RealEstateJournal | As the Market Cools, Is Now The Time to Buy a Home?

RealEstateJournal | As the Market Cools, Is Now The Time to Buy a Home?

Hollywood OK's Project With Lower-Cost Townhouses on Adams Street

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By Shannon O'Boye
South Florida Sun-Sentinel

April 27, 2006

Hollywood � City officials took a major step Wednesday toward building affordably priced townhouses where rundown apartments once stood.

Commissioners selected MG3 Developers and Creative Community Development to build Tango Gardens on Adams Street, east of South 24th Avenue.

Creative Community is owned by the city's former director of art and cultural affairs, Cynthia Miller, who has another project on Adams Street as well.

Tango Gardens is supposed to include 60 three-bedroom townhouses. Thirty-one of them will be priced at $158,000 and can be purchased only by families making a maximum of $46,480, or 80 percent or less of the county's $58,100 median income.

The other 29 townhouses will sell for $270,000.

To win neighborhood support for the project, the developers met with community members and promised to donate $10,000 to create a computer lab at the McNicol Community Center and to make other improvements on the street.

Adams Street has long been a notorious drug haven. Mayor Mara Giulianti said Wednesday it was considered "the worst [street] in Hollywood" when she took office in 1986.

The city used approximately $3 million in federal funding to purchase and raze several dilapidated apartment buildings on the south side of the street.

Neighbors "wanted to bring more ownership into the neighborhood, and for good reason," said Commissioner Beam Furr, who represents the area. "One of the ways we lost Adams Street was there was no one there who was invested in it. You're going to have eyes on that street where you haven't had them in a number of years."

Those who qualify to purchase the low-priced townhouses will not be able to rent them to others, according to Community Redevelopment Director Neal Herst.

Although the city requested proposals from 160 developers, only one other firm submitted a plan.

Developer Gary Posner, who has plans to build condos, restaurants and shops on the south side of Young Circle, offered to build and sell 62 townhouses on Adams Street at $158,000 apiece. An outside consultant analyzed Posner's plan and told city officials Posner might not be able to make the project work financially if he tried to make all the townhouses affordable.

Miller, the former city employee, and former City Commissioner Ken Gottlieb, a state representative, have stirred up controversy by asking the city to give them $6.3 million in land and $2 million in tax incentives on the other Adams Street project. They propose building a mix of housing, retail and office space at the site of the old Theresa Apartments.

As the Boom Cools on the Coasts, New Markets Start to Heat Up

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By James R. Hagerty
From The Wall Street Journal Online

As home sales cool on the East and West coasts, some cities that missed out on the real-estate boom are becoming the strongest markets.

A look at inventories of unsold homes, prices and employment trends points to generally positive signs in Houston, Dallas and Atlanta -- cities that have seen only modest home-price gains in recent years.

Metropolitan areas whose housing markets look less healthy, at least in the short term, include Boston, Los Angeles, Miami, Minneapolis, New York, Philadelphia and San Francisco. All of them have growing inventories of homes and relatively weak job growth. As a result, houses that a year or two ago might have sold in hours now are languishing on the market for months, and some sellers are cutting prices.

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Condos Bring Company Back to Its Roots

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Fletcher Place project is special for Page Development

By Madhusmita Bora

maddie.bora@indystar.com

April 26, 2006

 

They built their fortunes developing waterfront luxury condominiums in Florida. Now local developers Peter Page and his son, Tony, want to cultivate their roots in Indianapolis.

 

So they are building a $30 million luxury condominium project a block from the house where Peter was raised.

It's their tribute to the close-knit community that nourished them, they said. It's also their way of contributing to the city and its growing Downtown.

Villagio at Page Pointe will offer residents 64 units, five floor plans, a four-story secured parking garage and a ground-floor retail hub, just minutes away from Downtown. The building towers over the historic Fletcher Place neighborhood, adjacent to Eli Lilly and Anthem. The price tags: $325,000 to $750,000.

"It will become an anchor for Fletcher Place and help connect Fountain Square with the rest of Downtown," said Terry Sweeney, vice president for real estate development at Downtown Indianapolis Inc.

The project joins a growing crop of similar condo developments in the heart of the city, or close to it.

The 2001 debut of Firehouse Square townhouses resurrected the craze for Downtown living, experts say. Today, close to 1,800 condominium units are occupied or being built, according to Sweeney's association. The market isn't showing any signs of slowing. And there are reasons for that.

Downtown has had $5.2 billion worth of investments since the 1990s. An additional $3 billion will be invested in projects by 2010.

"The growth of condominiums is offering people choice: choice of surburbia versus Downtown and also a choice within Downtown," said John L. Krauss, director of the Center for Urban Policy and Environment at Indiana University- Purdue University Indianapolis.

For the Pages, riding the trend is just part of the story.

"This isn't going to be a huge money maker for the company," said Tony Page. "It's more of nostalgia."

Fletcher Place is known for its Italian heritage. The Pages' ancestors were part of the group that settled there in the 1800s.

"They did it because it's close to Downtown," said Peter Page. "Back in the old country, that's where people lived."

Peter Page remembers his childhood spent playing baseball at the neighborhood park or racing friends to Monument Circle. Neighbors attended services at Holy Rosary Catholic Church and pitched in for the annual Italian Street Festival. Many of them made a living selling fruits and vegetables. And the tradition of working in a family business is as strong as their Italian roots.

Over the years, some of the residents sought their fortunes elsewhere. Peter Page was one of them.

He entered the real estate market in the 1960s, subsequently launching his company. He developed upscale projects along Florida's Gulf Coast. In the 1990s, son Tony Page and nephews Paul Page and Paul Pittman joined the effort.

Page Development now claims 10 Florida projects in its portfolio. In 2001 the Pages ventured home, building Spirit Lake in Broad Ripple near a 13-acre lake. They sold the last unit there in December, a year ahead of schedule. The project's success symbolizes the popularity of condo living.

"People are happy at Spirit Lake, and it's a wonderful community," said Gabe Carincy, president of the homeowners association.

At Fletcher Place, the Pages say they wanted to contribute to the old neighborhood.

"We knew that it's our roots," Tony Page said. "And we wanted to stay where our roots are."

They found a vacant printing warehouse on Virginia Avenue. The location didn't exactly fit their philosophy: The Pages like building homes overlooking an expansive ocean or lake.

"Here you get the skyline of the city, which is beautiful," said Tony Page recently, as he donned his hard hat and looked out to the city from the fourth-floor parking garage of the Villagio. "We consider the view of the skyline to be our water."

Over the decades, the neighborhood's population shrunk as Lilly expanded its offices and I-65 and I-70 tore through the area. The Pages' return is a good sign, old-timers say.

People stop by at the construction site to reminisce. Many in the area can't afford to live in the luxury residence, but they are happy to have it in their back yard.

"It's the icing on the cake of revitalization of the neighborhood around our church," said the Rev. Joseph F. Schaedel, of Holy Rosary. "My parishioners welcome it because the property was such an eyesore and the impressive structure going up makes everybody happy."

The Pages already have sold 26 of the 64 units. They expect the rest to go fast when they unveil the model units. Completion of the project is expected early next year.

In the long run, they hope the project will bear testimony to their contributions toward their roots.

"We have been there for a long time, taken care of the church and the neighborhood," said Peter Page. "We want generations ahead of us to know our heritage and that our family lived there."

Florida Mixed-Use Development Slated for Hallandale Beach

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April 26, 2006 By Hortense Leon, Southeast Correspondent A mixed-use development called the European Club, featuring 118 luxury condominiums and 170 condo-hotel suites, is slated for development in Hallandale Beach, Fla., a few blocks west of the ocean. The developer is V-Strategic Group, L.L.C., based in Miami. Residential condominiums at the European Club are priced from the $600,000 range to more than $4 million, and the condo-hotel suites are priced from the low $300,000 range to more than $1 million. In addition, the project will include 91,032 square feet of Class A office space and 5,638 square feet of retail. Those prices are close to the top of the market for the condominium units, said Guy Trusty, president of Lodging & Hospitality Realty Inc. in Coral Gables, Fla., although they are not as high as those in Miami Beach, where some units sell for more than $1,000 per square foot. "If there is truly a hotel with a flag, a boutique chain," at the European Club, then the development would be different from the typical luxury condominium development, Trusty said. "The Hallandale Beach location is an appropriate location for a condo-hotel, because it is tourist area, and we have had a loss of hotel rooms in recent years, including on Hallandale Beach." But Jack McCabe, CEO of McCabe Research and Consulting, based in Deerfield Beach, Fla., is less sanguine about the project. "If these units were priced under $1 million, they would be easier to sell," he offered. "There are so many million dollar properties in South Florida and most developers are having trouble getting the funding. Only a unique location and a solid developer" has a chance of success. "There's probably at least 75,000 condominium units between West Palm Beach and Miami Beach, which have been announced recently in addition to those which are already under construction, permitted and have financing," McCabe said. "Of those 75,000, less than 10 percent will actually get built."

Developers Set to Unveil New $100M Project

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Construction likely would start this year on a hotel, office space, shops and condos.

Jack Snyder
Sentinel Staff Writer
April 26, 2006

Orlando Mayor Buddy Dyer is expected today to announce a $100 million project that would add another hotel, office space, shops and a condo tower to the city's already booming downtown.

The developers are Highwoods Properties Inc., owner of the 2.2-acre site at the southeast corner of Rosalind Avenue and Pine Street, hotelier Richard Kessler, who operates the 250-room Westin Grand Bohemian Hotel on South Orange Avenue, and an unidentified "national residential builder."

Mike Beale, senior vice president for Florida operations for Highwoods Properties, said construction on all three developments would start late this year with completion in phases in 2007 and 2008.

The mixed-use project would complete the Capital Plaza development, which now comprises the Capital Plaza I and Capital Plaza II office buildings and a 167-room Embassy Suites hotel. Highwoods Properties is the largest owner of office space in downtown Orlando.

Frank Billingsley, executive director of the Downtown Development Board and the city's deputy economic director, said the developers aren't getting any incentives.

According to preliminary plans filed with the city, Kessler would develop a seven-story, 150-room hotel. No brand, or operator, has been announced. Kessler, who opened the 250-room Westin Grand Bohemian in 2001, could not be reached Tuesday.

The 13-story condo tower would have 121 apartments on top of five levels of parking. Beale said the residential developer "is a nationally known name."

The 15-story office tower would have a total of 180,000 square feet of office space on top of eight parking levels.

Between 10,000 square feet and 15,000 square feet of retail space would be included. A large, drive-in plaza would face Rosalind Avenue.

Beale said Highwoods has been evaluating the project for two years. Originally, Highwoods planned a single 450,000-square-foot office tower for the project.

But Beale said Orlando's evolving downtown demanded a high-quality development that offered space for people to live, work and play.

"I've been all over, and Orlando has the most vibrant downtown in the country," Beale said.

Orlando's city center has exploded with development in recent years. The Premiere Trade Plaza development that encompasses the block at Orange Avenue and Church Street is under construction with condos, office space and a retail center including a movie theater.

To the northwest, at Orange Avenue and Livingston Street, developers plan a massive project including more office space, condos, retail space and a hotel.

According to the Downtown Development board, 57,000 people work downtown. Projects worth more than $2 billion are either under construction or proposed.

Beale said no tenants have been signed for the office space, but he thinks he can lease it quickly.

Downtown Orlando's office space is less than 10 percent vacant. Beale said Highwoods' properties -- the company has five downtown buildings totaling about 1 million square feet -- are about 4 percent vacant.

He said he expects to provide expansion room in the new tower for many tenants now in the other buildings.

Highwoods Properties is a publicly held real-estate investment trust based in Raleigh, N.C. The company, which holds interests in 37 million square feet of office, retail and industrial properties in nine states, is one of Central Florida's largest owners of office space.

Home Prices Up But Condo Prices Down

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BY MATTHEW HAGGMAN
mhaggman@MiamiHerald.com
Posted on Tue, Apr. 25, 2006

South Florida single-family home prices held strong while Miami-Dade condominium prices weakened in March, according to figures released Tuesday by the Florida Association of Realtors.

Miami-Dade condo prices dropped four percent compared to the same period a year ago. A median priced condo in Miami-Dade was $249,200. In Broward it was $202,600, up 16 percent compared to the same period a year ago.

In the first three months of this year condo prices have swung wildly in both counties.

Meanwhile, single-family home prices were up handsomely in both Miami-Dade and Broward from a year ago. A median-priced single family in Miami-Dade was $383,100 in March, up 19 percent. Broward came in at $368,100, an 11 percent jump.

Single-family home prices were also up compared to the previous month. The number of single-family homes sold were also up sharply in Miami-Dade compared to March last year. More than 940 homes were sold, up 21 percent from March last year.

Office Space Pulls a Vanishing Act

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By Eric Heisler
ST. LOUIS POST
Sunday, Apr. 23 2006

The weakest office buildings in St. Louis are disappearing amid a flurry of building conversions and tear-downs, improving the image -- if not the health -- of the office market.

After peaking in 2003, the level of empty office space has fallen sharply to below 15 percent this year, according to real estate firm Colliers Turley
Martin Tucker.

Conventional wisdom says the drop is caused by an improving economy and a spate of local hiring.

But a much less obvious trend is at work, too. In several cases, large, empty office buildings are becoming condo or retail sites. As that happens through demolition or redevelopment, the vacancy rate is driven down.

It's a trend that's taking shape at downtown sites such as the Union Pacific building and on suburban corners in Ellisville. Some believe it could spell relief for landlords and eventually encourage new office construction.

For now, however, real estate brokers say the trend means the office market might not be as healthy as vacancy stats would indicate.

"What it really takes to fill office buildings is office jobs, and we just haven't had that many new ones yet," said Dennis DeSantis, senior director for Gateway Commercial LLC, a local real estate brokerage.

Still, "Whenever you can take away some supply, it helps," he said

The majority of these projects involve redeveloping historic office towers. That trend marks an evolution from the recent flood of renovations of downtown warehouses into residential lofts.

As developers began to rehab these empty industrial buildings, the market for industrial leasing in St. Louis tightened up. Now, the same might be happening
with office buildings.

In the most recent example, the Lawrence Group announced plans this month to redevelop the empty Union Pacific office building at Tucker and Market streets
downtown.

The 1920s-era building held office workers until last year, when Union Pacific railroad moved 1,000 jobs to Omaha, Neb. When the $125 million project is finished, only a small swath of the building will be offices. The rest will be retail, apartments and condos.

Steve Smith, president of the Lawrence Group, said the "tremendous oveover-supply of older office space on the market" led his firm to seek a new use for the building.

"It's simply supply and demand at work here," Smith said. "There's more demand for housing than there is for offices, but there's less supply of housing."

Both locally and nationally, the office market went into a funk after the tech bust and recession of 2001. As thousands of workers lost jobs, large patches of
office space went vacant.

Locally, the hardest hit areas were downtown St. Louis and west St. Louis County. The regional office vacancy level topped 17 percent in 2003.

In 2004, employment in the St. Louis area began to grow for the first time in four years. As the vacancy rate has dipped to 14.5 percent, some landlords have
cheered.

But folks like DeSantis argue the main factor may not be an uptick in leasing. DeSantis counts 1.3 million square feet that's been taken off the market in the
form of conversions and tear-downs.

Depending on how the vacancy rate is calculated, that could mean a drop of up to 2 percentage points as weak buildings have gone away, he said.

One example is the former CitiMortgage building in Ellisville, which was demolished last year.

The sea green office building, which once held more than 1,000 employees, was emptied when CitiMortgage announced it would build a new headquarters in
O'Fallon, Mo.

Developer TriStar Business Communities took over the 275,000-square-foot building, at the corner Clayton and Clarkson roads, and tried to lease it to a new tenant before giving up last year.

Now, after tearing down the 1980s-era building, Centrum Properties of Chicago plans to build 80 townhouses, 120 condos and 185,000 square feet of retail shops.

Tony Bosworth, a local broker and developer, said the building was poorly located for a large office.

"The problem is that the office corridor is now clearly Highway 40 all the way out to Wentzville, and this site is away from that corridor," Bosworth said.

Other office sites that will become something else include the Pet Inc. headquarters building near Busch Stadium and the Marquette building in the heart of downtown. Both will become residential towers.

In pursuing these conversions, St. Louis area developers are following their peers in other large cities.

Locally, "I think you're eventually going to see two things happen," Smith said. "Eventually, all of the historic building will be converted. And then you're going to see new construction of office buildings again."

Or maybe, St. Louis will see the redevelopment of older offices into more-modern ones.

Still, the region isn't there yet, Smith said.

At a building in Midtown St. Louis, Hany Abounader faces a decision. Abounader, a real estate developer and broker, recently acquired the 1960s-era Council Plaza office building at South Grand Boulevard and Highway 40 (Interstate 64).

His quandary: Should the building be renovated into offices or residential units?

The answer, he said, could be offices, but only if a single large tenant emerges -- a long shot at best. Absent one, he'll go the more conservative route of condos, shunning a speculative development of an office building without tenants lined up.

"You'd have to be foolish to do that at this point," he said.

$204M Luxury Condo Tower Set for NYC Development

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April 25, 2006 By April Michelle Davis, Northeast Correspondent As another construction deal closes in Manhattan for LCOR Residential L.L.C. and a major West Coast pension fund, with financial advisory from The Singer and Bassuk Organization, LCOR Residential is set to build a 204-unit luxury condominium building at 101 West 24th Street (pictured). The 323,100-square-foot project has construction financed at $203.6 million. "We liked the idea of being the first large, full-service, luxury condominium project in a high-profile but underserved market," David Sigman, senior vice president of LCOR Residential, said. "Our layouts offer renters the opportunity to step up to a nicer environment at a reasonable cost and offer current owners in smaller coops prevalent in the Chelsea area the opportunity to step up to new space with full services." LCOR Residential purchased the original site, which was underdeveloped as a parking lot, along with the corner taxpayer parcel, and then added an inclusionary housing bonus and air rights. "Our overall average is around $300 per square foot compared with a market value for the site in the range of $420 per square foot," Sigman told CPN this afternoon. Construction is set to begin next week and will continue for 25 months. "In today's market, price is everything," Barak Dunayer, president of Barak Realty, said. "If they build a good building and price it well, they will be in good shape. If they had done this last year, they would have been better off."

$600M Luxury Wellness Resort Planned Fro Bethesda

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April 26, 2006
By Michael Fickes, Mid-Atlantic Correspondent

Tucson-based Canyon Ranch has announced plans to develop a $600 million luxury wellness resort and residential community called Canyon Ranch Living in Bethesda, Md. The Penrose Group, Inc. of Tysons Corner, Va., will develop the project.

The decision to locate in Bethesda stems from the fact that the Washington, D.C., metro area is the fourth-largest market for Canyon Ranch resorts in Tucson and Lenox, Mass. "Canyon Ranch guests have consistently told us they want more opportunities to integrate our healthy living philosophies into their daily lives," said Kevin Kelly, president of Canyon Ranch.

The Bethesda development is the second Canyon Ranch Living community. The first got underway in Miami last year. According to Kelly, the company plans to announce a new community in a major market every 18 months.

Scheduled to open in 2008, the Bethesda resort will include a 157-room hotel and two 20-story towers with 434 condominiums and 87 luxury apartments. One of the towers will contain a 90,000-square-foot complex housing wellness programs, exercise equipment, retail, a restaurant and a host of wellness professionals.

The project will alter Bethesda's image in the Washington, D.C., metropolitan area. "In this region, you never think about Bethesda as a high-end retail and entertainment destination," said Larry Thau, managing director of the Bethesda office of CB Richard Ellis Inc. "For the first time, Bethesda will be part of the four star luxury marketplace

Downtown L.A. to Finally Get $1.8B Mixed-Use Redevelopment

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April 25, 2006
By Gail Kalinoski, Contributing Editor

The long awaited $1.8 billon revitalization plan for Grand Avenue in Downtown Los Angeles has finally been unveiled. During a press conference yesterday with the The Related Companies, renown architect Frank Gehry and local officials, Carol Schatz, president & CEO of the Downtown Center Business Improvement District, related the plans.

The project calls for a 275-room luxury hotel, stores, restaurants and more than 2,000 residences to be built in three phases over seven or eight years. For phase one, Gehry, who designed the nearby Disney Concert Hall, has planned two skyscrapers covered in translucent glass. The 50-foot tower would have the hotel and spa, 250 condominiums and rooftop pools. The smaller building, with 25 stories, would have 150 condos and 100 affordable housing units. A 16-acre public park would also be included in the initial development. A public hearing will be held on the proposal next month. If approvals are granted by the fall, development could start by the end of the year, said Schatz. Phase one is expected to be finished within three years.

"The demand on available spaces is huge," Derrick Moore, a senior associate in the Urban Redevelopment Group of CB Richard Ellis in Los Angeles, told CPN this afternoon. "Just a year ago we weren't seeing national names come."

Trump Unveils New Mixed - Use Development in Panama City

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April 24, 2006
By Amanda Marsh, Staff Writer

When Donald Trump held the Miss Universe pageant in Panama City three years ago, he termed the city beautiful and said he would develop there if the right opportunity presented itself. The right opportunity finally did, and in New York City today Trump unveiled the Trump Ocean Club mixed-use project.

Trump's first foray into Central America, the 2.4 million-square-foot, 65-story waterfront tower is being co-developed by the Trump Organization and Panamanian resort developer K Group. It will include hotel condominium units, condominium units, retail, a casino and a beach club and marina upon its estimated 2009 completion. The tower is being built on a beachfront lot in the Punta Pacifica district, bordering the city's financial center, and will be connected to the rest of the city by the Corredor Sur highway, giving it accessibility to both the city and airport.

"Americans are coming in droves to Panama," said Roger Khafif, president of K Group. He cited reasons such as political stability, a low cost of living, low interest rates and the country's location outside of usual hurricane paths. "It's great for baby boomers." Trump said, however, that the project would be marketed worldwide.

The original development plans called for 1.8 million square feet at a cost of $220 million. The project has since been expanded to 2.4 million square feet, but Trump would not disclose if the development costs have risen as well. HSBC will be funding the project, and Colombian commercializing company Espacios Urbanos S.A. and construction firm Arias Serna y Saravia S.A are also taking part in the development.

The unveiling of Trump Ocean Club comes on the same day of Panamanian president Martin Torrijos' plan to ask voters for approval of a multibillion-dollar project to expand the Panama Canal in order to accommodate large, modern cargo ships. That would be the canal's largest modification since its 1914 opening.

Hedge Around Your Home

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Hedge around your home

By Doug Cameron
Published: April 24 2006 18:35

The words would bring a mixture of pleasure and pain to any new homeowner. "You guys got a great deal," crowed not one but three neighbours following the recent purchase of a condo in Chicago's Lincoln Park.

The comments produced the same chill as "the great rehab opportunity" line that graced the realtor's listing. The area's gentrification was almost complete. The only way was down.

Lincoln Park is fairly representative of the country. The US housing market appears to be on the cusp after a prolonged boom. Most analysts predict a soft landing rather than a protracted crash but there are pockets where price appreciation is at unsustainable levels and where it appears a "bubble" is ready to burst.

A hard landing for the housing market, with many Americans funding their consumption with extra mortgages against the increasing value of their homes, could have severe knock-on effects on the economy. So this could be a good time for the launch of the Chicago Mercantile Exchange's latest product. Next month, it will launch futures and options that can mitigate the risk of house price movements. They will also offer investors additional access to housing, an asset class topping $20,000bn - larger than the US equity market - which has hitherto been limited to trading of mortgage portfolios.

According to the CME, the scale of the market should attract institutional investors as well as offering a risk management tool for mortgage providers to hedge exposure to the home loan market. The contracts have been tailored at a size that anticipates demand from individual investors, who could take advantage of their relative expertise in the market in contrast to, say, precious metals.

"I think it's going to be a big retail market," says Russ Wasendorf Sr, founder and chairman of Peregrine Financial, a Chicago-based futures broker. "There are a whole lot more people in the US who own real estate than own [existing] futures."

Familiarity aside, the launch of housing products has been held back by the absence of a reliable measure of house price movements. The CME products will be based on the Case-Shiller indices, developed by two economists in the 1980s and revised to provide a monthly benchmark of pricing in 10 US metro markets, as well as a national composite.

Robert Shiller, the Yale economist and expert in behavioural finance, found fame with his book Irrational Exuberance, which came out just before the collapse of the internet stock bubble in early 2000. Perhaps worryingly, he is now in the "bear" camp on housing.

The CME will offer futures and options based on house prices in New York, as well as Washington, Boston, Miami, Chicago, Denver, Los Angeles and San Francisco. Las Vegas and San Diego, two of the hottest real estate markets over the past two years and the source of feverish discounting by some new-home builders, are also included, and could create volatility.

Over the last five years, according to Case-Shiller, Denver house prices have gained only 20 per cent. In Miami, the increase has been more than 140 per cent. Miami is also the strongest market since the index began in 1987 and its appreciation has been double that of Denver in the period since.

Retail investors can use the futures in three main ways. The simplest, direct investment, lets you take a view on a housing market by going long if you think it will go up, or short if you think it is going down. This is not possible for all futures contracts. These will be settled in cash, unlike, for example, the CME's frozen pork belly contracts.

A similar shorting strategy would allow homeowners planning to move within a limited time frame to lock in the current value of their property, with the contract paying out the difference, or at least part of the difference, if house prices decline before their planned move.

Each contract is valued at $250 multiplied by the index value. Thus to cover the value of a $500,000 home in Chicago, where in January 2006 the index stood at 163.98 - would require 12 contracts.

Finally, owners could link the value of their home to an index. For example, the home above could be listed at a constant 3,000 times the value of the Chicago index, tying its worth to the index and providing transparency to future buyers.

But some economists dislike the methodology of the indices, now known as the S&P Case-Shiller Home Price indices. They are based on recorded changes in home values based on a two-month "look-back" and released on the last Tuesday of each month.

Marc Chandler, an economist at Brown Brothers Harriman and a one-time trader on the floor of the CME, complains it does not provide a like for like guide to prices over time, notably because it excludes the impact of home improvement, which he says contributes to the disequilibrium housing has in the economy.

Mr Chandler suggests a truer reflection of house prices would require, for example, some proportion of sales at Home Depot to be factored in. Observers also question whether housing futures would be used as a risk management tool or as another speculative vehicle. Such things have happened in other markets.

A final question is whether there will be the institutional demand its proponents claim. The bulk of house price risk in the US lies with huge federal agencies such as Fannie Mae. Will they be willing to provide the initial liquidity in the fledgling market?

In spite of the intrinsic appeal of housing contracts, institutions will have to step in if the CME launch is to succeed. Retail financial advisers are suggesting clients wait a year or so before deciding on housing futures and options, rather than risk being left unable to sell in a market with little liquidity.

The new breed of online trading tools - notably in the options market - would at least afford potential users the opportunity to exploit virtual marketplaces as the housing market develops, without the risk of financial loss. However, options will be traded only in the CME's pits. Only futures - which tend to be harder for retail investors to trade online - will be traded on its Globex electronic system.

Condo Developers Find Tough Time in Vegas

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Posted on Sun, Apr. 23, 2006
Condo developers find tough time in Vegas MATTHEW HAGGMAN Knight Ridder Newspapers Two years ago Miami developer Jorge Perez said the Las Vegas market was ripe for the high-rise condominiums he has built so successfully in Florida. But Sin City has not been kind to South Florida's "Condo King." In January Perez canceled a twin-tower condo called ICON Las Vegas. Now he's weighing selling the 25 acres on which he, along with actor George Clooney, planned to build a massive - and much-hyped - 11-tower condo project, Las Ramblas. The $3 billion project was to rise near the Las Vegas Strip, and full-page newspaper ads heralded the arrival of Perez, Clooney and team as the second coming of the Rat Pack. But now Perez says demand is lower than expected and construction costs much higher - in fact, he says, Las Vegas' condo market has dropped off more sharply than any of his other markets. His experience reflects that of some other South Florida developers who gambled on Las Vegas: Going West has turned out to be not quite as easy as it looked. As Las Vegas grew, these developers figured it was poised to become a second-home destination. But now, some wonder if the Las Vegas market is not yet ready for projects centered on condos rather than on the tried-and-true formula of hotels and casinos. A decision will be made in the next two weeks about Las Ramblas' fate, Perez said. Options include going forward, bringing in another investor, or selling - which may still bring a profit, he said. But it would leave the builder without a project in a city he proclaimed the next South Florida. "Did we misjudge the levels of demand and costs in Las Vegas?" said Perez. "The answer is yes." Two years ago Perez and several other South Florida developers - including Miami Beach's WSG Development, Miami-based Fortune International and Royal Palm Communities in Boca Rato - decided Las Vegas might be the next hot condo market. At the time, only Aventura-based Turnberry Associates had successfully built condos in Las Vegas. Like South Florida, Las Vegas was growing. Just as South Florida drew buyers from the northeast, Las Vegas drew the massive Southern California market. And neither Nevada nor Florida has an income tax. Sprawling development and chronic traffic was whetting the appetite for urban living - i.e., condos near The Strip. And, the hope was Las Vegas would do as well with Asian buyers as South Florida had with Latinos. Now some South Florida developers are less sure. Fortune International CEO Edgardo Defortuna considered a Las Vegas project but backed out."The reality is that there are such wonderful, gorgeous hotels at very reasonable prices," said Defortuna. "Why would you stay in a condo when you can stay in a hotel in the middle of the action and not pay that much price?"

Make Way for The Next Generation of Trumps

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Make way for the next generation of Trumps

Donald Jr., Ivanka rising through ranks, but 'he would fire us like dogs'

The Associated Press

Updated: 6:54 p.m. ET April 23, 2006

NEW YORK - Donald Trump hand picks apprentices on his popular television series, but the true apprentices - the ones destined to lead the Trump Organization - have much closer ties to the boardroom.

They are Donald J. Trump Jr., 28, and Ivanka M. Trump, 24, and they are slowly carving out a role in their famous father's real estate business while fashioning their own identities.

In cramped offices located on the 26th floor of Trump's Fifth Avenue headquarters, Ivanka and Donald Jr. have been learning the art of the deal from their father.

"They are very formidable, very smart," Trump said. "They will promulgate the brand throughout the world. I have no doubt about it."

The siblings are positioning themselves to run the company one day, hoping to build on their father's successes, avoid his failures and bolster the company's fortunes.

"That's the intention," Ivanka says. "Ultimately, it's a family business."

But it hasn't been the straightest of paths to the family business for Donald Jr. and Ivanka.

Donald Jr. graduated from the prestigious Wharton School of the University of Pennsylvania but spent time as a ski bum in Colorado prior to joining his father about five years ago. His father wanted him to focus on his profession, not the slopes.

"He was not happy about it," Donald Jr. recalled.

Ivanka, too, decided to do something a little different after attending Wharton. She worked for New Jersey Nets owner Bruce Ratner on a massive retail development.

Ivanka, who studied real estate and finance, took the suggestion of Peter D. Linneman, a Wharton professor she respected, to go out and prove she could succeed on her own merits.

About a year ago, Ivanka left Ratner. Her father's towering condo-hotel in Chicago beckoned.

Today, she travels the country, inspecting property and sifting through business pitches. At night, she takes classes in construction management at New York University. Paperwork containing potential deals clutters her desk alongside a pamphlet: "A Pocket Guide to Trump: How to Get Rich."

Her title is vice president of development, but she plays it down.

"We're not so big on roles around here," she said. "It's pretty much my father and the rest of the company."

But don't typecast Ivanka, a former model.

"Ivanka was one of the smarter, better students," Linneman said. "She worked hard, did her fair share and then some. She's well-grounded and very genuine. She was not a limelight grabber."

Apparently she and her brother have bought into their father's philosophy that they need to earn their keep.

"If he didn't think we were doing a good job, he would fire us without hesitation," Ivanka said.

Donald Jr. put it more bluntly: "In my father's own words, he would fire us like dogs."

Donald Jr. has been with the Trump Organization longer than his sister, starting in 2001. Two years later, he began renovating a building, eventually overseeing the project. The condos are almost sold, and he's still with the company as Trump's executive vice president of development and acquisitions.

At the moment, Donald Jr. is running his father's biggest developments in Las Vegas and Chicago, projects worth about $2.2 billion, currently under construction.

His most important moment since taking a job with his father - other than his recent marriage - came when he formed Trump Mortgage LLC.

This was the first deal the son had finally brought to the company from start to finish. Getting his father to sign off wasn't easy.

"You had to have every answer worked out," Donald Jr. said. "The second you start stammering in front of him, he's got you."

Trump, who is not known for lavishing anyone with praise, singled out his son in front of hundreds of people at a news conference earlier this month.

People who have spent time with Trump say he trusts his children and their judgment. When he opened his books to Forbes magazine to prove his wealth, Trump left his lawyers and children to answer questions - important questions.

Despite the pressures of being Trump progeny, Ivanka and Donald Jr. say there are advantages in having the same last name as the boss. When people negotiate with them, they know they're negotiating with a principal. They know the children have Trump's attention.

"They have my ear," Trump says. "I respect them."

They can also challenge their father forcefully at times. They respect him but they're not intimidated by his outsized personality.

"There's an openness we can have with him," Ivanka said.

If their father makes a decision and the children disagree, they can step behind closed doors and make their case again. Sometimes Trump changes his mind; other times he doesn't.

But if Trump takes the advice and it's wrong, "you'll never hear the end of it," Donald Jr. says with a smile.

Soon, another Trump will join the family business. In the fall, Eric, 21, a senior at Georgetown University, will arrive in New York.

Donald Jr. says all three siblings have type A personalities, and all three are ambitious. And all three have the same mother, Ivana, from their father's first marriage. Trump has two other children - Tiffany and Barron William - from his other two marriages. Tiffany is only 12 years old and Barron William was born in March.

Like Ivanka, Donald Jr. was diplomatic when asked to say who will take the helm when the boss steps down.

He downplayed a sibling rivalry as did Ivanka, who described her relationship with Donald Jr. as more camaraderie than competition.

That's probably true. But they're also Trumps.

"When we want something, we go for it," Donald Jr. said.

Higher House Prices on Coasts Send Home Buyers Packing

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Higher House Prices on Coasts
Send Home Buyers Packing

By Rafael Gerena-Morales and Michael Corkery
From The Wall Street Journal Online

An exodus of U.S. workers from the technology-rich San Francisco Bay and Boston areas accelerated early this decade, according to Census Bureau data to be released today.

Meanwhile, high housing costs on both coasts drove more Americans to cheaper cities nearby. One big winner is the inland Riverside, Calif., area. It continued to attract residents from the Southern California coast from 2000 to 2004, experts say. States in the Southwest and Pacific-Northwest continued to attract many disaffected Californians, economists say. But their rate of U.S. migration gains slowed compared with the 1990s, the Census data indicates. Florida continued to attract new residents at a fast clip.

The bursting technology bubble sent people packing from the San Francisco Bay area. The rate of domestic migration out of the area nearly tripled to an average annual net loss of 14.7 people per 1,000 population, compared with a loss of 5.5 people in the 1990s. At the same time, the Boston area, another high-tech hub, lost workers at an average annual rate of 9.5 domestic residents per 1,000 population, nearly double the '90s rate.

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Gen Y Buying Homes Earlier Than Boomers Did

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Gen Y Buying Homes Earlier Than Boomers Did

MBA (4/21/2006) McAfee, Jamie The reasons why Baby Boomers and Generations X and Y bought their first homes reflect different influences, according to The "Century 21 Homebuyer Survey," by Century 21 Real Estate LLC, Parsippany, N.J. Baby Boomers (born between 1946-1964) purchased their first home based on family reasons while Generation X (born between 1965-1978) and Generation Y (born between 1979-1994) are buying or have bought a home as a safe investment, the survey found. The survey asked the three generational groups questions to discern some of the factors that influence the first-time home buying experience. Generation X and Y buyers tend to take longer to buy their first home, compared to Baby Boomers. Generation Y buyers are also purchasing first homes at a younger age than their Generation X and Baby boomer counterparts are. The average age for first-time homebuyers was 26 among Generation Y respondents, which is three years younger than Generation X (29) and Baby Boomer (29) survey participants, the survey said. Of the survey respondents, the average boomer polled was 51 years old, followed by Generation X and Y at 34 and 25 years old, respectively. Seventy-two percent of Generation Y respondents were single women, followed by 56 percent of Generation X'ers and 59 percent of Baby Boomers, according to the findings. Finally, 25 percent of Gen X respondents are single/never married compared to only 5 percent of Baby Boomers. Buying trends among the generations revealed the Generation X and Generation Y buyers tend to spend more for their first home than Baby Boomers which represents a larger portion of their household income. On average, the impact on the household income was 21 percent of Boomers' income as compared to 25 percent of Generation X and Generation Y's household income. When purchasing a home, Baby Boomers said price was a key concern (51 percent) compared to Generation X (42 percent) and Generation Y (39 percent). Generation X (8 percent) and Y (10 percent) buyers were more concerned with proximity to work for their first home than Boomers (4 percent). To find a home, the majority of Baby Boomers (53 percent) ranked real estate brokers/agents as the primary source of information on their first home, followed by 45 percent of Generation X and 34 percent of Generation Y buyers. Generation Y homebuyers (42 percent) search the Internet far more than their Generation X counterparts (26 percent). Forty (40) percent of all survey respondents said that the best way to find a broker/agent was through friends and relatives. In all three groups of buyers, the majority preferred more frequent contact from their broker/agent when buying a first home (more than 50 percent want contact every few days). The Internet replaced the Boomers (17 percent) drive-by signage for finding a broker/agent. Twenty-one percent of Generation X and Y buyers used the Internet. While Generation Y respondents ranked the Internet as their primary source of home shopping information, it took them longer on average to purchase their first home. When buying their first home, Baby Boomers were the quickest averaging 4.3 months, followed by Generation X at 4.6 months and Generation Y at 5.4 months. After homes were purchased, Baby Boomers (26 percent) were more likely to stay in their first home for more than 10 years as compared to Generation X (13 percent) and Generation Y (9 percent). International Communications Research (ICR) of Philadelphia conducted the survey between March 17 and March 31, with 1,514 respondents completing an online survey via the ICR Web site because of an e-mail invitation. Century 21 Real Estate LLC commissioned the study.

Migration Patterns in U.S. Show Move to South, West

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Migration Patterns in U.S. Show Move to South, West

MBA (4/21/2006) Sorohan, Mike Migration within the U.S. between 2000 and 2004, according to a new report  by the Census Bureau, confirmed two trends: Americans continue to move South and West; and they are leaving large cities. The report, "Domestic Net Migration in the United States: 2000-2004," found that with the country experiencing low and largely similar rates of birth and death nationwide, migration accounts for most changes in regional and urban populations. "The migration story at this broad geographical level is one of net out-migration from the Northeast and Midwest and net immigration to the South," the report said. Between 2000 and 2004, the South saw a net migration of 1.4 million, mostly in the South Atlantic states of Delaware, Maryland, the District of Columbia, Virginia, North Carolina, South Carolina, Georgia and Florida. On average, more than 350,000 people moved to this region per year from other areas. The West-defined as Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, Utah and Nevada-also saw net migration growth, of more than 220,000, during this period, much of it in the Las Vegasarea. The net migration gains of the South and West came at the expense of other regions. The Northeast, and in particular the Mid-Atlantic states of New York, New Jersey and Pennsylvania, saw a net loss of nearly 1 million between 2000 and 2004. The Midwest, and in particular the "Big 10 Conference" states of Ohio, Michigan, Indiana, Illinois and Wisconsin, saw a net migration loss of nearly 650,000. Interestingly, the Pacific region-Washington, Oregon, California, Alaska and Hawaii-also experienced a net migration loss of 302,000, continuing a trend that saw 1.7 million leave the area between 1990 and 2000. The Census Bureau defines migration as a move that crosses jurisdictional boundaries. This particular report does not include population gains from births and immigration, which skews in part the overall population gains of the Pacific states. Florida saw the highest gain in net migration, with 190,894 people moving to The Sunshine State from other states. Following Florida in the top five net gain states were Arizona (66,344), Nevada (50,803), Georgia (41,298) and North Carolina (39,137). At the bottom end, New York State lost the most people from migration (-182,866), followed by California (-99,039), Illinois (-71,854), Massachusetts (-42,402) and New Jersey (-32,147). Eighteen of the country's 25 largest metropolitan statistical areas (MSAs) experienced average annual net outmigration between 2000 and 2004. Neither coast was insulated, the report said. The New York City MSA saw a net outmigration of 211,014, the highest level of any MSA, followed by the Los Angeles-Long Beach-Santa Ana MSA, with a net outmigration of 117,780. The bottom five also included Chicago-Naperville-Joliet, Ill. (-63,249); San Francisco-Oakland-Fremont (-60,984) and Boston-Quincy-Cambridge (-41,851). On the plus side, sharp gains were reported by Riverside-San Bernardino-Ontario, Calif. (81,460, likely from people leaving the Los Angeles MSA); Phoenix-Scottsdale-Mesa, Ariz. (48,598); Tampa-St. Petersburg-Clearwater, Fla. (36,395); Atlanta-Sandy Springs-Marietta, Ga. (31,026); and Dallas-Ft. Worth-Arlington, Texas (17,119). Twenty-one of the country's 25 largest "micropolitan" statistical areas had net immigration between 2000 and 2004, led by Lake Havasu City-Kingman, Ariz., which saw a net gain of 3,950. "Domestic migration continues to redistribute the country's population," the report said.

 

Condos Aimed at Affordability

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Condos aimed at affordability

MELISSA FOLLOWELL
Herald Staff Writer
Friday, April 21, 2006

MANATEE - Another one of Bradenton's rental communities is going condo, and the new owners hope the transition will provide housing to those previously priced out of the real estate market.

Avondale Apartments have become Treesdale Condominiums.

The 200-unit complex built in the early 1970s sold to Osso Development a few months ago for $15.4 million, according to county records.

The property at 1818 Ninth Avenue E. in Bradenton was built as a U.S. Housing and Urban Development complex for low-income residents.

Mark Sosso, managing partner for Osso Development, said buyers are being offered up to $3,000 toward closing costs for a limited time. In addition, each unit is receiving about $7,000 in upgrades.

So far, a dozen or so current residents have reserved units in the complex.

"We tried to make it as easy as possible for those that wanted to buy," Sosso said.

This is Sosso's first condo conversion project, but the experienced builder and developer has owned apartment complexes and other properties in the Pittsburgh area for more than 15 years.

"This came about at the right place and the right time," Sosso said.

Those looking to invest aren't out in the cold either. Investors can reserve only two units apiece. Sosso said he hopes investors will turn around and rent to people who either wish to stay as tenants or whose credit will not allow them the option of buying.

Renovating and selling the condos has become a partnership between Osso Development, the Manatee Coalition for Affordable Housing and Goodwill HomeBuyers Club.

"We are providing the pre-purchase counseling," said Patsy French, communication director for Goodwill Manasota.

Goodwill HomeBuyers Club is a H.U.D. certified counseling agency that provides pre-purchasing, purchasing and post-purchasing counseling to first-time homebuyers.

"They want this to be a successful outing," French said of Osso Development. "We want to help however we can."

The Manatee Coalition for Affordable Housing and Goodwill HomeBuyers Club will provide information on and evaluations of credit ratings and special financing programs. Saturday will be the first day those who don't live in the community can put in reservations on a one-, two- or three-bedroom unit. Prices start at $109,900 for a one-bedroom and go to $149,900 for a three-bedroom.

"We wanted to create an affordable product that would serve a very underserved population. We sincerely hope we have done that," Sosso said.

Melissa Followell, Herald

Housing Markets That Are Hot And Those That Are Not

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Housing Markets That Are Hot
And Those That Are Not

By Lauren Baier Kim

Here's a look at what's new in real-estate markets across the U.S. from around the Web.

Los Angeles median price hits record high

Home prices in Los Angeles County continued to rise last month, despite indications that the market may be slowing, says the Los Angeles Times. In March, the median home price rose to $506,000, surpassing the half-million-dollar mark for the first time in the region's history, the article says, double the median price of four years ago. However, there's also slowing price appreciation, fewer sales and more houses for sale, all signs of a slowdown, the Los Angeles Times quotes an economist from the University of California, Los Angeles as saying. Using conventional financing and a 20% down payment, a household would need an annual salary of at least $120,000 to purchase an area home at the current median price, according to the article.

 

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5 Key Way to Avoid Buying A Bad Condo

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5 key ways to avoid buying a bad condo Renter population, homeowner dues become key issues Friday, April 21, 2006 By Robert J. Bruss Inman News

Whether you are a first-time home buyer, or a retiree planning to "down-size" your residence, condominiums are "hot" during the 2006 peak home-buying season. In most communities, condos are still affordable for home buyers. Condominiums are no longer the "ugly ducklings" of real estate. Now they appreciate in market value almost as fast as single-family houses. Purchase Bob Bruss reports online. As a longtime condo owner, I've witnessed their ups and downs in both popularity and desirability. Most condo owners are very satisfied. However, some condo complexes are poorly managed. Others have high monthly fees with sub-standard maintenance quality. Worst of all, some condo complexes have become occupied mostly by renters, rather than owner-occupants, where there is little pride of ownership. Buying a condo is not as simple as buying a house. However, if you know the right questions to ask, buying a condominium can be a profitable experience. WHY BUY A CONDO INSTEAD OF A HOUSE? In addition to the affordability of condos, the primary reason many condo buyers purchase is lack of maintenance concern. Condo owners don't worry about repairs outside their condo units because that is the responsibility of the condo homeowner's association. Legally, a condo purchase involves very expensive air. Known as a "vertical subdivision," each condo owner purchases the airspace to the inner walls, ceiling, and floor surfaces of a specific residence unit. The building structure such as the walls, foundation, elevators, parking area, and roof, including outdoor grounds areas, is known as a "common area," which is owned by, and the maintenance responsibility of, the homeowner's association, which is owned by all the members. In addition to affordability issues, the majority of condo buyers purchase for lifestyle reasons, such as recreational facilities, freedom from exterior maintenance, ability to lock the door and be away for extended periods, and enjoyment of luxury facilities at modest cost. NEW OR RESALE CONDO -- WHICH IS BEST? Being the current owner of a second-home condominium, and having owned several previous condos, I am quite familiar with the many pros and cons of new and resale condominiums. Owners of older resale condos usually have greater predictability of maintenance expenses and monthly fees because the construction defects of new units have been repaired. However, older condo associations often have gradually increasing maintenance costs as the property ages. But a well-managed condo association will budget for such expenses and set aside adequate reserves so special assessments won't be necessary. Buyers of brand-new condominiums usually enjoy the latest up-to-date facilities and amenities. However, construction defects are a frequent problem unless the builder takes care of them without trying to dodge legal liability. For example, reportedly over 80 percent of California condo homeowner associations have sued their builder for construction defects. Lawsuits by a condo association against its builder, or involving any other defendant, can greatly hurt the resale of condos in that complex. Mortgage lenders often refuse to make loans to buyers where there is any litigation involving the condo association. Another unexpected problem with brand-new condos is the developer often sets the monthly maintenance fees too low to adequately fund reserves for repairs. After all the units are sold, the unpleasant result is the homeowner's association has to raise monthly fee assessments to provide sufficient funds for expenses and replacement reserves. THE FIVE KEY QUESTIONS CONDO BUYERS SHOULD ASK To avoid buying a "bad condo," whether it is brand-new or a resale unit, smart condo buyers ask at least these five key questions: 1.) HOW DO THE MONTHLY CONDO FEES COMPARE WITH COMPETITIVE NEARBY CONDO COMPLEXES? Smart prospective condo buyers first ask, "What is included in the monthly assessment fee?" and then compare it with the fees charged at nearby competitive condo complexes. However, be sure to compare apples with apples. To illustrate, the condo that I own includes winter heat in the monthly fee, but not summer air conditioning. Similar nearby condos include these major expenses, but some include neither because their condo units have individual heat and cooling units. Closely related is the issue of adequate replacement reserves. Wise condo buyers carefully review the latest financial reports of the condo homeowner's association. If it is an older complex, the reserves should be relatively high per unit to provide for unexpected repairs. However, newer complexes usually don't need high maintenance reserves. 2.) WHAT IS THE FINANCIAL CONDITION OF THE HOMEOWNER'S ASSOCIATION? ARE THERE ANY EXPECTED SPECIAL ASSESSMENTS? Before purchase, condo buyers must be given a copy of the CC&Rs (conditions, covenants, and restrictions), by-laws, rules, and latest financial reports of the homeowner's association. In addition, smart buyers ask for and read the board of director's minutes for the last six meetings. A key question prospective buyers should ask is, "Are any special assessments under discussion or planned?" For example, I recently had lunch with a very successful real estate broker who told me about a condo he recently sold for an elderly seller. He explained that only after the sale was almost ready to close, it was discovered the condo owner's association planned to levy a $20,000 special assessment on each owner to pay for deferred maintenance. There is no specific maintenance reserve guideline. But two general rules are a) $2,000 to $3,000 per unit, and b) 25 percent of the annual gross income of the association should be in the reserve account. 3.) IS THE CONDO ASSOCIATION PROFESSIONALLY MANAGED? Except for very small condo associations up to six units, every condo association needs a professional property manager. Prospective buyers should be wary of buying a condo in a complex that is self-managed, often by the owners or directors living in the property. A related question is, "How long has the complex been managed by the same company?" The longer the better. The condo association where I own my condo has had the same professional management firm for 30 years. The property manager assigned to our property has managed our property over 20 years. Needless to say, we are very satisfied. Professional managers usually "earn" their fees from expense savings. For example, our insurance policy recently came up for renewal. The professional manager shopped among many insurers. Since he also manages other condo complexes, he controls lots of potential business for insurers. Not only did he negotiate a big reduction in our premiums with the same coverage, but he also got the insurer to lock-in the same rate for up to three years, and we are free to shop among other insurers at each annual renewal. 4.) WHAT IS THE PERCENTAGE OF RENTERS IN THE CONDO COMPLEX? If the answer is more than 10 percent, buyers should be cautious. If there are more than 20 to 30 percent renters, that's a very bad sign because mortgage lenders will either refuse to make loans in that complex or they will charge higher interest rates. Too many renters can hurt future condo sales. A key reason to avoid condo complexes with more than a few renters is absentee owners often don't care about maintenance of the property. The result can be declining quality of maintenance. Complexes with anti-renter rules are considered very desirable and often bring premium resale prices. 5.) ASK SEVERAL CURRENT RESIDENTS, "WHAT DO YOU LIKE BEST AND LEAST ABOUT LIVING HERE?" A closely related question to ask is, "Would you buy a condo here again?" Most condo owner-occupants are very friendly and willing to share their good and bad experiences. While you are asking questions, don't hesitate to inquire, "How is the soundproofing here?" Poor soundproofing between condo units, upstairs and downstairs, as well as adjacent, is the number one complaint of condo owners. Lastly, when making a condo purchase offer, be certain it contains a contingency clause for a professional property inspection. After the condo seller accepts your offer, be sure to accompany your professional inspector to determine if there are any undisclosed defects in the unit or the complex that might cause you to reject the inspection report. More details are in my special report, "The 10 Key Questions Condo Sellers Hope Buyers Don't Ask," available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.

$180M Mixed-Use Project Planned for Downtown Orlando

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$180M Mixed-Use Project Planned for Downtown Orlando

April 21, 2006
By Hortense Leon, Southeast Correspondent


With 1000 North Orange--one of the largest developments planned for downtown Orlando, a city in the midst of a development boom--approved by the city's municipal planning board earlier this week, it is now expected to go before the Orlando city council on May 15th. The $180 million, 42-story mixed-use development will feature 650 luxury condominiums, 67,500 square feet of office space and 13,000 square feet of retail. It is being developed by the Hallandale, Fla.-based Mayan Group.

Haim Mayan, Mayan Group's CEO, says he chose Orlando for the project because the South Florida market, and especially Miami, is too crowded (although he himself is developing an 150-unit condominium project in Broward County's Dania Beach, just north of Miami). He also has a contract on another Orlando site for later development; that site is on International Drive, he acknowledged, although he did not elaborate on his plans for it.

The current Orlando development boom is different from the boom going on in many other cities today, observed Naeem Coleman, economic development coordinator for the Orlando Downtown Development Board. It includes not only residential condominiums but more than 2 million square feet of office space and 700,000 square feet of retail either proposed or under construction within the 1,600-acre area for which the development board is responsible, at least with regard to promoting development. That is in addition to the 7,000 residential units that are also in the works in the area, said Coleman.

Mayan said he does not know how the 1000 North Orange project will be financed as of yet. "We may go to a bank or private equity partners," he said.

Before he became a developer, Mayan was a construction contractor for a number of office buildings in New York and Miami. In Orlando, he expects to break ground on the 1000 North Orange development in mid-2007.

Toronto Real Estate Sales Grow

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Toronto real estate sales grow Condo activity soars across region Friday, April 21, 2006 Inman News

In the first half of April, the Toronto-area resale housing market showed a modest increase in transactions compared to the same time period a year ago, the Toronto Real Estate Board reported. Realtors documented 4,140 sales during the first half of April, up 3 percent from the same period a year ago. "The market followed its best first quarter ever with another solid performance to start this month," said TREB President John Meehan. "The spring season is a very important indicator for the overall health of the market and it is very encouraging to see this kind of performance." TREB also reported that the average price of a home in mid-April was $366,878, 2 percent higher than the mid-March figure of $360,285, and up 9 percent over the $337,206 recorded in mid-April of 2005. A few neighborhoods across the Greater Toronto Area showed particularly high mid-April sales totals in comparison to mid-April figures from last year: In the East, Scarborough's Wexford/Dorset Park area saw 71 percent more overall transactions compared to mid-April 2005, helped by a jump in condominium activity. In the West, overall sales activity in Rexdale was 62 percent higher than totals recorded midway through April of a year ago. Condominiums made up the majority of transactions in Toronto's Downtown East neighborhood, as the area saw 60 percent more overall transactions in the first half of April compared to a year ago. North of Toronto, the Markham West/Langstaff neighborhood showed an overall increase of 89 percent compared to mid-April of last year, fueled by strong sales of detached homes. The Toronto Real Estate Board serves more than 23,000 Realtors throughout the Greater Toronto area.

Why Mexico Has Come Of Age As Retirement Property Market

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Why Mexico Has Come Of Age As Retirement Property Market

BY DAVID DEVOSS
FOR INVESTOR'S BUSINESS DAILY

Posted 4/20/2006

Fifteen years ago, San Felipe was an impoverished Mexican village at the northern end of the Sea of Cortez. Its fishing industry was moribund. Its farmland lay fallow.

American snowbirds who arrived every winter were about the only reason the town of 16,000 had a cash economy at all.

Still, former Marriott Corp. executive Patrick Butler saw only potential when he got there in 1993, just before the signing of the North American Free Trade Agreement.

San Felipe was off the beaten path, though just a six-hour drive from Phoenix and less from San Diego. The town's fishermen were poor, but they enjoyed a quaint port on a tranquil sea 15 degrees warmer than the nearby Pacific Ocean.

Butler realized any warm-weather beach town near a large population is bound to appreciate in value. So he bought 200,000 desolate acres for $12 million and named his new property El Dorado.

Today, Butler's Club Acquisition Co. presides over two hotels, a gated community of 750 homes and lots, 700 condominiums and a seaside golf course. These generated over $80 million in revenue from property sales, rentals and management fees last year. Revenue is set to top $110 million in 2006. No longer sleepy, San Felipe has a population of 25,000, including 5,000 Americans.

Those Americans account for 70% of all spending and are seeing their retirement properties appreciate 10% a year.

"NAFTA reforms and new laws protecting foreign investment are fueling a booming market in retirement property," said Butler, 61. "More than 1 million Americans live in Mexico. And that number will grow, if only because over the next 20 years 10,000 baby boomers every day will reach age 50."

In response to America's demographic, luxury developments are sprouting along Mexico's Pacific coast. Near Mazatlan, Butler's company is building an 816-acre gated community called Estrella del Mar.

Ground zero in the Mexican land rush lies between Rosarita Beach and Ensenada on Baja's west coast. Condos, town homes and detached villas there are appreciating 20% a year.

In Ensenada - where 40,000 Americans own property - English is the lingua franca, the dollar is the currency of choice at big box stores and most new homes have infinity pools and fast Internet access.

Mexico has always offered the prospect of comfortable retirement. But investing in a home there was long seen as risky. Land titles were murky, banks charged exorbitant interest and Mexico's judiciary rarely ruled in favor of a foreigner.

"In the past, a buyer would pay 30% down and the seller, or developer, would finance the balance," said Juan Moreno, a real estate attorney with international law firm Bryan Cave. "The danger was that the buyer did not get title to the property until the loan was fully paid. Because he didn't have title he couldn't get title insurance. And if his payments were delinquent for two consecutive months he could lose everything."

Reforms that have made Mexican real estate investing more secure began in 1993. The country's Agrarian Law was amended that year so members of ejidos - peasant collectives that received land after the Mexican Revolution - could sell their individual parcels once the land was privatized.

NAFTA's passage the next year created dispute-settlement provisions to protect direct foreign investments. In 2000, Mexico's Negotiable Instruments Law and Commerce Code were changed in ways that allow expedited foreclosure procedures. Reforms in 2003 provided for regulation of Mexican real estate agents, ethical guidelines for property developers and recognition of U.S. title insurance.

As the result of those reforms, a number of U.S. firms including First Capital Mortgage, General Electric's  (GE) unit GE Capital and CS Financial now offer mortgages to U.S. citizens buying in Mexico.

"Mexico's laws were changed several years ago," Moreno said. "But it takes time for U.S. investors and lenders to develop trust in the new system."

Buying property in Mexico is now easier. A foreigner can do it on the mainland outright by direct deed, except in what's called the restricted zone: 32 miles from the coast or 62.5 miles from the U.S. border.

Buying there, or anywhere on the Baja Peninsula, takes a Mexican bank trust called a fideicomiso. The bank, for an annual fee of about $400, serves as a trustee holding legal title for up to 50 years.

A permit to set up a bank trust is around $1,000. When the government approves the trust, an appointed attorney called a notario prepares the deed. Taxes, normally 2% of the purchase price, must be paid.

Then the deed is recorded and title insurance can be purchased through companies such as First American Title Insurance, (FAF) a unit of First American; Fidelity National Title, a unit of Fidelity National Financial; (FNF) and Stewart Title Guaranty, a unit of Stewart Information Services. (STC)

As a beneficiary of the fideicomiso, a foreign owner can use, improve, sell or bequeath his property. Co-owners can be listed to avoid probate. And the trust can be extended indefinitely.

Cost is a major factor driving Mexican real estate. An ocean-view condo in the planned community of Las Palomas at Puerto Penasco, a booming resort town across the Sea of Cortez from San Felipe, sells for $300 a square foot. Similar properties on San Diego's Coronado Island go for $2,000 a square foot.

Developed by Abigail Properties of Phoenix, Las Palomas is 60 miles south of the Arizona border. It will consist of 200 golf course homes and 1,800 condos. Half the condos, priced from $325,000 to $2 million, are already sold. Thirty-year fixed loans from U.S. lenders at 6% interest are available.

Meridian Development Group in Reno, Nev., is building two of the larger Baja communities under construction. Halfway between San Diego and Ensenada on 33 acres overlooking the Pacific, Brisamar will be a private residential club of 300 Mediterranean-style units.

Farther south, just outside Ensenada, the even larger Porto Hussong is planned. Ocean promenades and garden paths will connect a 250-slip marina and retail area with a five-star inn and four towers with 270 condos. They range in price from $550,000 to $1.8 million. Though construction won't start for four months, two-thirds of the 150 units in the first phase are sold.

Migration of Mexicans into the U.S. receives most of the attention. Chris Merson, the 62-year-old CEO of MDG Resorts, says the flow of American baby boomers to Mexico is also significant for property developers.

"California is the sixth largest economy in the world, and we're sitting right under it," said Merson. "All we have to do is wait for the richest generation in the history of America to retire."

Far From Emerging, New Markets Are Here Now

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Far from emerging, new markets are here now Hispanic immigrants a 'sweet spot' for real estate opportunity Thursday, April 20, 2006 By Neil J. Morse

It has become something of an inside joke in financial services that the so-called "emerging markets" already are here and well established. What's more, they represent a potential windfall for financiers who serve them right.  "We're mainstream already," declares Hernan Guaracao, publisher of Al Dia, a Spanish language newspaper based in Philadelphia. And, if buying power is proof, Guaracao is correct. The disposable income of Hispanic immigrants will top $1.08 trillion by the end of the decade - just four short years from now, according to the University of Georgia's Selig Center for Economic Growth. But institutional lenders in the U.S. are beginning to question whether their well-honed methods for identifying, measuring and controlling customer behavior will not fit the new breed of customers. Consider recent comments by the chair of the Mortgage Bankers Association, discussing the industry's much-prized automated underwriting procedures, used most often by lenders making loans in conformance with limits set by Fannie Mae and Freddie Mac, currently at a ceiling of $417,000 for single-family loans. "I have had controversial discussions with both the GSEs (government-sponsored enterprises) on this," reports Regina Lowrie, president and CEO of Gateway Funding Diversified Mortgage Services. Lowrie is serving a one-year term as MBA chair, expiring in October. "We are of a mindset that at the time of application we can run [any] borrower through an AU system and get a decision," says Lowrie, noting that industry has moved so much to an automated underwriting. "My concern (is) we do need to deal with better service to diverse customers. I'm not sure they can (all) fit in the black box. It's a big issue," the MBA chair says. This is especially true with many Hispanic immigrants who shy away from mainstream lenders, illegals due to fears of deportation, others simply used to cash transactions, born from decades of financial crises and currency devaluations in Latin America. "We need to do a better job of serving this customer; finding systems and ways that we can deal with the differences in their credit and their savings and their employment history that are part of a socio-economic culture," Lowrie says. Beyond a failure to fully capitalize on this new market, Lowrie says lenders may open themselves to charges of discrimination. "I think what happens is, because we rely so much on AU (automated underwriting) systems, we run the risk of having disparate impact or disparate treatment of those segments of the market." Jorge Caceres, director, emerging markets, Genworth Mortgage Insurance, says by 2010 fully one-fifth of the U.S. population will be Hispanic in recent origin and of that share, three-quarters will reside in only seven states: Arizona, California, Florida, Illinois, New York, New Jersey and Texas. Two-thirds of Hispanics in the U.S. are of Mexican nationality, with the next largest contingent (14 percent) from Central and South American countries. "Not only do you have a growing population (but) it's a young population: 66.8 percent of Hispanics in the U.S. are 34 years old and under," says Caceres, adding: "We like this because that's the age of the first-time home buyer; it really falls into that 'sweet spot' of opportunity