complexes typically house lower-income residents who cannot afford to buy the refurbished units.

The regulations approved yesterday are designed to ensure full disclosure of a complex's conditions, such as roofing and plumbing and electrical systems. In addition, condo converters will be required to replace any building component, including roofs and heating and ventilation systems, that has a remaining life of five years or less.

Although a report on building conditions is required in some cities in the county where condo conversions are occurring, no such requirement has been in place in San Diego, where hundreds of projects already have been approved. Currently under review are more than 270 projects accounting for 8,350 apartment units targeted for conversion.

The new regulations, once they go into effect after the council gives its final approval in two weeks, will apply to projects in the pipeline, according to the City Attorney's Office.

The regulations came on the same day that the council approved two conversion projects totaling nearly 1,000 units - including a 736-unit complex in Mission Valley.

Some council members said they were troubled by the time it has taken to hear the more substantive condo conversion regulations that have been discussed for the past year. In council committee and planning commission meetings, there has been talk about beefing up relocation assistance for tenants and making condo converters comply with today's parking standards, which in some cases are tougher than what was in effect when many of the older apartment complexes were built.

Yet another proposal would require developers of condo conversions to set aside a percentage of their units for moderate-income households. Under a citywide ordinance that applies to all new housing, converters have the option of paying an affordable housing fee as opposed to making the condos in their complexes affordable.

Councilman Jim Madaffer, who heads the council's Land Use and Housing Committee, said the remaining proposals may come before his committee in March.

"As we sit here and discuss this, hundreds of units are being converted," said Councilwoman Toni Atkins, who suggested that it may be time to halt conversions. "I've supported them, but at the same time we may have gone a little too far."

After the meeting, Atkins said she is unsure there is a council majority willing to take a more aggressive stance on condo conversions.

San Diego is facing lawsuits filed on behalf of two activist groups, which contend that state law requires the city to analyze the cumulative environmental effects of condo conversions.

Cory Briggs, one of two attorneys representing the groups, has agreed to delay proceeding with the lawsuits as long as the city undertakes a less formal survey looking at what the consequences have been of conversions. The City Attorney's Office has been holding informal discussions, including with developers and affordable housing activists, to finalize such a study.

Still, Briggs seemed discouraged by yesterday's meeting.

"It's difficult for me to believe they're interested in addressing the adverse impacts of condo conversions when they approve 1,000 units," Briggs said. "The council members are willing to talk about this, but they're not willing to do anything about it."

Anybody Home?

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Anybody Home?

By SHANNON BEHNKEN sbehnken@tampatrib.com

Published: Jan 27, 2006

TAMPA - Lance Ponton Jr. was a condo developer's dream.

In September 2004, he put down 10 percent deposits on five Harbour Island condominiums before they were even built. Ponton, 27, hoped to sell them for a big profit as soon as the building was finished and his deals closed.

"But when it was done, we found that everyone else in the building was doing the same thing," Ponton said.

He ended up having to make thousands of dollars in mortgage payments for 10 months on all five condos in the ParkCrest Harbour Island. Eventually, he sold four units, pocketing $50,000 to $100,000 on each. With one more unit left to sell, Ponton hopes he can slip out of condo investing before he loses money.

"The market was really good, but it has changed, and it's time to move on to the next hot thing," Ponton said.

As Ponton has learned, rising mortgage interest rates, a swelling inventory of new condos and growing skepticism among buyers about prospects for fast profits have triggered a slowdown in the condo resale market downtown.

Indeed, real estate investors such as Ponton are finding that the days of selling units, or "flipping" contracts on pre-construction condos within hours or days, are over, especially downtown. It's taking months, or longer, to find buyers, and some sellers are having to lower their asking prices, according to sales data and real estate agents who specialize in new condo sales.

That could spell trouble not only for condo owners hoping to turn over their units quickly, but also for developers. More than 30 condo projects are in development in and around the city. Most builders are still getting permits, trying to attract buyers and lining up financing, rather than breaking ground.

Many condo developers have relied heavily on investors to raise enough start-up money to persuade lenders to finance their projects. With short-term investors shifting from urban condos, developers now must market more to people who want to live in their buildings or hold units as long-term investments. It's a tougher sell.

Compounding the problem are completed condo towers that sit half-empty, despite strong sales.

Some condo buildings that sold out during construction have few full-time residents. The reason: Many units were purchased by investors looking to resell or by people buying a second home, property records and interviews with owners show.

The dearth of full-time residents has made it difficult to attract shops and other tenants in the buildings. Some potential buyers are turned off by buildings that aren't lively, said Jason O'Neil, of Palermo Real Estate Professionals in Tampa.

"It's more difficult to attract end users right now," O'Neil said, referring to buyers who plan to live in the units full time. "It's not impossible, though, and I think it will level off as investors sell."

Take the 18-story Parkside of One Bayshore, across from Publix Supermarket at Platt Street and Bayshore Boulevard. Its 104 units sold out during construction, but almost nine months after it opened, fewer than 20 percent of the owners have filed for a Florida homestead exemption, a property tax exemption granted on primary residences.

Companies or trustees own a dozen units, property records show. The lack of primary residents and corporate ownership indicate that many owners don't live in the building, said Warren Weathers, chief deputy property appraiser at the Hillsborough County Property Appraiser's Office.

"If you have under 50 percent homestead in a building, it's usually heavily investor-owned," Weathers said. "Only time will tell if those units are sold to end users. In the meantime, we'll probably see a lot of renters."

Retail Not Rushing In

The lack of primary residents appears to be affecting marketing retail space in the Parskide building. None of the 11,500 square feet of retail space has been leased.

Byron Moger, of the commercial real estate firm Cushman & Wakefield, is confident that retail space in the condo high-rises will be leased. "It's just a matter of getting enough people downtown to support it."

Still, the lack of retail is an annoyance to high-rise residents such as Maryanne Piplica, who came downtown for an urban lifestyle. She and her husband bought a corner unit on the 18th floor of Parkside of One Bayshore.

Piplica, who grew up in New York, said she and her husband traded in suburban life in Palm Harbor hoping to find a lively lifestyle. With her children grown, she looks forward to walking to everything she needs.

"I was hoping for a Starbucks, a bistro-type restaurant, a small gourmet shop," she said of the empty retail space in her building. "I want to see museums and galleries and shops downtown ... things to be open after 5 p.m."

Rising mortgage rates and other factors have played a role in cooling the real estate market overall. Pair higher interest rates with escalating home prices, and some parts of Florida are at risk of an oversaturated condo market, said Bill Hudnut, senior resident fellow at the Urban Land Institute in Washington. He thinks Tampa, thanks to expected population and job growth, should fare better than other markets.

O'Neil, the Realtor who specializes in condo sales, said investors will be able to resell their units, but it will take longer and profits will be lower.

"People get conditioned to thinking things are going to sell in days, and that's just not happening anymore," he said. "Prices, too, will level out, but they will still be good."

A look at three recent condo developments - ParkCrest Harbour Island, Parkside of One Bayshore and Victory Lofts - highlights the strong investor activity in Tampa. Each has had high resales since opening, with a number of units for sale now.

Some investors in these and other buildings made a lot of money, but selling isn't as easy as it used to be. One condo in the Parkside tower has been on the market for 275 days. Another at ParkCrest: 260 days.

No one collects data on the average days condominiums are on the market, but real estate agents say that there is a slowdown and that they are no longer are seeing condo contracts flipped before final settlement.

Units that used to sell within days are taking months, said Kristen Myer, an agent with Smith & Associates, which is working with developers to sell units in several condo projects.

"Investors are dropping out, and that changes the way we have to market condos," Myer said.

Just six months ago, developers didn't have to advertise because investors tracked down new projects and were more than willing to buy, she said. Now, developers have to target potential full-time residents and compete with many other developers for buyers, Myer said.

More Plans To Build

Despite signs the downtown condo market is slowing, developers continue to come forward with proposals.

Crescent Resources plans to break ground in March on a 26-story building with 130 units next door to Parkside, which it also built, said Jim Walters, a real estate agent representing the projects. Crescent also has plans for two more condo buildings in the same area, he said.

Some developers of other downtown condos have restricted investor buying at the request of banks and other lenders, Walters said.

Developers such as Ken Stoltenberg, of Mercury Advisors in Tampa, say the company discourages investors from buying units because they end up competing for buyers of unsold new units.

Crescent Resources welcomes investors.

"I don't know why you would want to control the investment markets so much," Walters said. "The developer makes their money, and an end user ends up there anyway."

As far as Parkside's empty feeling, residents should be patient, he said. When the other buildings are built and more people move in, he said, restaurants and shops will follow.

Some investors are worried.

Jason Barrett, a resident in Parkside, said he is on a list of potential buyers for some condo projects. Developers use potential-buyer lists to justify their projects to city officials or banks. Some of the lists are a year or more old, Barrett said, and the names were collected when the market was much different.

He won't be buying any more condos, he said. Barrett had luck with one condo in Parkside and plans to sell his current unit in four to five years. But he had to lower his price to compete with other sellers in his building.

To Barrett, evidence that the condo market is no longer a good investment can be found at Parkside. He notes that about 40 condos were for sale when he sold his unit last summer. Many of his neighbors use their condos a few times a month, and some use it strictly as a place to party on the weekends.

Barrett, who also owns a condo in Sarasota and a condo/hotel unit on Anna Maria Island, hopes to sell those soon.

"I'm spread thin now and that's not a comfortable situation," he said

Vegas Condos Go Cold

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Wednesday, Jan. 25, 2006
Vegas Condos Go Cold
Developers are suddenly scaling back their bets on the town's once sizzling luxury real estate market
By SONJA STEPTOE/LOS ANGELES

Now that several high rollers in the Las Vegas condo-hotel game, with properties linked to the likes of Michael Jordan and Ivana Trump, are either folding or selling their holdings, a growing number of players are losing their taste for big bets on high-rise residential real estate development.

Over the past two years, as high-rise fever spread across town, prices for the luxury apartments ballooned, fetching as much as $500 to $1,000 a square foot-or up to $1.5 million for a one-bedroom- at the peak. Buyers, mostly interested in flipping them for quick profits, eagerly anted up five-figure down payments, while developers planned more than 70 luxury towers holding a total of about 43,000 units on or near the Strip and downtown. But the intense competition for the city's limited supply of contractors sent construction costs skyrocketing 30% last year, just as lending policies tightened, interest rates climbed and sales started to slow.

Currently, just 18 projects are under way, and nervous developers have called off three high-profile projects over the past seven months. A number of others, including one backed by a group including George Clooney, are being either revised or postponed. Experts now forecast that only a quarter to half of the six dozen originally proposed projects will ever be built. Brian Gordon, a principal at Applied Analysis, a real estate research firm, says the developers with experience building luxury high-rises, whose properties are located on or near the Strip and carry a strong and recognizable brand name- such as Donald Trump, Hard Rock and MGM Grand- are the ones playing winning hands in Vegas now.

Back east, the luxury condo markets that have had similarly explosive growth in Miami and New York, where high-end apartments can command from $2,000 to $4,000 a square foot, haven't slumped yet. Still, experts say the abrupt reversal of fortune in the desert, where the mainstream residential real estate and hotel markets are still quite healthy, shows just how quickly the odds can change in even the most affluent markets if runaway speculation and overzealous development take hold. "It's another case of irrational exuberance," says John Restrepo, head of a Las Vegas real estate and economic consulting firm. "There is a market for high-rise condo hotels here; but it's not as deep as people thought it was. The days of the two guys from the East Coast or Canada coming into town and promoting a condo development with a website and a dream are over."

Realty Times Outlook - Time to Panic? Lereah Say No

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Realty Times Outlook - Time to Panic? Lereah Say No
by Blanche Evans

Is it time to panic? Housing sales are down, housing prices are lower in key markets, and some experts are saying the sky is falling. Housing has propped up the nation's economy for nearly five years, following the collapse of the tech sector in stocks and the brutal events of 9/11. In fact, housing has broken sales records for five years consecutively, suggesting to many that housing's winning streak is about to come to an end. Two recent reports have housing investors running for the exits -- the National Association's monthly report that housing sales slumped 3 percent in December -- despite setting a record for over 7 million housing units sold for 2005 total. But then the California Association of Realtors announced that home sales nose-dived more than 17 percent in the same month. But hold the phone. Your house is not going to implode, explode or disappear like stock options in a bad IPO. Let's look at the big picture -- there's a lot more good news than bad for homebuyers. The Census Bureau just reported that new home sales increased in December. Meanwhile, interest rates have softened to pre-December levels. Also, housing prices continue to shoot upward. In 2005, the median national price was $208,700, up nearly 13 percent (12.7 percent) over home prices in 2004. ($185,200.) Prices also continued to climb in California, where December prices were still up 16 percent over last year. The NAR's chief economist David Lereah says there's no reason to panic. Not only was a market adjustment expected -- it's healthy. In an exclusive interview with Realty Times, Lereah said this: "There is a transition taking place in most of the nation's hot housing markets: transitioning from a sellers' market to a buyers' market. In that transition, home sales drop and after some time, price appreciation follows." But he says -- the sector still exhibits solid fundamentals: low rates, lean supply and healthy demand. What is transpiring to date is the exit of investors from hot markets. That is exacerbating the fall in home sales. But a falling market share of investors is good -- it's almost a cleansing -- for the housing sector. It takes the speculative and risky element out of the equation. So where does that leave housing in 2006? "It will be a down year," says Lereah, "but it will leave us a great deal healthier to begin 2007." Realty Times has been saying the same thing for weeks -- there will be some pullback in the market, but then you'll see buyers swooping down on good deals in housing again. Why? There's still no better place to put your money.

Will Your Condo Retain Its Value?

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Will Your Condo Retain Its Value?
Five Tips for Edgy Buyers

By Lauren Baier Kim

The U.S. condominium market has been good to real-estate investors. In 2004, the median sales price of an existing condominium surpassed that of a single-family home for the first time, according to the National Association of Realtors. This trend has held steady so far through 2005: The median sale price of a condo was $213,600 in September, compared with a median price of $212,200 for a single-family home, NAR reports.

The market for condos remains strong -- condo-sales activity in September was 10.2% higher than the same month last year. But some question whether it will last. "There's a lot of supply, and the demand has been significantly supported by speculative buyers rather than occupants," says Chip Brown, senior vice president and co-director of production of CWCapital, a national multifamily and commercial real-estate lender based in Needham, Mass. Speaking of his firm, he says, "We've gone from being selective to extraordinarily selective in thinking about financing condo projects."

-- November 07, 2005

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Suburban housing market has seen its ups and downs

January 29, 2006

On Jan. 1, Sharon real estate agent David Wluka became president of the Massachusetts Association of Realtors. Globe reporter Kimberly Blanton spoke with Wluka, owner of Wluka Real Estate Corp., about the suburban housing market.

Q: Why did suburban home sales, which started well in 2005, drop sharply during the fall?

A: It was one of the best years in Massachusetts history. It was that the market had finally peaked. If you go back to 1995, except for a couple of blips, we've had continuous growth for 10 years. Back in '95, the annual number of sales was approximately 43,500 units. In 2005, it was about 72,000.

Q: What triggered the slowdown?

A: Part of it was the economy. There was also some unrest: oil prices, situations in the world, and the fact the Fed began to raise interest rates. But if anybody has a sense of history, the rates are historically low. As someone who sold houses at 9 percent, 10 percent, 11 percent interest rates -- or even 18 percent -- I think 6 percent is pretty good.

Q: While sales fell only slightly last year, the biggest change was a spike in inventory. What happened?

A: It's a return to normalcy. Historically, 7 1/2 to 8 1/2 months of inventory, like we have now, was a steady, normal market. You didn't have people overbidding on houses, overpricing houses in a very hot market, and people buying houses to speculate. In a normal market, people buy homes when they need to or when their house is too small.

Q: Why was the market change last fall so dramatic?

A: The market fell sharply because people weren't sure as to what was going to happen. When the talk of the bubble came out, some didn't know what to do so they stopped. Perception more than reality caused that to happen. I'm seeing in the experience I'm having since the first of the year and in talking to other agents [that] everyone's busy.

Q: Do you worry about how high house prices have become for buyers?

A: We have the highest cost of living in the country -- we even beat out San Francisco, according to the National Association of Realtors. We have lost population two years in a row. People in the 18-to-40 demographic are leaving, and we're losing our doctors, our engineers, and their support people to other parts of the country where they can have a similar quality of life for a lot less.

Until we begin to produce more housing, we're going to continue to have a brain drain and a talent drain. We're also losing our service people -- they're driving hours to get to work.

Q: What is your prediction for 2006 sales levels and prices?

A: I don't think we'll hit 2005 sales levels. But if in fact we had as much as a 10 percent drop from last year's sales -- and I'm not saying we are -- it would still be the third-best year in history. I think it'll be less than a 5 percent drop. Prices will probably either be flat or rise moderately.

Q: Should homeowners be concerned home values will fall?

A: They have to have the long-term view. If they're comparing what their houses are worth now versus last year, they may very well be less. But if they go back two or three years, they'll find the appreciation is there. The longer you look back, the higher rate of appreciation.

Q: Tell us about your own home-buying history.

A: I bought my first house in 1972. I lived there until 1979 -- I remember the Blizzard of '78 in that house. I built a new house and lived there 20-odd years. I had an opportunity to downsize and buy some lakefront property in Sharon on Massapoag Pond. Now I have a house for my extended family -- they're all in town. 

Superhot housing market settling down

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Article published Jan 29, 2006

Superhot housing market settling down
A stable sales pace would benefit buyers

By Jennifer Portman
DEMOCRAT SENIOR WRITER

Tallahassee real estate experts have this to say to homeowners accustomed to getting huge checks at closing: Those days are over.

That's not to say money won't still be made. Many just don't think it will be at the same stunning pace.

"I think we are heading toward more sustainable, reasonable appreciation," said Steven Louchheim, executive director of the Tallahassee Board of Realtors. "Six- to 10-percent appreciation, that's healthy."

For the last few years, the prices of homes in town have been increasing at unprecedented rates. In 2003, prices went up 13.7 percent; in 2004 prices climbed 13.2 percent and last year they surged 14.7 percent, according to the board's market trends and research committee.

And while those increases have been great for sellers, it can't go on forever.

"The market can't sustain double-digit appreciation," said appraiser Matt Ryan.

That's not to say any bubbles are expected to burst. Things are simply expected to get back to normal.

"I don't think anybody is going to lose a lot of money, but they might not make as much money in as a short a period of time," said Jackie Wilson, executive director of the Tallahassee Builders Association.

While sellers may rue those words, a slowdown in escalating home prices would be welcome news for buyers.

For people like first-time home buyer Steve Dillion, a 34-year-old accountant and city native, the soaring asking prices have made it tough to become a homeowner in his hometown.

Last year, a new house in Leon County sold for an average of $260,000 and resale homes went for an average of $225,000 - well above the $140,000 Dillion is prepared to pay.

"If you look at the square-footage prices, it's crazy. I'm like, 'What in the world?' " said Dillion, who recently began his search and will likely end up in a townhome. "Things are a little bit weird right now, but I think they are getting back to normal."

Buyers also could catch a break if, as some say, the pace of home sales cools.

"As days on the market increases, then the pendulum swings a little bit," Louchheim said. "When a seller knows that in a week they will get five or six offers they are in the drivers' seat. . . . I think it's also healthy when it takes a bit longer to sell your house."

Recently, the pace of sales has been dizzying. Last year, closed sales were up 19 percent over 2004.

"It's been nothing short of phenomenal," said Ryan, who owns Timberlane Appraisal. "I thought it would slow down in the last quarter of 2005. I was grossly mistaken. We were as busy between the week of Christmas and New Year's as we are in July, August."

But he, too, thinks those days are over.

"Last year is as busy as we're going to see it," Ryan said.

Don Pickett, chairman of the local Board of Realtors market trends and research committee, said higher-end homes will feel the shift most profoundly.

"Where the prices are going to fall are in the upper-end properties," Pickett said. "Over $700,000 are slow on the market and some of them will have to come down on their prices."

More affordable homes below $250,000 will remain a hot commodity because there aren't enough to go around, Pickett said. He expects home prices under $400,000 will see appreciation of about 10 percent.

Overall, the Tallahassee market will remain stable, says Pickett and others, in large part because the area is landlocked by plantations, federal forest land and the St. Joe Co., limiting opportunities for new construction. Interest rates also have remained low.

"It's like Key West. Key West is surrounded by water, Tallahassee is surrounded by large property owners," Pickett said. "What we have to do is make do with what we have."

Happiness, however, can be found - with enough patience and determination.

Barbara MacArthur and her husband, Rick, relocated to Tallahassee in 2000 and by necessity quickly purchased a home without knowing too much about the area. The location and schools were good, but MacArthur soon found herself craving more of a neighborhood feel.

So, on Sundays when she went to the grocery store she started exploring.

"What I did was prowl," said the chief nursing officer at Tallahassee Memorial Hospital.

This year, she finally found her spot in Highgrove, off Thomasville Road. The family downsized from a 4,200-square-foot house to one with 3,100 square feet. She has not regretted the decision.

"The whole thing worked," she said, "I believe if you look, there is still quite a variety of houses available. Patience paid off."

RealEstateJournal | Luxury Home Index: January 30, 2006

RealEstateJournal | Luxury Home Index: January 30, 2006

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RealEstateJournal | Chasing Condos

Homes Sales Fell in December; Condo Market May Falter

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Homes Sales Fell in December;
Condo Market May Falter

By Joi Preciphs

Sales of existing homes fell in December to their lowest level in three months, but they still set a record for the year.

The National Association of Realtors said nationwide sales of previously owned homes fell 5.7% to an annual rate of 6.60 million last month from November's revised annual rate of 7.0 million. Analysts had projected a 6.87 million sales rate in the existing-home market, which includes single-family residences, condominiums, townhomes and co-ops.

The national median price for existing homes of all types in December was $211,000, down from an unrevised $215,000 in November, but up 10.5% from December 2004. The inventory of homes on the market increased slightly to a 5.1 months' supply last month, compared with 5.0 months in November.

The pattern was mixed regionally, with sales falling 11.4% in the West, 7.2% in the South, and 2.6% in the Midwest. Sales in the Northeast were unchanged.

-- January 27, 2006

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Baby Boomers Planning Big Splashes in Next 60 months

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Baby Boomers Planning Big Splashes in Next 60 months
by Kenneth R. Harney

Baby boomers have always made big waves in real estate -- setting generational records for homeownership ratios, equity wealth, and mortgage debt. But what do they want to buy now that millions of them are heading over the symbolic 60-year-old line? New consumer research presented at the annual convention of the National Association of Home Builders in Orlando provided some eyebrow-raising answers. For starters, a stunning 52 percent of all boomers aged 45 to 54 years of age expect to purchase some form of retirement, investment or second home property within the next 60 months. Fifty-seven percent of homeowners aged 55 to 64 say the same. So it's fair to say that the boomers -- 70 million-plus of them -- will play a key role in residential real estate sales, home building and new community development for years to come. But what sort of housing are the boomers most interested in acquiring? The new study, conducted by ProMatura LLC, an Oxford, Mississippi-based research firm, covered a national sample of 2,309 boomer homeowners who have Internet connections. Are the boomers as interested as their parents in property on or near golf course developments? Don't bank too heavily on that one. Just 1.7 percent of the boomers surveyed said yes to buying in golf course developments, and only 5.1 percent said they even want a view of a golf course. Contrast that with moving back into the city or having a view of a city -- 12 percent expected to buy that sort of property. That's got to be good news for realty agents, developers and investors involved with downtown condo and loft conversions. The most popular locational or environmental draws for boomers? Believe it or not, it's "fresh water" and "green space." Over 25 percent of likely movers 55 or older told researchers they either want to buy real estate directly on, or with a view of, fresh water such as a lake, river or pond. Nearly 12 percent want to buy real estate surrounded by "green space" -- parklands, fields or trees -- and 27.1 percent want to see green space out their windows. Salt water-oriented locations get much lower marks. Perhaps worried about potential storm damage, just 8.5 percent want to be either located on, or have a view of, the ocean, a bay or other bodies of salt water. Boomers are much more open than their parents to the idea of planned "active adult" real estate developments, according to study author Margaret Wylde, president of ProMatura. A surprising 49 percent of all boomer homeowners consider themselves likely or highly likely to move to an "active adult" community after selling the family home. Active adult doesn't necessarily mean "retirement community" in the traditional sense, said Wylde. "It doesn't mean senior," it doesn't mean "old folks, but it does mean a very active lifestyle that is tailored to the needs of hyperactive boomers themselves." For example, large percentages of boomers in the study said a key factor in their decision about where to move will be the presence of high-amenity facilities for physical activity, workouts, sports and fitness. One out of every four boomers 45 years and older even wants to be able to walk -- not drive -- to a fitness center. Twenty seven percent want to be able to walk to either bicycling or hiking areas. The bottom line for anyone involved in selling real estate to the boomer hordes: Make sure that whatever you're offering conveys energy and activity -- not aging -- because the boomers think they've got plenty of gas left in the tank, and they absolutely do not feel as old as they are.

New-home sales climb in Dec., set record for 2005

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New-home sales climb in Dec., set record for 2005   WASHINGTON (Reuters) - Sales of new homes expectedly rose 2.9% in December as mortgage rates dipped, but home prices fell for a third month and the number of houses on the market hit a record, according to a government report Friday. For the year, the Commerce Department said a record 1.282 million new homes were sold, up 6.6% from 2004, capping a five-year rally in the housing market that sent sales and construction levels to new highs. Sales of new single-family homes climbed to a 1.269 million unit annual pace in December after falling sharply the previous month. The department revised November's sales pace down to a 1.233 million pace from an originally reported 1.245 million unit rate. Economists had expected sales to slow slightly in December to a 1.225 million unit pace. While sales rose in December, the inventory and price data suggested some cooling in the housing market. The number of new homes on the market at the end of December climbed 2.4% to 516,000, marking a new high. At the current sales pace, that represented 4.9 months' supply. The median home sales price continued to decline as well, down 2.2% to $221,800 in December, the Commerce Department said. That marked the third month in a row of declining prices. Earlier this week, a trade group said sales of existing homes fell 5.7% in December to the lowest level since March 2004. That marked the third monthly decline in a row. But for the year, home resales hit a record 7.072 million, the National Association of Realtors said. The cooling began as mortgage rates started to climb in September. Long-term rates dipped in December, but in the latest week, the 30-year fixed-rate loan rose to 6.12%, from 6.10% the previous week, according to data from Freddie Mac. New-home sales last month soared 22.7% in the Midwest and 11.1% in the West, but fell 23.3% in the Northeast and 2.6% in the South. The homes sales data are subject to major revisions, as the statistics are estimated from sample surveys.

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Flat sales of condos hint thrill is leaving

Home prices higher as volume stagnates

By Mary Umberger
Tribune staff reporter
Published January 26, 2006

Condo sales, the driving force behind Chicago's housing market throughout the fall, went flat in December, the latest sign that the torrid housing market has eased to tepid.

The Illinois Association of Realtors reported Wednesday that existing-condo sales in the Chicago area rose just one-tenth of 1 percent last month from December 2004, though year-over-year sales last fall had spiked 7 to 15 percent a month.

Meanwhile, The National Association of Realtors reported Wednesday that sales of existing homes climbed to 7.072 million units in 2005, setting a new record.

However, sales fell by 5.7 percent last month, the third straight monthly decline.

Analysts say the national trends are worrisome.

A report Wednesday from Goldman Sachs said the December existing-home sales report suggests that "U.S. housing market conditions are deteriorating rapidly," because inventories of both single-family homes and condos "appear to be surging."

If the market doesn't bounce back sharply in early 2006, "we may need to revisit our view that U.S. house prices are set for stagnation rather than outright declines," the report stated.

In Chicago, single-family home sales continued their gradual decline, falling 2.7 percent in December, though their median sales price climbed 11.2 percent, to $264,561, the Realtors said.

Statewide, it was a similar story: Single-family sales, though posting an annual record, were down 1.1 percent for the month, with their median sales price up 8.6 percent, to $203,000.

Chicago-area agents have mixed views of the market.

"It just feels completely flat," said Pamela Ball, a North Side agent for Baird & Warner. "There's no sense of urgency from buyers.

"In Edgewater, for instance, just eight condos over $300,000 were sold in all of December. The year before, there were about 15. That doesn't seem so good."

Others said they don't see a pronounced slowdown but rather a building-by-building variance.

"There are buildings that are very flat," said Thaddeus Wong, a principal with the @Properties brokerage in Chicago. "But in the good buildings in the solid locations, there's strong appreciation. We're still seeing good, solid pieces of real estate that, if in a good location without inherent defects, have a market time of less than 30 days."

Wong said one reason condos are lingering is because many lack distinctiveness from one another, a byproduct of the housing boom that has created a bumper crop of units in similar buildings with similar amenities.

He also cited overpricing by "overzealous sellers" whose perceptions are colored by memories of a hotter market.

This performance--fewer homes sold, but at higher prices--mirrored the U.S. housing picture, according to the National Association of Realtors.

While existing-home sales were down 5.7 percent in December, prices climed 10.5 percent from the year before.

"This is part of the market adjustment we've been discussing, with a soft landing in sight for the housing sector," said David Lereah, chief economist for the trade association.

Population growth

He said he expects sales to pick up in the coming months because of population and jobs growth and because mortgage interest rates are receding toward last summer's levels. On Wednesday Freddie Mac reported that 30-year loan rates averaged 6.1 percent, the lowest since Oct. 20, when it also was 6.1 percent.

But NAR President Thomas M. Stevens of Vienna, Va., cautioned Wednesday that sellers should expect prices to come down to "more normal levels" because of inventory.

Buyer's advantage

"I wouldn't call it a glut," said Arlington Heights Re/Max agent Bill Brucks. "But there's plenty available. In the past five years we've had several new high-rises built here, and they're putting more in as we speak. It does take longer to sell them."

Bob Gary of Arlington Heights said the ample condo inventory there worked to his advantage when he and other family members signed a contract to buy a unit for his mother-in-law just before Christmas.

"We were waiting for the market to downshift a little," said Gary. "We were able to begin the search from a better position than if we had bought earlier in the year."

Gary says he is not worried about appreciation.

"Everything is cyclical, so I wasn't too concerned about it. This isn't something we're looking to turn and make a profit."

One of the few places locally that showed an uptick in condo activity in December was McHenry County, where sales rose 15.2 percent and prices gained about 19 percent.

"It's still a seller's market," said Crystal Lake Re/Max agent Kristi Hoiberg, who said that within certain price ranges the relatively newer condos there sell faster than single-family homes because they tend to be in better condition.

"I'm pricing them aggressively, sometimes at what seems to be a very high price," she said. "The houses sell OK, but the condos get contracts within a few weeks."

----------

mumberger@tribune.com

Condo Converter Pays $74.1Mln for Fla. Apartments

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Condo Converter Pays $74.1Mln for Fla. Apartments

Thursday, January 26, 2006

An affiliate of Elad Group Florida has paid $74.1 million for Park at Sawgrass Mills, a 390-unit apartment property in Sunrise, Fla. The property, at 1640 NW 128th Drive, was sold by ING Clarion Partners, which was advised by Apartment Realty Advisors' Boca Raton, Fla., office. Elad Group is a Miami Lakes, Fla., condominium converter. The property it purchased was built in 1995 and is comprised of 15 buildings that include 110 parking spaces and 54 storage units. It also includes a business center, fitness center, clubhouse and two large swimming pools.

Subprime real estate loan party less hearty

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Subprime real estate loan party less hearty Boom in loans to those with poor credit slows Thursday, January 26, 2006 By Janis Mara Inman News

Jeff DerGurahian, Metrocities Mortgage As the housing market slows, the booming subprime real estate loan market - loans for people with less-than-stellar credit - is also slowing, observers say, despite a long runup. "In general, there's been a subprime boom over the last two years," said Jeffrey DerGurahian, senior vice president of capital markets at Metrocities Mortgage, "but Wall Street is getting concerned about the risks in these loans. "Right now the execution selling loans to Wall Street is not as attractive as it used to be. People are afraid of the credit risk going toward a slowing market," the senior vice president said. Subprime loans are loans to people with less than excellent credit, poor employment records or other problems that prevent them from getting traditional loans. Because the risk is greater, the interest rate charged is generally higher. As early as December 2005, one industry veteran predicted that "exotic" loans, a category that includes subprime loans, would be curtailed in 2006. "The secondary market is tired of creative financing products and is starting to price against them," said Pat Stone, vice chairman for Metrocities Mortgage's board of directors and former chief executive officer of Fidelity National Information Systems. In another ominous sign for the subprime arena, Irvine-based mortgage lender ECC Capital Corp. said Jan. 6 that it would eliminate 27 percent of its workforce, or more than 440 jobs, amid a cooling trend in the home loan business, media reports said. ECC specializes in subprime loans. ECC's main subsidiary, Encore Credit Corp., which funds loans through independent mortgage brokers, will consolidate seven processing centers into three sites in Irvine, Calif.; Downers Grove, Ill.; and Glen Allen, Va., the Los Angeles Times reported. The subprime industry suffered another hard knock this week as Ameriquest Mortgage Co., another subprime lender, finalized a $325-million settlement of allegations that it deceived borrowers, falsified loan documents and pressured appraisers to overstate home values. Whether this development will affect the subprime lending market has yet to be seen. James Croft, Mortgage Asset Research Institute These various reverses are the first in many years for the subprime market, which has been growing by leaps and bounds since 1999, according to James Croft, founder of the Mortgage Asset Research Institute in Reston, Va. Indeed, subprime loan originations grew more than ninefold, from $35 billion to $332 billion, between 1994 and 2003. Subprime loans totaled $403 billion in 2004, 17.6 percent of all originations, according to the data produced by the 2004 Home Mortgage Disclosure Act Data, Mike Fratantoni, senior economist with the Mortgage Bankers Association, said. And, though data for all of 2005 isn't yet available, subprime originations grew to 21 percent of total originations for the first half of 2005, according to the Midyear 2005 Mortgage Originations Survey, Fratantoni said. Prime loans comprised 65 percent of all originations for the first half of 2005. But the party may be over, with bonds backed by subprime home loans losing about 2.5 percent since September, Bloomberg reported in December. "With interest rates having risen and prices having risen and leverage by borrowers having risen the risks of owning subprime-backed mortgage bonds have been increasing. That concern is likely warranted," noted Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information. Indeed, many industry observers expect the loan market in general to decline this year. The MBA is projecting a drop of approximately 20 percent in total mortgage originations in 2006 compared to 2005, "industry-wide, for all types of loans," Fratantoni said. "There is going to be a decreased demand for mortgages." For this reason, the senior economist said, subprime lending will slow. "It is a substantial part of the market and it is going to behave in a manner similar to the rest of the market because it's such a big component," said Fratantoni.

Real estate business booming in Florida

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Real estate business booming in Florida Price gains overtake sales increases Wednesday, January 25, 2006 Inman News

The median price for existing single-family homes in Florida continued to rise in December and home sales in 2005 increased 2 percent over the previous years, according to the Florida Association of Realtors. The median price for existing single-family homes in Florida continued to rise in December, reaching $247,000 -- an increase of 27 percent compared to the statewide median price of $194,000 in December 2004, according to FAR. In December 2000, the statewide median sales price was $116,200, which is an increase of 112.5 percent over the five-year period, according to FAR records. The median is the midpoint, which is a typical market price where half of the homes sold for more and half for less. The national median sales price for existing single-family homes was $213,500 in November, which was 13.5 percent higher than November 2004, according to the National Association of Realtors. In California, the statewide median price in November was $548,400; in Maryland, it was $302,822; in New York, it was $280,000; and in North Carolina, the average resale price was $215,160. Statewide in Florida, a total of 17,505 homes sold last month, compared with 20,592 homes sold in December 2004, for a drop in the sales pace of 15 percent during the holiday period. Realtors across the state reported that inventory levels appear to be on the rise following months of tight supply in many markets, according to FAR. Despite another active hurricane season, Florida's housing market thrived in 2005, registering a record year in terms of closings and median price for sales of existing single-family homes statewide, FAR said. By year's end, Florida came close to reaching the 250,000 mark for annual sales, with a total of 248,565 homes sold -- a 2 percent increase over the 242,597 homes sold the year before. Statewide, the median sales price rose 29 percent to reach $235,100; in 2004, it was $181,900. In 2000, Florida's median sales price was $115,900, which represents a gain of 102.8 percent over the five-year period, according to FAR records. Mike Dooley, 2006 president of FAR and a broker with Illustrated Properties in Hobe Sound, said the 2005 existing-home sales data demonstrates the continued strength of Florida's real estate industry despite local market disruptions caused by three hurricanes striking the state this year.

Californians May Be First To Feel Home Loan Pinch

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Californians May Be First To Feel Home Loan Pinch
by Broderick Perkins

For better or for worse, California often gets first dibs on changes in the national real estate market and in what could be an example of the worst case side of that trend, some mortgage shoppers in the Golden State may be the first to be underwritten out of the home buying market. A data crunching company's new index, designed to help Californians choose less risky housing markets, says California lenders, fearing rising default risk levels, are already more closely scrutinizing mortgage applications. That could make it tougher for already border-line borrowers to get financing or for existing home owners to tap their equity. During the last six months of 2005, risk levels for new mortgages statewide increased an average 28.6 percent in the Golden State, according to San Juan Capistrano-based HomeSmartReports.com, which for the first time offered such data to the public. The risk factor is lowest in coastal Southern California and the San Francisco Bay Area and highest in the rural Central Valley. The greatest increases came in the Salinas and Santa Cruz-Watsonville areas. The index trended down in rural areas north of Sacramento. The high risk areas typically are where more and more buyers stretched financially to get into a home. As home prices have soared beyond a half-million dollar median price statewide, many California home buyers suffering home price sticker-shock migrated away from coastal regions to the Central Valley where homes are cheaper. But the financial stretch makes them more vulnerable market conditions that could cause them to default on a home loan. "The frenzy we saw in more coastal markets last year moved inland at the same time as interest rates were edging up. Some neighborhood sales patterns are showing signs of market stress, and buyers may be stretching their finances. Lenders are evaluating loan applications and appraisals much more carefully," said Mike Ela, HomeSmartReports.com president. Ela said the problem is exacerbated by home builders developing large plots of homes and offering easy-money, no- and very low-down payment financing to buyers stretching to become home owners. Home owners with no or small equity stakes in their homes are more likely to quit home ownership. "The moment things get tough, people walk away from homes and you are left with an excess supply of homes," Ela said. In addition to consumer and developers' habits in the expanding Central Valley market, lending trends in recent years has opened the doors of home ownership to many new categories of buyers who previously could not qualify for a home loan. Such a policy may soon become too much of a good thing. Even if it means putting a damper on the housing market, lenders have little choice but to curtail their risk. Jonathan Lansner a columnist with the Orange County Register said local lenders including New Century, Impac and Downey were experiencing smaller net interest margins -- the gap between a banker's cost of money and income from loans -- compared to the margins a year ago. Similarly, in October the Federal Reserve Board's "October 2005 Senior Loan Officer Opinion Survey on Bank Lending Practices", surveyed loan officers from 57 domestic banks nationwide and found that one-fourth of those surveyed said that they had narrowed spreads of mortgage rates over an appropriate market base rate (which means there are more loans with attractively competitive rates available) and that they had increased the maximum loan-to-value ratio on such loans (which means borrowers are allowed to carry even greater debt loads). Ela said lenders frequently reexamine underwriting policies as an ongoing prudent business practice to keep risk manageable, but federal pressure is likely adding to their concerns. "Lenders are great at managing their risk and I think that lenders are being more vigilant on their own, but I suppose to some extent if they view regulators as coming down the pike they are going to review any process that could be an influencing factor," increasing the level of risky loans, said Ela. Federal financial regulators last year twice warned lenders to curtail risky mortgages, most recently in December when they issued a detailed "Interagency Guidance on Nontraditional Mortgage Products" to address the over abundance of risky purchase mortgages. The proposal was not unlike "Credit Risk Management Guidance For Home Equity Lending" released earlier last year to target risky equity loan making. Regulators want lenders to step back, scrutinize easy-money mortgages -- no and low-down loans, no-doc mortgages, interest only loans, piggy back loans, option-payment mortgages and the like -- and write fewer of them. That's because rising interest rates and flat and falling home values could leave home owners high and dry with mortgages larger than the value of their home. The HomeSmartReports index couldn't come at a better time. Ela said because this is the first time the report was released to the public there's no comparison data among the foreclosure trends, sales activity, resale pace, price appreciation, fraud and flipping activity, and other data used come up with the 1 to 100 index, based on a 1-low to 100-high scale. The increase is based on a proprietary benchmark the company established for an ongoing index. Right now the index numbers appear low, given the 1 to 100 spread. The highest index was only at 6.72 in the Hanford-Corcoran area; 6.08 in Bakersfield; 5.44 in Madera; 4.88 in Visalia-Porterville; and 4.48 in Merced. Larger metropolitan areas have even smaller index numbers -- 0.80 in San Diego; 1.12 in San Francisco and 1.44 in both Los Angeles and San Jose (Silicon Valley). The concern lies in how much the numbers have risen since HomeSmartReports.com benchmarked the data. "In the end, what we want to do is educate consumers about value, risks and trends. Is an area solid or shaky? The strategy is to give them information to inform them so they can make good buying and selling information," Ela said. "We want to level the playing field," he added.

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Posted on Tue, Jan. 24, 2006

Trump plans luxury condos

Tower would be built along the Delaware waterfront.

By Suzette Parmley

Inquirer Staff Writer

Donald Trump said yesterday that he would build a 45-story luxury condominium high-rise along the Delaware waterfront called Trump Tower Philadelphia.

The $190 million project - similar to Trump Tower buildings planned for Las Vegas; Tampa, Fla.; and Chicago - will consist of at least 250 units on Penn Street near the foot of Spring Garden Street, with construction to begin this summer and completion expected in mid-2008.

"I'm really excited about this project," Trump, the developer, casino mogul and reality-television star, said yesterday from his office in New York City. "It will be the tallest building on the waterfront. It is going to be really beautiful."

Trump Tower would be five stories higher than the 40-story towers being built nearby at Waterfront Square at 900 Penn St. Trump would not disclose the exact address, saying his company was in the middle of completing the land purchase.

Trump's high-rise is planned for an area along the Delaware waterfront that has seen a string of multimillion-dollar development proposals between the Benjamin Franklin Bridge and Penn Treaty Park. Besides Waterfront Square, where two of five proposed towers are under construction, Marina View Towers is planned near the bridge and would encompass 600 luxury units.

Three of five slots parlor projects are proposed for that area: the $380 million Riverwalk Casino by Planet Hollywood, the $450 million Sugar House Casino, and a project by Pinnacle Entertainment Inc. that could cost more than $250 million.

Trump described his project as a "first-class" condo building with landscaped gardens, a high-end spa, a five-star restaurant, a wine cellar, health and fitness club, recreation rooms, and an outdoor deck.

Trump said units at his Philadelphia condo project had not been priced. "If I put a price on them, the phone would be ringing off the hook," he said. "They'd sell out right away. That's what happened in Chicago."

The 92-story Trump International Hotel & Tower in Chicago will sit on the site of what used to be the Chicago Sun-Times building. When completed, it will be one of the city's tallest buildings. Only the 110-story Sears Tower and a proposed 115-story building called Fordham Spire would be taller.

In Las Vegas, Trump has proposed a 64-story luxury condominium tower, while the Trump Tower Tampa - which broke ground last fall - will stand at 52 stories.

The Department of Licenses and Inspections is reviewing a zoning plan for the Trump condo project, said Jeff Moran, spokesman for Mayor Street. He added that there was land zoned in that area to accommodate buildings of the size Trump is proposing.

"That's what's under examination," he said, "whether or not any variance or modification of design would be needed to comply with existing zoning."

The Philadelphia condo building is the latest project in the city for Trump. Last month, his casino company, Trump Entertainment Resorts Inc., applied for a gambling license to operate a $350 million slots parlor in the city's Nicetown section.

Trump is partners with former Philadelphia 76ers president Pat Croce and members of Boyz II Men on that project, called TrumpStreet Casino & Entertainment Complex. Trump Entertainment owns and operates three casinos in Atlantic City: Trump Taj Mahal, Trump Plaza and Trump Marina.

Trump never hesitates to emphasize his ties to, and knowledge of, Philadelphia. "I went to school here," the 1968 Wharton School graduate said. "It's a great city. I know it well."

Trump is not the only billionaire developer who has his sights on the waterfront. Chicago real estate magnate Neil G. Bluhm put forth the plans to build a $450 million casino on the former site of the Jack Frost sugar refinery at Delaware Avenue and Shackamaxon Street last month. Bluhm's Sugar House Gaming firm is one of five applicants, along with Trump, for two coveted gambling licenses tied to the city limits. His plans include a residential building near the Sugar House Casino.

Attracting world-class developers, like Trump and Bluhm, reflects how far Philadelphia has come, said Nancy Alperin, chief executive officer of Maxwell Realty Co. in Center City.

"We've arrived," she said. "Philadelphia is the fifth-largest city in the country, and it's finally acting like the fifth-largest city.

"Developers and investors are realizing we're still cheaper than our sister cities of Manhattan and Washington, D.C., so when you're able to develop and sell for less money, and still have a first-class city, it makes sense to build and buy here," she said. "We've seen more investors building and buying product here, like condominiums, more than ever before in the last 12 months."

Allan Domb, who runs Allan Domb Real Estate, which specializes in the brokerage and development of luxury condominiums, said it was "great for the city" to have a Trump or a Bluhm development in an area that has become known as "Fishtown South."

"That's a pioneering neighborhood, and it's aggressive," he said. "But I am a little concerned about the location they are selecting.

"It should be more where people want to live," Domb said, noting that the area lacks supermarkets and restaurants within walking distance. "This is not the west side of New York on the Hudson River. There's no infrastructure there yet."

Domb said he hoped such high-profile developers were there for the long haul.

"The play is future growth," he said. "It could be very good, but it could take a while. Neighborhoods don't change overnight."

On the Waterfront

The following are major projects that are under construction or have been proposed for the waterfront between the Benjamin Franklin Bridge and Penn Treaty Park.

Now under construction, Waterfront Square is a luxury condominium project at 901 N. Penn St. Occupancy of the first two of five planned towers is scheduled for this summer.

Construction has not begun on Marina View Towers, a 600-unit residential tower near the Benjamin Franklin Bridge.

Three slots parlors have been proposed for that area: the $380 million Riverwalk Casino, the $450 million Sugar House Casino, and one by Pinnacle Entertainment Inc., which estimates it will cost $250 million to $400 million to develop. The state is expected to award gambling licenses in December or January 2007.

Trump Tower Philadelphia would be a $190 million luxury condo tower with at least 250 units.

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Washington Business Journal - 2:19 PM EST Monday

D.C. stumbles globally but is still tops for real estate investment in U.S.

Barton Eckert

Contributing Writer

London has knocked Washington out of the top spot when it comes to being the best city for global real estate investors.

A survey from the Association of Foreign Investors in Real Estate, which has been ranking the top five U.S. and international cities since 1992, says Washington is the only city to have made the U.S. list every year. In fact, D.C. has been either first or second in all the surveys except for the year 2000.

London held first place globally in 2001 when the question was first asked, but since then has been second behind Washington.

Kingsley Associates conducted the survey for The Association of Foreign Investors in Real Estate, putting questions to association members who collectively have nearly $470 billion invested globally.

The remaining global cities include New York in third place, moving up a notch, and Paris in fourth position, up from fifth. Tokyo, which made the list for the first time in 2004 in third place, slipped to fifth.

Rounding out the top five U.S. cities are New York, Los Angeles and San Francisco. Newcomer San Diego took fifth place.

The association points out that Washington's slight slip on the global front is more of a reflection of the world markets than it is of D.C. Washington is said to benefit from low vacancy rates, good rental growth and a good capital appreciation rate.

Making strong showings among the new EU countries, The Czech Republic, Poland, and Hungary remained in first, second and third place. For the first time, foreign investors ranked their top Asian-Pacific markets as Japan, China, Singapore, Hong Kong, Korea, India and Australia.

An interesting chart showing housing appreciation in the South of the US

From: www.housingbubblebust.com

Homeowners sue over missing square footage

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Homeowners sue over missing square footage More lawsuits over California builder's size mistake Wednesday, January 25, 2006 By G.M. Filisko

More homeowners have sued builder JTS Communities of Sacramento, Calif., alleging that the square footage of their homes is smaller than the sales brochure indicated -- as many as 168 feet smaller, to be exact. This case, filed as a class action, is the third suit filed against JTS over the difference between the square footage advertised in the company's marketing materials and the actual square footage of buyers' homes. JTS has acknowledged there were discrepancies of up to 168 square feet involving just under 200 homes built between 1998 and 2004. But the company contends that it has not intentionally misled anyone, that no one has been harmed financially and that all home buyers signed sales contracts stating the square footage advertised in marketing material was an estimate. According to JTS general counsel Ian Craig, "We acknowledge there's a difference between the plans filed with the building department and the brochure. But the measured square footages of the homes are in many instances up to and exceed the amount of the square footage in the brochures." "That's not true," said Brandon Gallardo, a plaintiff in the most recently filed suit who bought a La Jolla model from JTS in 2000. He says he's been contacted by 26 families who want to join the lawsuit, and he's reviewed the appraisal for each home. "Every appraisal on record, from a recent refinancing or the original appraisal, says 2,482 square feet, give or take a few feet. They're all within that range, not 2,650," the advertised amount. As for the cases in which the square footage is below that included in the sales materials, Craig said, "The measure of square footage is an inexact science. There've been great variations in the square footage measurements, and our contract indicates that square footages vary." Craig said JTS is cooperating with a California Department of Real Estate investigation by providing the department with about 30-40 form sales contracts for several models of JTS homes. When asked if the company has been asked to provide additional materials but has declined to do so, Craig responded, "I'm not sure what the status is regarding what they've asked and what we've provided." Tom Pool, spokesperson for the Department of Real Estate, wouldn't comment on what information JTS has provided, nor what it has asked JTS to provide, stating the department doesn't comment on ongoing investigations. He added that the department "has no jurisdiction over subdividers of property in terms of marketing. That's a civil issue," he said. "There is an investigation. We're looking into agents and brokers who represented JTS," whom the department does have jurisdiction over. In late November 2004, the company sent letters to homeowners informing them of the difference in square footage and stating that the discrepancy was the result of the building department's requirement that the plans be revised, "which preserved the layout and design of the home but reduced the square footage," according to the letter. Gallardo also disputes that claim. "The letter doesn't say which building department asked for changes," he said. "These plans were submitted to the city and county of Sacramento and the county of Elk Grove, and they're asking us to believe that all three jurisdictions asked for the same changes to the same model?" JTS also stated in the letter that the value of its homes is based on "the design, features and unique quality of the home . and not solely on square footage." "I wouldn't have bought this home had I known its true square footage," Gallardo said. "When my wife and I bought this home, we were debating over buying this home or another, both with the same square footage. But this was slightly less expensive, so we felt it was a better bang for the buck." Gallardo claims his damages as a result of JTS's mistake are as much as $150,000. That figure includes the amount he believes he overpaid for the 168 feet -- which translates into a 13x13 or an 11x15.3 room -- he didn't receive, the amount he believes he'll lose in resale, and punitive damages for what he believes is JTS's intentional misrepresentation. "At this point, we have no smoking gun," Gallardo said of his claims of intentional misrepresentation. "But given that this happened over a course of time and with so many homes involved, I think it'd be ridiculous to believe that nobody at JTS knew." Rob Ward, an attorney with the Burdman Law Group in Sacramento and San Diego, Calif., who represents two families in arbitration with JTS over the square footage issue, also believes JTS made misrepresentations to his clients. "We believe there was a pattern of malfeasance," says Ward, "that JTS knew there was a difference in square footage and continued to advertise the higher square footage, thinking it could get away with it." "What we know right now," Ward said, "is that JTS submitted plans created by its own in-house design company to the City of Sacramento, yet claims to not have known the actual square footage of the homes. This, despite the fact that JTS applied for permits for several homes showing the square footage to be 2,482 for the La Jolla model back in 2001," he said. "It doesn't make sense that JTS would apply for permits at this square footage, yet claim to not have known the actual square footage when my clients purchased their homes in 2003." Craig rejects the claim that JTS made misrepresentations. "First and foremost, there's no false statement. All buyers were advised that square footage was an estimate in their sales contracts, and they were in fact estimates," he said. As for Gallardo's worries about resale, Craig said, "We certainly feel all the homes have all substantially appreciated in value. We don't believe buyers have suffered any damages." Craig said JTS hasn't settled any claims with any homeowners over the dispute in square footage. The company has met with homeowners who said they intended to sue, according to Craig, but after JTS "showed the homeowner an appraisal of the same plan or even their house that's measured at the same as advertised in the brochure, they were satisfied with it and chose not to pursue litigation." In addition to filing suit, Gallardo has contacted California legislators, seeking to have the "Gallardo Act" passed into law. The act would adopt an "acceptable margin of error" of 4 percent or less in stated square footage. "The current proverbial position of, 'oops, we're sorry but we said the square footage is just an estimate'" isn't an "acceptable method" for home building, Gallardo said.