Blackstone Rushes $2.5 Billion Purchase as Homes
Blackstone Group LP (BX), the largest U.S.
private real estate owner, accelerated purchases of single-
family homes as prices jumped faster than it expected.
Blackstone has spent more than $2.5 billion on
16,000 homes to manage as rentals, deploying capital from the
$13.3 billion fund it raised last year, said Jonathan Gray,
global head of real estate for the world’s largest private
equity firm. That’s up from $1 billion of homes owned in
October, when Blackstone Chairman Stephen Schwarzman said the
company was spending $100 million a week on houses.
“The market is moving much faster than
anybody thought possible,” Gray said during an interview in
Blackstone’s New York headquarters. “Housing is much
stronger than people anticipated.”
Blackstone is the largest investor in
single-family homes to manage as rentals, acquiring properties
in nine markets, from Miami to Phoenix, where prices surged 22
percent in the 12 months through October. The firm, along with
Thomas Barrack’s Colony Capital LLC and Two Harbors Investment
Corp. (SBY), is seeking to transform a market dominated by small
investors into a new institutional asset class that JPMorgan
Chase & Co. (JPM) estimates could be worth as much as $1.5
The market, which has been “dominated by ‘Mom
and Pop’ owners” could total 12 million homes and be double the
size of the institutional multifamily market, JPMorgan analysts
led by Anthony Paolone, wrote in a note yesterday. “A corporate
structure with institutional capital around the business makes
Blackstone, which started buying the
properties last year, has been racing against the real-estate
recovery as prices across the U.S. rose more than economists
forecast, with the areas hardest hit by the crash rebounding the
The S&P/Case-Shiller index of property values
in 20 cities increased 4.3 percent in the 12 months through
October, the biggest 12-month advance since May 2010, the group
said last month in New York. Prices will gain 3.3 percent in
2013 after an estimated 4.5 percent jump last year, based on the
median estimates of 15 economists and housing analysts surveyed
by Bloomberg News.
Blackstone is buying in Atlanta, Chicago, Las
Vegas, Phoenix, Northern and Southern California; Miami, Orlando
and Tampa, Florida -- where prices fell so far that they
“overshot,” said David Roth, managing director at Blackstone
overseeing single-family home rentals.
Blackstone has been purchasing through
foreclosure auctions and short sales, in which banks agree to
accept less than is owed on the mortgage, after more than 5
million homeowners lost their homes since the market’s peak in
It’s bought so quickly it’s “warehousing” more
than half of the homes it’s acquired as it completes the
purchase and hires staff and contractors to renovate and rent
the properties, Gray said. It takes about 30 days to fix each
home and then as much as 30 days to lease the property, he said.
“Renovating the 16,000 homes is an enormous
job,” Gray said.
By comparison, D.R. Horton Inc. (DHI), the
largest U.S. homebuilder by volume, sold 18,890 homes and
generated $5.35 billion in revenue in fiscal 2012.
Colony Capital has bought about 5,500 homes
since April, spending more than $500 million, and expects to
reach $1.5 billion invested by the end of the year. Closely held
Waypoint Homes said it has bought about 2,500 homes and expects
to have 10,000 homes by the end of 2013.
Silver Bay Realty Trust Corp., a publicly
traded arm of Two Harbors, raised $245 million in an initial
public offering last month. It rose 2.1 percent to $21.58 at
12:53 p.m. in New York, extending its 14 percent gain through
yesterday since it started trading. The firm, led by Chief
Executive Officer David Miller, a former Goldman Sachs Group
Inc. executive and U.S. Treasury Department official, is the
largest public real estate investment trust concentrating on
“We are seeing increased supply of rental
homes as some of these big companies have moved into the space,
but we’re still seeing a strong appetite as well,” said Colin
Wiel, co-founder and managing director of Waypoint. “We always
anticipated that prices were going to rise pretty quickly.
They’ve risen quicker during the last 12 months than we would’ve
Blackstone currently buys all of its homes
with cash and then finances pools of houses with up to 60
percent debt. Conventional single-family home mortgages are
financed with a 20-percent down payment.
The firm got a $600 million line of credit
from Deutsche Bank AG (DBK) in October. It’s in talks with the
Frankfurt-based lender to double the financing, according to two
people with knowledge of the negotiations. Deutsche Bank will
lead a group of banks that will contribute an additional $600
million, according to the people, who asked not to be identified
because the talks are private.
Financial institutions have been slow to back
single-family rental homes, because large investors have little
history to demonstrate cash flows and cost of operations.
“While leverage is currently limited,
potential financing options include secured credit lines,
lending syndicates, high- yield debt, government sponsored
enterprise-provided financing, and securitization,” Jade Rahmani,
an analyst with Keefe, Bruyette & Woods Inc. in New York, wrote
in a note yesterday.
Citigroup Inc. (C) extended a $245 million
line of credit to Waypoint in October, enabling the investment
firm to multiply its initial $150 million in capital from GI
Partners, a Menlo Park, California-based private equity fund.
American Residential Properties, which has 1,500 homes in five
states, received a line of credit from Wells Fargo & Co. (WFC)
in June 2010. The company announced plans for an initial public
offering of shares as early as the first quarter of this year,
depending on market conditions.
Acquisitions have been limited to one property
at a time because holders of large pools of foreclosed homes
haven’t conducted bulk sales. Fannie Mae, the largest holder of
foreclosed houses with an inventory of 107,225 repossessed homes
as of Sept. 30, plans to sell most of them one-by-one after a
bulk sale of 2,500 properties last year.
“Frankly, we see that our retail execution,
selling individual homes to individual buyers, as still our best
execution,” Fannie Mae Chief Executive Officer Timothy
Mayopoulos, said during an interview at Bloomberg’s Washington
office yesterday. “So we will continue to do the vast bulk of
our executions in that way.”
Blackstone’s strategy in real estate generally
has been to “buy, fix and sell,” said Gray, who in 2007
engineered the largest real estate buyout ever when Blackstone
acquired Sam Zell’s Equity Office Properties Trust for $39
billion including assumed debt. Gray’s real estate business
brought in $1 billion in profit for the firm in 2011.
In the case of the single-family business,
Blackstone will rent and manage the homes through Invitation
Homes, which it founded last year with Riverstone Residential
Group, an apartment management company based in Dallas.
While Blackstone ultimately will benefit from
the properties’ price appreciation, in the meantime, the homes
will generate revenue and cash flow, Gray said.
“We’re building a real company,” he said.
Southwest Florida real estate market attracts
Canadian investors, other international clients
They come from Toronto, London and
Dusseldorf, and they're all here for the deals.
Foreign buyers are on the hunt for real estate bargains in
Southwest Florida. They scour listings from across the Atlantic
and leave Canadian tundra in search of properties dotted with
palms. And local real estate agents say foreign interest could
help revitalize the area. International clients tend to be cash
buyers who are financially stable, since many of their countries
haven't weathered financial storms to the level the United
States has recently.
"They're not going to be
foreclosed on if they lose their job," Mark Washburn, an agent
in Fort Myers, said of foreign investors. "They're a safer bet
for the market as a whole than, say, someone local here who has
a lot of risk in the economy right now."
As of August, approximately 112,283
Florida Realtor members closed on roughly 90,000 deals with
international clients in 2010, according to a survey by the
National Association of Realtors and Florida Realtors. Over the
past 12 months, foreign buyers accounted for approximately 22
percent of Florida's existing home sales.
Canadians dominate among
international buyers in Southwest Florida - and across the
state. Buyers from Canada accounted for approximately 36 percent
of Florida home sales to foreigners, making them the largest
sector of out-of-country buyers. Western Europeans followed at
29 percent, according to the NAR and Florida Realtors survey.
Canadian investors sought out real
estate in Lee County in the 1970s, but their interest seemed to
wane until about two years ago, said Gloria Tate, a real estate
agent in Cape Coral, who has lived in the city for more than 50
Approximately 114,765 Canada
residents visited Lee County in 2009, according to the Lee
County Visitor & Convention Bureau. About 104,089 people came
from the United Kingdom and 180,155 people traveled here from
German-speaking countries such as Germany, Austria and
Switzerland, according to the VCB, which spent about $265,000 on
international print and online advertising during the 2009-10
A Sanibel Realtor placed an ad in a Canadian newspaper for a
woman from Canada who is selling her father's Sanibel home. The
seller said she recently heard public radio commentators in her
native country discuss the deals in Southwest Florida.
The growing strength of
Canadian currency - called the loonie - versus the American
dollar has likely helped increase interest in Florida real
estate. One U.S. dollar now equals about $1.03 in Canadian
In addition, the more northern
country hasn't experienced bank failures or a foreclosure
crisis. A Toronto client told Washburn his home hadn't dropped
in value over the past few years.
"He's feeling more confident about
making a purchase down here because he's doing better at home,"
said Washburn, who recently sold a condo at High Point Place in
downtown Fort Myers to a Canadian buyer for a price in the high
$200,000s, a bit higher than the median purchase price of
$150,000 among Canadian buyers in Florida.
Most foreign buyers, including
Canadians, pay cash, but real estate agents point out to
prospects the convenience of the five or so Royal Bank of Canada
branches in Southwest Florida.
"The Royal Bank of Canada has made it
much easier for people to purchase here," Tate said. "Most
lenders are now working with Canadians. I haven't found too many
who are working with other foreign investors."
Some international buyers are
looking for second homes, while others purchase investment
property they rent out - at least until they're ready to make
their part-time residence here.
British and German buyers have a
strong presence in the area, but international interest comes
from all over. Tate said she recently worked with clients who
hail from Finland, Israel, Greece and North Korea. Both Tate and
Starowicz reported a few inquiries from Australia as of late.
On Sanibel, Eric Pfeifer spoke
with French investors looking for commercial property, plus
plenty of German, British and Canadian residential prospects. He
recently closed on an approximately $650,000 three-bedroom,
penthouse condo in The Sanctuary on Sanibel with a couple from
Real estate agents say the weak
dollar piques international interest, along with U.S. newspaper
headlines and reports that point to Southwest Florida as a
leader in foreclosure properties.
"That triggers the Internet
searching opportunity worldwide," Tate said of news reports.
"Every time someone gives that headline, I believe people are
- Miami-Fort Lauderdale-Miami Beach: 17 percent
- Bradenton-Sarasota-Venice: 13 percent
- Tampa-St. Petersburg-Clearwater: 10 percent
- Cape Coral-Fort Myers: 9 percent
- Naples-Marco Island: 5 percent
- All other areas in state: 27 percent
Source: National Association of Realtors and Florida
Americans say time is
right to buy home: poll
Majority believe prices
will be the same or higher during the next year
10:11 a.m. ET,
Tues., April 6, 2010
NEW YORK - Nearly two-thirds
of Americans think the time is right to buy a house, with a majority
believing prices will be the same or higher over the next year,
according to a Fannie Mae survey released Tuesday.
The 64 percent that said it
is a good time to buy is just shy of the 66 percent that said the
same thing in 2003 as the U.S. housing market was racing higher,
said the survey.
However, most of the 3,451
polled said that it would be tougher for them to get a loan than it
was for their parents.
The survey comes amid signs
that the U.S. housing market is recovering after suffering the worst
downturn since the 1930s. But, while home prices in some regions are
rising, soaring delinquency rates across the nation mean
foreclosures will keep persistent pressure on the market, according
Fannie Mae, the largest U.S.
mortgage finance company, said that the public still "strongly
believes" in upholding their financial commitments, though that
weakens once people know someone who is defaulting.
Those who know someone in
default are more than twice as likely to have seriously considered
stopping payments on their own mortgage, Fannie Mae said.
It's a perfect time to buy a
house or two in the US
Is it time to buy US property? US
investment expert Dr Steve Sjuggerud of the True Wealth
financial newsletter reckons there are bargains galore.
Regular MoneyWeek columnist James Ferguson isn't so sure.
Here they make the case for and against investing in US
I've lived in Florida for most of my
adult life. I've never seen bargains like I'm seeing right
now. Last month, I attended an auction for two properties
less than a block away from the beach in St Augustine,
Florida. They were empty building lots in a residential
neighbourhood, 200 steps from the sand. You could build your
dream house here – your second home in Florida exactly the
way you want it. What would you have bid – £200,000,
£150,000? What's the least you'd be willing to pay?
Both lots sold for less than £25,000
Would you believe I didn't even win
the auction? I was only willing to bid about half that. Why?
Well, I didn't need these lots. And I expect I will find
even better opportunities. They're everywhere. The median
price of a home in Florida today is less than £100,000.
That's a home – and in Florida, median probably means at
least three bedrooms, two bathrooms, a garage, a yard, and
It's an extraordinary time to be a
buyer of US real estate in general, and Florida real estate
in particular. You may never have such a great opportunity
to buy here in the rest of your life. Here's why.
For one thing, you're looking at a
'half-off' sale in many desirable places. Home prices have
fallen by a third nationwide, peak-to-trough in dollar terms
(according to the Case-Shiller home price index). But in
some 'bubble' cities, such as Las Vegas and Phoenix, prices
are down by more than 50%. Meanwhile, in Florida, property
prices in Miami fell 49% peak-to-trough – and many smaller
beach towns here fell by even more.
Secondly, financing is very cheap.
Mortgage rates are currently the cheapest in history (or
certainly since the Federal Reserve's records began in
1964). As a personal example, I have a 2.74% interest rate
from Bank of America on a home equity line of credit – Bank
of America will lend me up to $500,000 at 2.74% interest. I
haven't tapped it yet. But if I bought those St Augustine
properties with that money, I believe I could have sold them
for significantly more than they went for at that barely
advertised, distressed-sale auction. The return on my own
money would have been near infinity. My only 'out of pocket'
expense would have been the lowly cost of the 2.74% interest
for a couple of months.
Thirdly, US housing is more affordable
than ever. Affordability is a simple concept. But most
people get it wrong – they often quote a ratio of house
prices to income. This comparison is near-useless. It's not
apples to apples. For example, the interest payments on my
parent's 20% mortgage from the early 1980s were an entirely
different situation to my 2.74% Bank of America interest
The actual price of a home isn't
people's main concern when they buy a home – it's the
monthly payment. So affordability isn't about the house
price to income ratio, it's about the payment. "Can I afford
that monthly payment?" That's the big question. That
question can be answered by knowing three things: the price
of the house; the mortgage rate (as these two determine your
monthly payment); and your monthly income. All three are in
favour of the US homebuyer now.
So we've seen the average house price
cut, in many cases, nearly in half. Beyond that, the cost of
financing has been cut by a third during this decade alone.
Meanwhile, household incomes have held up reasonably well.
So it's no surprise that the NAR Housing Affordability Index
(which goes back to 1970) shows that housing is more
affordable than ever in the US. So US housing is now easily
affordable. But why is now the right time to buy? There are
four good reasons.
Four reasons why now is the right
time to buy
Record low building activity
Housing starts are at their lowest
level in recorded history, and a shortage of new homes has
historically always led to a rise in prices. It's simple
supply and demand – when home builders build too many homes,
prices peak soon after. And when they don't build any for a
while, prices start to rise again. You can guess when the
most recent peak in new homes started – January 2006. Prices
peaked within six months. Before then, building activity
(housing starts) bottomed out in 1991, 1982, 1975, 1969. And
following the rules of Economics 101, prices started rising
(often dramatically) soon after. Housing starts are now at
their lowest level in recorded history.
Banks are desperate to sell
"Just make any offer," my friend – a
US bank chief financial officer (CFO) – told me recently.
"Chances are, the bank will take it." Banks are in the
business of making loans, not owning property. But they made
tons of bad loans, and now they're stuck with thousands of
properties. They don't want to be in the property business,
they want out of it. With so few buyers, they have to be
willing to consider any offer. As my bank CFO friend says,
"Chances are, they'll take it." It's easy to find bank-owned
properties and government-owned properties. Just type "REO"
into Google, and you'll find plenty of banks and their
listings. Pick your place and price.
The government wants higher prices
You wouldn't believe the effort the US
government is putting into propping up the housing market.
Undoubtedly, it will succeed. If housing falls, Americans
will feel broke, they'll blame their politicians, and those
politicians won't get re-elected. The incentives are
comical: government-guaranteed mortgages, tax credits of up
to $8,000 for first-time home buyers, tax-free capital gains
of up to $500,000; and many more. But it gets much bigger
than this – you could argue that the whole government
bail-out is about saving homeowner equity.
US property is hated
As an investor, I'm seeing what I
love. It's a rare situation, but incredibly important if you
can recognise it. It's when people's emotions are clearly at
odds with the reality of the numbers. The numbers for
housing are great right now. But after three years of
losses, people are sour on housing – it's perfect. I prefer
to be a contrarian. Three years ago, everyone in the US
said: "You can't go wrong in real estate." Now everyone
thinks you'll never make money again. I'll take the opposite
side of both of those trades.
David Dreman is a legendary contrarian
investor. In 1980, he literally wrote the book on the topic.
It's called Contrarian Investment Strategy. In it, he
recommended going heavily into stocks. Today, Dreman
recommends US residential real estate: "If inflation hits
hard, the chief culprit of the bear market – real estate –
is likely to be one of the best investments in the years
ahead. Buy a home if you don't already have one or a second
home if you can afford one." Time to buy a house (or two!)
in America – preferably in Florida.
Steve's top buying tips
• Don't buy north of Orlando
if you want to be warm in winter. Most foreigners don't
realise that Florida temperatures vary so much from north to
south. Palm Beach County and South? Great. You'll need a
sweater just a few days in winter, and you can get in the
pool nearly every day. But Jacksonville? It's way colder
than you think! You won't get a suntan, and you can't use
your bathing suit.
• Avoid Miami. You want
to pull off the highway to fill up your car and worry if
you'll make it out of that neighborhood alive? Then move to
• If you want a cheap home near the
ocean, try the southwest coast. Ft. Myers, Naples,
anywhere over there – that's where the most real estate
speculation and overbuilding went on, so it's where the
biggest bust has been. That's where to get a super deal –
just find the town you like.
• If you want a great deal, get on a
plane. Do all the homework you can from home. But for the
real deals, you should spend time here. Figure out which
towns you actually like. And talk to realtors about
foreclosures and other special deals. Nothing beats doing
this in person.
Home sales surge, boosting recovery hopes
Tax break helps boost housing market, but GDP
growth revised downward
12:34 p.m. ET,
Tues., Dec . 22, 2009
WASHINGTON - The recovery may have gotten
off to a slow start in the third quarter, but a surge in home sales
last month could presage a more robust end to the year.
Sales of existing homes rose in November to
the highest level in nearly three years, reflecting an extraordinary
level of federal support that has pulled the housing market back
from its worst downturn since the Great Depression.
The National Association of Realtors said
sales rose 7.4 percent to a seasonally adjusted annual rate of 6.54
million from a downwardly revised pace of 6.09 million in October.
Sales had been expected to rise to a pace
of 6.25 million, according to economists surveyed by Thomson
"Things are stabilizing," said Pete Flint,
chief executive of real estate Web site Trulia.com. "There is a
significant amount of buyer interest out there."
A rebound in housing could help give the
nascent recovery a boost in the fourth quarter after it got off to a
weaker-than-expected start in the third quarter.
President Obama, speaking after a meeting
at the White House with chief executives of community banks Tuesday,
said business have a great opportunity now to start growing and
hiring again if they can get the credit they need.
"We feel very optimistic that the worst is
behind us," the president said.
The Commerce Department reported Tuesday
that the economy grew at a 2.2 percent pace in the July-to-September
quarter, slower than the 2.8 percent rate estimated just a month
ago. Economists were predicting the figure wouldn't be revised in
the government's final estimate on third-quarter GDP.
The main factors behind the downgrade:
Consumers didn't spend as much, commercial construction was weaker,
business investment was a bit softer and companies cut back more on
inventories, according to Tuesday's report.
Despite the lower reading, the economy
managed to finally return to growth during the quarter, after a
record four straight quarters of decline. That signaled the deepest
and longest recession since the 1930s had ended and the economy had
entered into a new fragile phase of recovery.
Many analysts believe the economy is on
track for a better result in the current quarter.
"We expect a better performance in the
fourth quarter, but the core problems for the economy — bust banks
and a massively overleveraged consumer — have not gone away," said
Ian Shepherdson, chief economist at High Frequency Economics.
The economy is probably growing at a rate
of nearly 4 percent in the current quarter, analysts say. If they're
right, that would mark the strongest showing since 5.4 percent
growth in the first quarter of 2006 — well before the recession
began. The government will release its first estimate of
fourth-quarter economic activity Jan. 29.
Yet even such growth wouldn't be enough to
quickly drive down the unemployment rate, now at 10 percent. High
unemployment and tight credit for both consumers and businesses are
expected to continue to weigh on the economic recovery. Many
economists predict the economy's growth will slow to a pace of
around 2 or 3 percent in the first three months of 2010.
Growth in the final quarter is expected to
be driven by companies restocking depleted inventories. Stocks of
goods were slashed at a record pace during the recession. So even
the smallest pickup in customer demand will force factories to step
up production and boost overall activity.
Stronger exports, as well as spending by
U.S. consumers and businesses, also will help underpin
It's been a wild ride for the economy this
year. In the first three months, it shrank at a pace of 6.4 percent
— its worst downhill slide in 27 years.
The recession eased in the second quarter,
with the economy dipping at a pace of 0.7 percent. The economy
returned to growth in the third quarter.
But much of the third quarter's growth was
supported by government stimulus. The "Cash for Clunkers" rebates
and an $8,000 tax credit for first-time home buyers buoyed sales of
cars and homes. The clunkers program ended in August, though the tax
credit has been extended and expanded beyond first-time buyers.
Government stimulus certainly had a hand in
helping November home sales. Buyers were racing to complete their
sales before the original expiration date of a tax credit for
first-time buyers that was scheduled to end Nov. 30. Last month,
Congress decided to extend and expand the credit to ensure the
housing market could sustain its recovery.
Besides the existing tax credit of up to
$8,000 for first-time buyers, homeowners who have lived in their
current properties for at least five years can now claim a tax
credit of up to $6,500 if they relocate. To qualify, buyers must
sign a purchase agreement by April 30.
Foreclosure rates remain a strong drag on
the housing market and the economy, however. Employers continue to
cut jobs, which is not good news for the record 14 percent of
homeowners with a mortgage that is either behind on payments or in
The government makes three estimates of
GDP, which measures the value of all goods and services produced in
the United States, for a given quarter. Each estimate is based on
more complete data. The government's initial estimate for the third
quarter was more energetic, showing the economy's growth at a 3.5
percent pace. Subsequent estimates, however, showed the recovery was
A trouble spot for the economy — the
commercial real-estate market — was clearly visible in Tuesday's
Builders slashed spending on commercial
building projects at an annualized pace of 18.4 percent in the third
quarter. That was sharper than the 15.1 percent pace previously
estimated and contributed to the GDP downgrade.
It's unclear how the recovery will fare
once the government withdraws stimulus programs put in place to
combat the financial crisis and the recession. If consumers pull
back on spending, the economy could tip back into recession.
Against that backdrop, the Federal Reserve
pledged last week to keep interest rates at a record low to help the
recovery gain traction.
Faced with the prospects of high
unemployment well into the 2012 presidential election year,
President Barack Obama wants the government to take further steps to
put Americans back to work. The House last week passed some
provisions that Obama has pushed to aid job growth. But it didn't
include new tax breaks for small businesses that hire.
The administration credits its $787 billion
package of tax cuts and increased government spending with improving
employment, though Republicans argue it did not help much.
How baby boomers are reigniting
the housing market.
battered housing market is getting some help from an
unlikely source: retirees. Baby boomers on the cusp of
collecting Social Security are bringing some much-needed
vitality to the real-estate sector as they capitalize on
reduced prices and low mortgage rates by lining up their
next homes a few years early.
Before the crash, older home-buyers
were already big players in
the real-estate market, and now their influence is
growing. According to the National Association of
Realtors, people over 55 bought 21 percent of the homes
that were sold in 2008, up from 13 percent in 2001. Now,
roughly one out of every four baby boomers owns either a
vacation home, land, or a rental property in addition to
the home that they live in. And some shoppers are
looking for transitional homes that they can vacation in
now and settle into when they are ready to retire.
"That's a trend that will continue,"
says NAR's Walter Molony. While many repeat buyers took
a breather to rebuild the savings and home equity they
lost over the past couple of years, Molony expects
retirees to buy their way back into the market as the
economy recovers. "This can be a terrific time to buy
that retirement home, but buyers have to have the
resources to float [multiple homes] for a while," says
Rich Arzaga, a San Ramon, Calif., financial planner. He
points out that the carrying costs of holding two
properties can be unexpectedly high, and include the
costs of finding tenants, making repairs, and managing
Baby-boom retirees and pre-retirees
who are in the market seem to be considering the effort
and expense involved in managing a property. They are
looking for something different their second and third
time around. They want single-story houses, smaller
floor plans, and some amenities aimed at older home
purchasers, such as nonslip floors, larger medicine
cabinets, and lower kitchen cabinets, according to
recent surveys by the National Association of Home
Builders and the
MetLife Mature Market Institute. They don't seem to
care as much as builders for much-hyped universal design
features like lever-handle doorknobs and wider doors and
hallways, perhaps because they are concerned about
costs, or in typical baby-boomer fashion, they are
resistant to seeing themselves as aged or infirm. That
may also be why today's newest retirees also seem less
likely to prefer age-restricted communities than their
Pre-retirees looking at the housing
market face more challenges in financing their purchases
than they did a few years ago. Then, many buyers bought
second homes with cash-out refinances of their primary
homes. Now, with less equity available in their primary
homes, they are seeking mortgages for their second
homes. Second-home mortgages are more broadly available
than they were a decade ago, but do require high credit
scores and down payments as high as 20 percent.
People with significant assets in
their individual retirement accounts can tap that cash
to invest in a retirement home, but there are many
complexities involved. They have to establish a
self-directed IRA with an independent trust company such
Pensco Trust and
the Entrust Group. They have to treat the home as an
investment, so they can't use it as a vacation home or
rent it out at below-market rates to friends and
relatives. When it is time to retire and they want to
start using the home, they have to pull it out of the
IRA, and if it's been held in a tax-deductible IRA, that
would force them to pay income taxes on the entire value
of the house. That makes it far preferable to use a Roth
IRA (from which withdrawals will not be taxed) to buy
Older investors who have been buying
into the market may turn into net sellers once they
actually retire, as it can eat up a lot of that monthly
Social Security check to run two homes. Arzaga tells his
clients that once they've made the decision to move,
they should put their older homes on the market and not
wait for better prices that could be years down the
road. Selling sooner rather than later could protect
their cash flow and provide better housing deals that
could pull a younger generation of buyers into the
median home price drops to $89K, sales soar in September
23 october 2009
The median price of a single-family-home
resale in September in Lee County was $89,700 in Lee County — 37
percent off $141,400 a year earlier, according to statistics
released today by the Florida Association of Realtors.
Meanwhile, the number of homes sold increased 77 percent in the
same period from 746 to 1,321.
In Charlotte County, the median price fell 19 percent from
$136,900 to $110,600 while the number of homes sold increased 56
percent from 153 to 238.
Statewide, the median price fell 19 percent from $174,900 to
$142,000 while the number of homes sold increased 34 percent
from 10,778 to 14,419.
In a separate report also issued today, the National Association
of Realtors said U.S. home sales rose 9.4 percent to a
seasonally adjusted annual rate of 5.57 million in September,
from a downwardly revised pace of 5.1 million in August.
Sales had been expected to rise to an annual
pace of 5.35 million, according to economists surveyed by
The median sales price was $174,900, down 8.5 percent from a
year earlier, and slightly lower than August’s median of
“There’s a mini-boom going on in the housing market,” said
Thomas Popik, who conducts a monthly survey of real estate
agents for Campbell Communications, a research firm.
The inventory of unsold homes on the market fell about 7 percent
to 3.63 million. That’s a 7.8-month supply at the current sales
pace, and the lowest level since March 2007. Nationwide sales
are up nearly 24 percent from their bottom in January, but are
still down 23 percent from four years ago.
U.S. Economy: Home Prices Increase by
Most Since 2005
Sept. 29 (Bloomberg) -- Home values in 20 U.S.
cities climbed in July by the most in almost four years, helping
stem the record plunge in household wealth that’s depressed
The S&P/Case-Shiller home-price
index rose 1.2 percent in July from the prior month, the biggest
gain since October 2005, the group said today in New York. Another
consumer confidence unexpectedly fell in September, while
holding above the record low reached earlier this year.
Home values are rebounding as low borrowing
costs and government tax credits lift home sales. Combined with
stock prices, the gains will begin to restore the $13 trillion
plunge in net worth caused by the worst financial crisis since the
Great Depression, a process that economists such as
Brian Bethune say will take years to complete.
Home prices are “a major, major turning point for
the economy,” said Bethune, chief financial economist at IHS Global
Insight in Lexington, Massachusetts. “We are eating away at the
problem of household balance sheets.”
The New York-based Conference Board’s consumer
confidence index fell to 53.1 in September from 54.5 the prior
month, the private research group said today, amid growing concern
over the lack of jobs. The gauge sank to 25.3 in February, the
lowest level in data going back to 1967.
The Standard & Poor’s 500 Index dropped after the
confidence report, erasing earlier gains. The index was up 0.1
percent to 1,064.01 at 1:18 p.m. in New York. The yield on the
benchmark 10-year Treasury note was little changed at 3.29 percent
compared to 3.28 percent late yesterday.
year earlier, the S&P/Case Shiller index was down 13.3 percent,
less than economists anticipated and the smallest decrease in 17
The measure was forecast to fall 14.2 percent,
according to the
median projection of 36 economists surveyed by Bloomberg News.
Estimates ranged from declines of 12.5 percent to 15 percent. It was
down 15.4 percent in the 12 months ended in June.
Compared with the prior month, 17 of the 20 cities
covered showed an increase, led by a 3.1 percent jump in Minneapolis
and a 2.9 percent increase in San Francisco. Las Vegas suffered the
biggest one-month decrease at 1.9 percent.
Combined sales of new and existing homes have
risen for four out of the last five months, signaling the worst of
the housing crisis is over.
The Obama administration’s $8,000 tax credit for
first- time buyers, which is due to expire at the end of November,
combined with lower prices as foreclosures soared, have helped lift
sales this year. The National Association of Realtors and the
National Association of Home Builders have lobbied to extend the
credit on concern demand will wane after it lapses.
Karl Case, co-creator of the S&P/Case-Shiller index, said the
U.S. residential property market is improving enough to end the tax
credit for first-time buyers.
“We’ve got to phase back incentives and this may
be a good time to do that,” Case said in an interview on Bloomberg
Radio. “I believe in some cities you’ll see the beginning of
Lennar Corp., the third-largest U.S. homebuilder,
is among companies that see demand improving, even as losses mount.
The Miami-based company said last week it expects to turn a profit
in fiscal 2010.
“In the third quarter we started to see some real
signs that the housing market is in fact starting to stabilize,”
Stuart Miller, Lennar’s chief executive officer, said on a Sept.
21 conference call. “The sense that now is the time to buy is
starting to gain momentum.”
The Conference Board’s confidence gauge was
projected to increase to 57, according to the median estimate of
surveyed by Bloomberg News.
The decline was caused by growing pessimism over
jobs. The share of consumers who said jobs are plentiful fell to 3.4
percent this month from 4.3 percent. The proportion of people who
said jobs are hard to get increased to 47 percent from 44.3 percent.
“It’s a little hard for households to look at
their paychecks, or the lack thereof, and feel more confident,”
Ellen Zentner, a senior economist at Bank of Tokyo-Mitsubishi
UFJ Ltd. in New York, said in a Bloomberg Television interview. Even
so, “we should continue to see consumer confidence turn around,”
because the recession is over and hiring eventually will rebound,
Fewer Job Losses
The pace of job losses is easing as the economy
shows signs of accelerating. Payrolls fell by 216,000 in August, the
smallest decline in a year, according to the Labor Department.
Employers probably cut another 180,000 workers this month,
economists project a Labor Department report later this week will
Economists say the Conference Board’s index tends
to be more influenced by attitudes about the labor market.
Confidence may improve in future months as balance
sheets rebound. Net worth for households and non-profit groups
climbed by $2 trillion in the second quarter, marking the first gain
since the third quarter of 2007, according to figures from the
Fed policy makers last week said they would keep
the benchmark lending rate near zero “for an extended period,” and
noted that sluggish income growth and tight credit are curbing
household spending and slowing the pace of the economic recovery.
Home prices post first quarterly rise in 3
New data suggest housing market may have
turned a corner
9:45 a.m. ET,
Tues., Aug 25, 2009
NEW YORK - A closely watched
index shows home prices posted their first quarterly increase in
three years, signaling the housing market has turned a corner.
The Standard & Poor's/Case-Shiller's
U.S. National Home Price Index released Tuesday rose nearly 3
percent from the first quarter, though was still down almost 15
percent from the second quarter last year.
Home prices are at levels
not seen since early 2003. Prices have fallen 30 percent from the
peak in the second quarter of 2006.
The monthly index of 20
major cities increased 1.4 percent from May to June to 142, the
second straight month the index registered a gain. All but two
cities, Las Vegas and Detroit, saw home prices rise, and Dallas and
Denver clocked their fourth-straight monthly increase.
Prices, however, have a long
way to go to recover completely. Every metro showed annual declines,
with fifteen reporting double-digit drops.
The Case-Shiller index is a
composite of home price indexes for the nine U.S. census divisions.
The 20-city index measures home price increases and decreases
relative to prices in January 2000. The base reading is 100; so a
reading of 150 would mean that home prices increased 50 percent
since the beginning of the index.
FAR Study: 2009 Fla.
ORLANDO, Fla. – Aug. 31, 2009 – International home buyers make up a
significant part of the Florida real estate market, and are an
important part of many Florida Realtors®’ businesses. According to a
study conducted for the Florida Association of Realtors® (FAR) by
the National Association of Realtors (NAR), a majority (54 percent)
of Florida Realtors worked with an international client within the
past 12 months.
The typical Florida Realtor participating in the survey worked with
three international clients; 10 percent of respondents worked with
11 or more international clients in the past year.
Not all client interactions result in a transaction. In the past 12
months, 34 percent of Realtors who worked with international clients
reported that none of their international clients purchased a home.
However, this does not mean that those international clients will
not ultimately buy in Florida.
Other study highlights:
• 86 percent bought an existing home, while 14 percent opted for a
• 52 percent chose a single-family detached home. Of the rest, 34
percent chose a condo, 76 percent a townhome, and 7 percent “other.”
• One in four buyers (27 percent) bought a home in South Florida,
while Bradenton-Sarasota-Venice and Orlando attracted 11 percent
each. However, one-third (32 percent) of foreign buyers purchased a
home outside Florida’s top six metropolitan areas.
• One-third of buyers (35 percent) who eventually decided to walk
way did so, at least in part, because of property tax costs; while
31 percent cited immigration laws that prevent year-round residence.
While Floridians balk at the cost of property insurance, however,
only 20 percent of immigrants listed that as a reason to walk away.
Land After Three Years of Cutting Inventory
Signature Properties has been
trying since 2005 to sell 4,000 finished lots in its
Fiddyment Farm community, a former pasture and
pistachio orchard northeast of Sacramento,
The developer sold 41 sites in
Meritage Homes Inc. for $66,000 each, and
another 41 in June to
Hovnanian Enterprises Inc. for $68,000 apiece.
This month, they got their best offer yet --
$103,500 each for 77 sites.
Signature Properties said no.
“We decided to build it out
ourselves,” said John Bayless, president of the
Sacramento division of
Signature Properties, a closely held developer
in Pleasanton, California. “Our feeling is, ‘The
tide’s turning. Let’s build ‘em.’”
Homebuilders that spent the past three years
selling off land and writing down the value of
property holdings are scouring markets in
Denver and Orlando -- cities synonymous with the
real estate bubble -- looking for deals on
ready-to-build lots as they prepare for a rebound.
Writedowns and write-offs by 14 of
the largest publicly traded homebuilders totaled
$28.5 billion since the start of 2006, according to
a July 15 report by Fitch Ratings.
Home prices in 20 U.S. cities fell
in June at a slower pace than forecast. The
home-price index declined 15.4 percent from a
year earlier, the smallest drop since April 2008,
the group said yesterday. The gauge rose from the
prior month by the most in four years.
Like a Shark
New home sales climbed 11 percent in June, the
biggest gain in eight years, and housing starts were
the highest since November.
Single-family home starts increased again in
July, for the fifth straight month, the U.S.
Commerce Department reported on Aug. 18. July new
home sale data will be released today.
“Like a shark has to keep swimming
or it’ll die, it’s the same thing with builders,”
said Kathryn Boyce, regional director in Sacramento
Hanley Wood Market Intelligence, a real estate
research company based in Costa Mesa, California.
“They have to keep building or they’ll die.”
National Association of Home Builders reported
Aug. 17 that a builder confidence index rose to 18,
its highest level since June 2008. A reading of less
than 50 means most builders believe conditions are
“It’s a good time to acquire
properties, because you can often find distressed
properties at low prices,” said
Bernie Markstein, senior economist for the
Washington-based homebuilder’s association. “There’s
that old Wall Street saying: Don’t try to catch a
falling knife. Maybe the knife is on the ground.”
Loaded with Cash
Homebuilders have increased cash by shedding
non-performing assets. Shares in all 12 companies in
the Standard & Poor’s Supercomposite Homebuilding
Index are trading higher than they were at the
beginning of the year.
“A lot of national builders have
access to large funding,” Markstein said. “They have
access to more sources of capital than smaller
builders tied to local lenders.”
Meritage, based in Scottsdale,
Arizona, has gone on a shopping spree in metro areas
that were early victims of the housing slump, buying
ready-to-build lots sold for one-third of the peak
“The markets that were the hardest
hit and had the largest fall from peak to trough are
the best opportunity,” said
Larry Seay, chief financial officer of Meritage,
which builds in Arizona, California, Colorado,
Florida, Nevada and Texas.
In addition to Meritage, other
“land light” builders shopping in different cities
M.D.C. Holdings Inc. of Denver; KB Home of Los
NVR Inc. of Reston, Virginia; Ryland Group Inc.
of Calabasas, California; and Hovnanian of Red Bank,
New Jersey, Seay said.
KB Home declined to comment for this story. NVR,
Ryland and Hovnanian did not respond to requests for
M.D.C. Chairman and Chief
Larry A. Mizel said during a July 31 conference
call that his company’s land balances had dropped to
their lowest level in more than a decade. He said
the company has plenty of buying power, citing $1.6
billion in cash, no outstanding borrowing on its
line of credit and no senior debt maturity until
“While our low exposure to land is
a positive in this unstable economic environment, we
are looking forward to redeploying our capital into
new investments,” Mizel said.
Hovnanian paid $25,000 per lot for
160 bank-owned finished lots in Florida, about 11
percent of the $220,000 original cost for land and
Ara K. Hovnanian, the company’s president and
CEO, said during a June 3 earnings call.
“We are seeing more land deals
like this making their way to the surface around the
country and will provide a once in a generation
opportunity for us to reload and reinvest in land,”
Hovnanian said, according to a transcript of the
Ryland spent $31 million to
purchase new land in its second quarter, said
Larry Nicholson, president and CEO.
“Since the quarter closed,
however, we have been more active on the land
acquisition front,” Nicholson said in a July 30
KB Home plans to spend up to $350
million on land purchases and development in 2009,
about $200 million less than 2008. During the
quarter ending May 30, the company optioned five
finished lot deals “with minimal deposits touching
every region we operate in representing more than
Jeffrey T. Mezger, KB Home’s president and CEO
said during a June 26 conference call.
Not in Vegas
Not all areas of the country have
equal appeal to builders. Meritage is steering clear
of cities where markets are far from recovery, such
Las Vegas or
Miami. It also is avoiding areas where prices
have not fallen far from their peaks, such as Texas.
“The lots we’re buying are 50 to
75 percent off peak values,” Seay said. “In Phoenix,
the lots we bought at $20,000 sold for $60,000 at
Meritage would not disclose how
many total lots it bought or what it paid, “but it
would be safe to say we have closed on ‘several’
deals in 2009,” Seay said.
Even in a single metro area, not
all communities rebound at the same time. In the
Sacramento area, Bayless of Signature Properties
said, Roseville is the first and only city so far to
see signs of a recovery.
“The others will take time,” he
Lot sellers are troubled builders,
banks and other companies that need to get
nonperforming assets off their books.
In the Orlando area, land owners
are unloading properties at one-third the peak
prices, offering them in increments as small as four
lots, waiting to get paid until after the homes on
the lot are sold, said James B. Lewis, president of
Charles Wayne Consulting Inc. in Maitland, Florida.
“They’ll take almost any deal they
can get,” Lewis said.
Fiddyment Farm, named after the family that
owned the property since Gold Rush days, Signature
Properties spent about $75,000 per lot for
improvements such as roads, sewers and grading,
Bayless said. And that didn’t include the cost of
the land. To break even, he said, the lots should
sell for at least $100,000.
The first sales in April were
money losers, deemed necessary to raise cash. Those
sales broke a logjam, he said.
“We knew we had to make that first
sale to move the market,” Bayless said. “Once
Meritage closed, the offers started to flow in.”
Meritage’s homes are already
rising on the 41 lots at Fiddyment Farm.
The builder scaled down the square
footage and switched to less expensive finishings.
Instead of granite countertops, the homes come with
Formica or tile. Instead of hardwood floors, they
come with carpet.
“One of the keys to building is to
compete with the foreclosure market,” Seay said. “We
can be a little more expensive. We have to be close
enough to represent a good value.”
Signature Properties plans to
build $450,000 homes on the 77 lots it’s keeping.
Ground-breaking is planned for early 2010. Bayless,
who has worked in the real estate business for 23
years, said this is the third slump he has weathered
and it’s “by far the deepest trough.” Experience
taught him a lesson he hopes works today.
“If you take an opportunity when
the market starts to make a turn,” he said, “it
tends to pay off.”
Vacationers checking out local real estate
updated 7:12 a.m. ET,
Sat., Dec. 27, 2008
BEACH: There may be signs that the local real estate market
is heading in the right direction. A big chunk of vacationers on
Fort Myers Beach were walking into local real estate offices.
We saw parking
lots packed on Friday as curious people checked out the deals for
renting and for buying along Estero Island.
officials say Christmas is traditionally one of the quietest times
for local realtors, but say the huge number of walk-in prospects is
an encouraging sign heading into the New Year.
coming in off the street, wanting to find something to rent," said
Ann Alsop of Century 21. "Years ago, it used to be you never went to
Fort Myers Beach without a reservation. Now it's different."
She added that the
increase in walk-up renters is rather unprecedented.
encouraging, she said, is the increase in walk-up home buyers.
Realtors pursue international investors
BRADENTON, Fla. – Oct. 9, 2008 – Florida is becoming a hot spot in
the global real estate market.
Declining property prices coupled with a desirable climate is making
the state an attractive investment and bargain for foreign buyers.
And local real estate professionals are taking advantage of that
appeal and doing more to establish international relationships.
“The past couple of years with the declining dollar, Florida has
become a magnet to international investors,” said Ivo Travnicek, of
Florida Venture Partners LLC, a Sarasota firm that serves as a
managing partner for foreign investors.
While property transactions in Florida have declined over the past
three years, the number of international buyers in the state has
grown, according to a joint survey by the National Association of
Realtors and Florida Association of Realtors.
Florida Venture Partners are among several local companies to
extensively network overseas in an attempt to profit from the
increasing number of international buyers.
On Friday, the group leaves for Europe to begin a week-long trip
aimed to attract buyers from Prague and Slovakia.
Sarasota lawyer Alan Tannenbaum, who formed the group with Travnicek
and Realtor Ian Black, said this will be the group’s fourth trip in
a year to Central and Eastern Europe in which they’ve showcased a
portfolio of property ranging between $22 million to $100 million to
the area’s top investors.
“The trips have built on each other,” Tannenbaum said. “I think
you’re going to see over the next six months a real substantial
amount of transactions that are going to occur.”
The number of international buyers of Florida property from 2005 to
2008 has doubled.
According to about 5,000 Florida Realtors who participated in a
survey by the National Association of Realtors, international
purchases made up 30 percent of Florida property sales reported
between August 2007 and August 2008.
In 2008, the Sarasota-Bradenton-Venice area ranked third on the top
destinations for international property purchases as reported by
Realtors in the survey.
Luxury real estate companies that are well established
internationally, too, are taking an aggressive approach to
establishing global relationships.
Today, Michael Saunders, president of Michael Saunders & Co., is
speaking in London to the National Association of Estate Agents
about the importance of networking.
Tom Heatherman, corporate communications director for Michael
Saunders, said Saunders’ speech will be the key note address at a
meeting. She will discuss the value of effective international
Saunders’ trip to London follows networking conferences she attended
in Rome and Madrid, and precedes a global conference she will attend
in Bermuda later this year.
“Michael more than anyone else is a proponent of networking at all
times,” Heatherman said. “It’s the networking you do in the bad
times that set you up for the good times.”
Terry Hayes, an agent with SKY Sotheby’s International Realty, said
Anna Maria Island has a strong reputation for attracting European
Hayes said SKY Sotheby’s had the opportunity to further showcase
Anna Maria property to international investors at conference held in
Boca Raton in May.
“We were able to go over there and really feature our properties on
the West Coast with a lot of international agents visiting,” Hayes
said of the conference that was attended by 1,500 agents
representing 23 countries.
“I certainly haven’t stopped advertising in the international
market,” Hayes said. “The international market has always been
attracted to this part of the market. They still think it’s a
beautiful place to own a home.”
homebuyers favor Florida in greater numbers
ORLANDO, Fla. – Sept. 23, 2008 – While a number of factors have
contributed to a home sales decline in Florida, an increase in
foreign homebuyers has modified the trend, according to a
just-released research paper from the National Association of
Realtors (NAR), the 2008 “Profile of International Home Buying in
Foreign buyers recognize U.S. real estate as a desirable, profitable
and secure investment. In addition, the weak dollar has made U.S.
real estate an even more attractive investment.
NAR, in cooperation with the Florida Association of Realtors,
conducted a survey of Florida Realtors, asking them about their
experience working with international clients. This survey was
conducted in August 2008, with a total of 4,859 responses received
from Realtors who had completed more than 4,000 transactions
involving a foreign buyer during the previous year.
More than half (53 percent) of the Realtors reported that they
worked with an international client in the past 12 months. The
typical Realtor in this group worked with three international
clients, and about one in five (17 percent) worked with six or more
international clients in the past year. More than one-quarter (28
percent) had one international client who purchased a property, and
15 percent reported two transactions within the past 12 months.
Nearly one in five Florida Realtors who worked with international
clients completed at least three home sales transactions.
Significance of the international market
One in 10 Realtors (12 percent) reported that an international
client base made up 50 percent or more of their business. Half
indicated that international clients accounted for 25 percent or
less of their business.
The survey also asked FAR members if they’ve seen any change in
their number of foreign clients. One-third of respondents noted an
increasing share in the past two years, while just over half (52
percent) said that their share of international clients remained
stable, neither increasing or decreasing.
Where they’re from
Although homebuyers come from all over the world, buyers from a few
regions and countries had a higher demand for Florida property. FAR
members reported that Canada buyers account for 27 percent of recent
sales among foreign buyers. Buyers from the United Kingdom accounted
for 21 percent; and the rest of Western Europe accounted for an
additional 25 percent.
Latin America – defined for the report to include Mexico, the
Caribbean nations, Central America and South America – accounted for
17 percent of recent sales to international clients. In addition to
Canada and the United Kingdom, countries with a small but
significant share of sales included Germany (7 percent), Venezuela
(5 percent) and France (4 percent).
Where they bought
The Miami-Fort Lauderdale area was the most frequently reported
location of a home purchased by a foreign buyer in Florida. One in
five (21 percent) bought a home in the area, followed by one in 10
(11 percent) who purchased a home in the Orlando area. Sarasota,
Tampa, Fort Myers and Naples rounded out the top six, accounting for
at least 5 percent of purchases by foreign buyers.
The remaining 39 percent of purchases were in other areas of
Fla. still No. 1 with foreign home buyers
By MARTHA BRANNIGAN
8 augustus 2008
Florida remains by far the most popular
location for foreign buyers of real estate, accounting for 25.4
percent of all international purchases in the United States.
However, the number of foreign buyers nationwide declined over
the past year, reflecting the deep U.S. housing slump, a new study
released Thursday by the National Association of Realtors said.
The study, which covered the year ending in May, said 26 percent
of Realtors surveyed had at least one foreign client, down from
nearly one-third of the brokers queried in 2007.
The profile of international home buying activity said that
``foreign buyers -- like U.S. buyers -- may be waiting for home
prices to continue to decline in order to purchase a property at a
Canadians, aided by a strong Canadian dollar, were the No. 1
group of international buyers, accounting for nearly a quarter of
all foreign buyers in the year ended May 2008. That was nearly twice
the share the Canadians represented a year earlier.
Florida was the choice for 33 percent of all Canadian purchases
in the United States.
Mexicans, who were the No. 1 group of international buyers last
year, dropped to third place, behind the British and Canadians.
Forty-two percent of all British buyers chose Florida.
Rounding out the top six were: China, India, and Germany. Buyers
from China favored California, which captured 25 percent of their
U.S. purchases, but Florida was No. 2 with 11 percent. Fifty-four
percent of German buyers picked the Sunshine State.
After Florida, other top states for foreign buyers are
California, Arizona and Texas.
Despite the current downturn, 35.5 percent of Florida Realtors
surveyed said their international business has grown in the past
five years, the report said. Some 52.6 percent in Florida reported
their foreign business remained about the same, and only 11.8
percent indicated foreign business had decreased.
Thirty-eight percent of the Realtors thought the weak dollar was
having a significant impact on foreign buyers looking in the United
States, the study said.
But there were also some factors putting the
brakes on U.S. purchases. 'While U.S. real estate is still
considered a `safe haven' for foreign funds, there are some
perceived impediments to foreign purchases including cost of
property, immigration laws, and property taxes,'' the report said.
Germans cashing in on SWFL foreclosures
12 juli 2008
CORAL: There is a new twist to the foreclosure market in Southwest Florida.
Germans are taking advantage of the exchange rate, scooping up
properties for an even better deal.
Joseph estimates a home selling for $90,000 in Cape Coral can be
bought with European money for only €57,000.
The issue is
catching the attention of a national TV news crew from Germany.
Three people from Spiegel TV traveled more than 5,000 miles to come
to Cape Coral to report on the foreclosure market here.
overwhelming I must say, even as a reporter, to see what's going
on," said German TV reporter Julia Kriwitz. "Everything is on sale,
everybody is hustling, wheeling and dealing."
The German crew
followed more than a dozen interested buyers on a foreclosure bus
tour through the Cape.
is one of them. A native German, she says she was first attracted to
Cape Coral because of the large German population.
"You get your
heritage neighborhoods, we still have German friends here, get the
Germany bakery, everything is German. It feels like home," says
looking to invest in the real estate market.
Although she was
a little distracted by the German news cameras. She hopes her family
back home will catch a glimpse of her on TV.
The news crew is putting together a 45 minute documentary that
will air on national TV in Germany in early September.
Homes in Lee County
sell cheap, but fast
increase 41 percent over April 2007
Existing homes sales
in Lee County in April rose sharply from a year earlier as
prices plunged and builders offered deep discounts.
Meanwhile, sales and prices dropped nationally as the
backlog of unsold single-family home was at a 23-year high,
according to statistics released Friday.
In Lee County, 809 single-family homes were sold with the
assistance of a Realtor compared to 573 in April 2007, an
increase of 41 percent, according to the Florida Association
Meanwhile, the median price fell 29 percent from $283,200
to $200,300 in the same period.
Charlotte County sales showed a similar trend: The price
was down 27 percent from $197,100 to $143,400 while the
number of sales rose 6 percent from 254 to 268.
Collier County statistics weren't available.
Southwest Florida bucked a statewide trend of falling
sales: Florida had 11,200 sales, down 9 percent from 12,358
a year earlier. The statewide median price fell 17 percent
from $239,000 to $198,900.
One recent buyer said he's glad to be buying after a long
decline in the market. The median price of a single-family
home is now 37 percent off the all-time high of $322,300
reached in December 2005.
"We found it cheaper to buy than rent," said Bernie
Connor, 71, a retiree from Maine who's under contract to buy
a four-bedroom, two-bath house in northwest Cape Coral for
"I found it more reasonable to buy, naturally, because of
the equity," he said. "The low home market's probably going
to last for another year or so but then it's going back up -
there's no question about that."
His real estate agent, Brett Ellis of Remax Realty Group
in Fort Myers, said the market is continuing to absorb the
foreclosed houses being taken back by banks - Connor's new
house, built in 2006, is one of those homes.
"Prices are attractive and buyers are off the fence,"
Ellis said. "There are definitely enough end users."
Fifty-seven of the houses sold in April were in one
community - Coral Lakes in Cape Coral, where Fort
Myers-based businessman O.J. Buigas in March purchased 116
completed but never-lived-in houses and townhouses for $13.5
million from Engle Homes. Engle's parent company, Tousa
Inc., is seeking to reorganize under federal bankruptcy
Buigas immediately reduced the prices at Coral Lakes by
about 40 percent and they've all been sold, said Denny
Grimes of Denny Grimes & Co., who marketed the homes for
"You will see the numbers go up" for sales, he said. "I
think the worst is over," although prices may continue to
fall for a while.
In a similar move, businessmen Greg Jarrett and Larry
Smith are buying 72 houses from financially strapped Comfort
Home Builders in Cape Coral. The plan is to offer them for
half the original price, or less, and sell them in a month.
Two weeks after the homes went on the market, about half
are under contract, said Steve Koffman of Century 21 Sunbelt
Realty. He's selling 62 of the houses and Kim Hardin, also
of Century 21 Sunbelt, is selling 10.
Buyers include people intending to live in the houses and
investors, Koffman said. "The shrewd investors are buying
when other people are selling."
Nationally, the housing market was still in the doldrums.
Figures released by the National Association of Realtors
showed sales of existing homes fell for the eighth time in
the past nine months, with the backlog of unsold
single-family homes rising to the highest level in more than
Sales dropped by 1 percent to 4.89 million units,
matching the all-time low set in January. These records go
back to 1999.
The median price for an existing home dropped 8 percent,
compared with a year ago, to $202,300. Analysts predicted
further price declines given the huge backlog of unsold
single-family homes, which rose in April to 10.7 months
supply at the current sales pace, the highest inventory
level since June 1985.
Condos in South Florida good news for bargain hunters
MIAMI – May 19, 2008 –The glut of condominiums for sale in South
Florida is attracting a legion of bargain hunters.
Out-of-state and international buyers are descending on the area in
search of deep discounts as prices continue to crater. They want to
get in now and wait out the housing slump because they think the
region remains a powerful long-term draw.
With the lingering real estate downturn, now in its third year, some
condos are selling at 25 to 60 percent less than during the boom
times, when investors hoping to “flip” units bid up prices.
At the end of April, almost 41,000 condos were listed for sale in
Palm Beach and Broward counties, according to data from Coldwell
Banker Residential Real Estate. Based on the current monthly sales
pace, it would take roughly five years to sell all those condos if
no new units came onto the market. Experts point to a huge number of
still-unfinished condos that will keep a lid on prices for at least
Flush with cash, buyers from Italy, Germany, England, Spain and
other countries are scooping up condos here for at least 30 percent
less than the cost of properties in their homelands.
Susan Gomez of Colombia visited South Florida last week and had real
estate agent Chuck Frank show her condos in Fort Lauderdale and
Miami. The owner of a language translation business said she hopes
to buy in a month or so.
“The gossip in South America is that properties in the U.S. are
selling for low prices and the market is good here,” said Gomez, 50.
“They’re saying that people who want to buy should buy now.”
Amit Bagaria, a real estate executive from Bangalore, India, spent
two days this month scouting for deals on behalf of wealthy Asian
families. He’s eyeing new buildings in Fort Lauderdale and Miami
with condos priced from $400,000 to $1.5 million.
“We hear that if you’re interested in four or five units, builders
are willing to negotiate,” Bagaria said. “Good deals are not
difficult to find in the market right now.”
The rock-bottom prices also are luring buyers from within the United
States, particularly the Northeast.
Austin Regolino, a semi-retired real estate executive from the
Boston area, took advantage of plummeting prices when he bought
recently at the Sea Ranch Club in Boca Raton.
The two-bedroom condo, once priced at $875,000, was down to $749,900
by the time Regolino and real estate agent Dolly Trotto looked at
it. Regolino finally paid $660,000, thrilled to have a second home
in an area so close to where many of his longtime friends live.
“I looked at 19 different units in a one-week period,” he said. “I
couldn’t be happier. This is as close to paradise as you can get.”
Despite the resurgence of buyer interest in condos, it’s not likely
to stabilize the stagnant market in the next year because of the
large number still under construction, housing analysts say. At the
end of the first quarter, there were more than 30,000 unfinished
condos in South Florida, 80 percent of them in Miami-Dade County,
according to research firm Metrostudy in West Palm Beach.
“There’s so much inventory reaching completion that it’s going to
put downward pressure on prices the rest of this year and into
next,” said Brad Hunter, South Florida director of Metrostudy.
During the housing boom of 2000 to 2005, speculators bought condos
at pre-construction prices and watched the units rise in value
before having to close on the deals.
They then flipped them to other buyers, which artificially inflated
demand and sent prices soaring. But not enough long-term owners
bought condos, leaving investors on the hook with empty units.
Some of the investors have tried to use loopholes in the sales
contracts to get out of closing on the deals, while others are
falling into foreclosure. And owners living in the condos are tiring
of expensive maintenance costs and special assessments.
“I used to show buyers six condos; now I show them 20,” said Elaine
Russell, a broker associate with Lang Realty in Boca Raton. “They
want the very best deal. If sellers are not motivated, I tell them,
‘Don’t even bother to list it.’“
At The Prado in West Palm Beach, a unit once priced at $484,000 is
now on the market for $349,000. Two years ago, a two-bedroom condo
at One City Plaza in West Palm Beach would have fetched $400,000 or
more. Today, prices are in the $280,000 range.
“That’s just the list price,” said Kendra Radicchi, a West Palm
Beach agent with Condo Vultures, a Bal Harbour-based real estate
consultant. “What they sell for is typically much lower.”
In Fort Lauderdale, condos at Las Olas Beach Club that were selling
for more than $1 million now are going for $750,000 to $800,000.
A townhouse on Northeast Second Avenue that was on the market in
2006 for $599,000 is listed for $214,500, a 64 percent discount. And
a condo on North Ocean Boulevard that two years ago was listed at
$899,000 is available for $479,900, a 47 percent cut.
“Some sellers are desperate to get out,” Fort Lauderdale real estate
agent Jim DeMaria said. “[Buyers] are saying, ‘This is my chance, my
The March median price of existing condos in Palm Beach County was
$148,600, off 30 percent from $211,800 last year, according to the
Florida Association of Realtors’ latest figures. Broward’s March
median also plummeted 30 percent, to $137,000 from $195,500 a year
Condo sales fell compared with last March, but not by much. Sales
dipped 8 percent in Broward and 9 percent in Palm Beach County, well
below the statewide decline of 23 percent.
Those figures suggest that activity in South Florida is picking up
as prices keep dropping, and it could get even busier, analysts say.
“We really haven’t seen the wheeling and dealing that we will see as
we go further along in the year,” said Lewis Goodkin, a Miami-based
housing consultant. “I can’t see how we’re not going to have further
Condo prices overall are expected to keep declining because of the
oversupply and the unfinished projects, although certain luxury
condos are holding their values, real estate agents say.
Units in urban settings with no water views are seeing the biggest
price declines, Goodkin said.
Some offers are “almost embarrassingly low,” said Pompano Beach
agent Randy Bates, president of the Realtor Association of Greater
Fort Lauderdale. Insulted, owners reject the bids, only to field
subsequent offers just as low, Bates said.
One of his clients listed a three-bedroom Lauderdale-by-the-Sea
condo for $1.4 million. The owner turned down several offers for two
years before finally selling it for $1.05 million. Another of Bates’
clients listed a Lauderdale-by-the-Sea condo for $799,000 two years
ago, only to sell it recently for $550,000.
“A lot of these units selling at bargain prices have been on the
market for a year or two, and their owners are just now realizing
that the market is not going to turn around,” Bates said. “They
figure they’re better off taking the deal on the table, even though
it’s not the best deal.”