Wednesday, December 29, 2010

Foreclosure Debacle Won't Stop Housing Recovery



From Builder Online, a short article on why the foreclosure mess isn't something to worry about. In essence, the article talks about how the foreclosures are concentrated in particular areas like Florida, and how many of these foreclosures are going to go through since they were valid actions to begin with.

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Monday, December 27, 2010

Top Ten Design Trends for 2011



Builder Magazine just unveiled what it thinks to be the top ten housing design trends for 2011. Among them are directions towards honest, simple architecture for smaller homes that eschews glitz as homeowners simplify their lives, organic and green construction, continued moves towards more village type suburbs, multigenerational homes, and an increased mixing of styles in home and interior design.

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Friday, December 24, 2010

The Staten Island Greenbelt















After exploring the Staten Island Bluebelt in our posts the other day, I thought I would present a little green for the Holidays and take an interesting overview of another one of Staten Island's resoures: The Staten Island Greenbelt.

This article from the blog Landscape and Urbanism features a video about the Greenbelt from PBS's The City Concealed series.

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Wednesday, December 22, 2010

Housing Recovery Expected to Gain Strength in 2011 and 2012

An excerpt from Builder.com about an improving outlook on housing as the job market improves.

The job market should improve sufficiently in 2011 to begin thawing the big freeze in household formations of the past few years and to put consumers in a brighter mood, both of which are prerequisites for boosting housing demand.

Some parts of the country will recover sooner than others, the economists on the panel said, and foreclosures will linger as a problem in many of the largest housing markets. However, supply and demand may be in a healthier balance than suggested by today’s high vacancy rates and even conservative demographic projections suggest that housing production will have a lot of catching up to do in the decade ahead.

Job Growth the Key

“The key to recovery is job growth,” said Crowe, “and that has been relatively slow.” Average monthly employment growth following recessions in the 1980s and 1990s was in the range of at least 200,000 new jobs. By comparison, the first six months of this year averaged 139,000, including many temporary Census jobs, which barely made a dent in the 8.5 million jobs lost in the recession. “We need to add about 100,000 to 125,000 jobs just to keep up with growth of the labor force,” he said.

When asked why buyers were remaining on the sidelines, almost 85% of the builders surveyed by NAHB said it was because they could not sell their existing home and 78% said it was due to uncertainties over employment and the economy.

In the period ahead, Crowe said he was looking for better job creation to spur household formations, which over the course of the recession were 0.5 million to 1.5 million lower than they should have been as people doubled up with friends and relatives. “We’ve got a lot of people right on the edge who will soon form households,” he said. “They are ready to move out and begin to absorb the housing stock that’s out there.”

A Multifamily Surprise

With signs looking favorable that new-home sales will be gradually improving, Crowe forecasted a 37% increase in single-family starts in 2011 to 655,000 units and a further 48% climb to 970,000 units in 2012. Starts this year are expected to rise to 470,000 units, a “marginally better” 8% gain from 2009 but lower than had been originally anticipated.

Multifamily construction, on the other hand, “made a surprisingly decent rebound midyear,” he said. “It had been expected not to do as well in 2010 as in 2009, but that is now reversed. The latest NAHB forecast shows multifamily housing starts bottoming out at 112,000 units in 2009 and then rising 12% this year to 125,000 units, 19% in 2011 to 149,000 units and 41% in 2012 to 210,000 units.

Better Private Payroll Growth

Maury Harris, chief U.S. economist for UBS, said that 2.7% real growth in 2010 and 2011, while substandard, will generate “some decent results” for business and the stock market. “In terms of jobs, they will pick up next year,” he said. “The longer we can sustain even moderate growth, the more employers have confidence in going ahead in hiring.” They will remain cautious until they see demand staying at least at its current level.

Harris predicted that private payrolls will grow by about 150,000 jobs a month next year, compared to around 95,000 now, leaving the unemployment rate at 9% at the end of 2011.

Once the Federal Reserve begins seeing better job growth, he said, “it will be talking about tightening, not easing.”

Banks Easing Lending Standards

Harris was confident that better employment gains will be achieved next year because banks — confronted by weak demand for loans and the need to compete for a bigger market share — began easing their lending standards this summer. That historically has been associated with improved private employment growth, he said, especially among firms with less than 50 employees, who have been contending with severe credit constraints.

Republican control of the U.S. House of Representatives will also be heartening to the small business community, easing its concerns over taxation and regulatory policies emanating from Washington and producing a pick-up late in the year in business confidence indexes, he said.

Household debt burdens relative to income “are tumbling,” he added, a good omen for stronger consumer spending. “Debt is holding back the consumer less and less.”

A Severe Market Correction

“Most economists now are predicting job growth next year that would be sufficient to begin to eat into the unemployment rate,” said Eric Belsky, managing director of Harvard University’s Joint Center for Housing Studies. “Jobs are very critical to a recovery in housing, because it goes straight to consumer confidence and business confidence. The longer housing remains stressed, the lower the confidence of most decision makers in the economy.”

Taking a broader and longer view of the housing cycle, Belsky said that the market has now corrected for the housing boom with a severe downturn in which both home prices and home building have dropped dramatically, and this has some positive implications for future growth.

The declines in house prices and mortgage rates have reduced average monthly home payments to a historic low. “This is a plus because when a more meaningful recovery does begin, more people will be able to get into the market,” he said. “An environment that is remarkably affordable is likely to hold for the better part of next year and beyond.”

And as a result of steep cuts in production during the downturn, a total estimated 15.8 million completions of single-family and multifamily homes and placements of manufactured homes from 2001 to 2010 puts the supply of new housing for this period back into balance with demand.

“The market doesn’t look like it’s oversupplied in the long term,” Belsky said, and the current inventory should be absorbed as demand returns. A similar trend is occurring in remodeling.

Two-thirds of the demand will be coming from household formations, which will be fueled by an aging population, by the extra-large echo-boom generation of children of baby boom parents and by immigrants, he said.

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Tuesday, December 21, 2010

With Mortgage Rates Below 5%, Housing Highly Affordable For 7th Straight Quarter




Excerpt of a Builder.com article:

Housing affordability remained near its highest level nationwide for the seventh consecutive quarter as interest rates dipped below 5%, according to the NAHB/Wells Fargo Housing Opportunity Index (HOI) released on Nov. 18.

Interest rates during the quarter were at their lowest level since the HOI was first compiled nearly 20 years ago.

The HOI indicated that 72.1% of all new and existing homes sold in the third quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the third quarter almost equaled the record-high 72.5% set during the first quarter of 2009 and marked the seventh consecutive quarter that the index rose above 70%. Until 2009, the HOI rarely topped 65% and never reached 70%.

"With interest rates remaining at historically low levels, and house prices starting to stabilize, homeownership is within reach of more households than it has been for almost 20 years," said NAHB Chairman Bob Jones. "While these favorable conditions are beginning to draw home buyers back into the market, builders continue to have major problems in obtaining credit for new-home construction, and this obstacle must be overcome if builders are to respond to improving demand moving forward."

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Monday, December 20, 2010

The Staten Island Bluebelt

The Watersheds of South Richmond

I thought it would be interesting to share an article today that isn't specifically related to opportunities in and news about Staten Island real estate, but rather to take a look at one of the Island's other fascinating features: The Staten Island Blue Belt.

I came across this interesting article from Urban Omnibus, a project of the Architectural League of New York, where they sat down with Dana Gumb, NYC Department of Environmental Conservation's Bluebelt lead manager to talk about this engineering project that tries to work with the ecology of the Island while helping to manage the reality of suburban development and the large sudden surges of water runoff created by storms.

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Friday, December 17, 2010

How to Get a Home Buyer’s Discount




A NY Times article about how to get a discount on your new home, even though the tax credit has expired:

With the home buyer’s tax credit now expired, here’s one way to still get an equivalent discount of sorts: ask your real estate agent to take it out of his or her commission.

That’s what Colm Glass, founder of Glass Real Estate in San Francisco, is offering clients. At a recent open house, Mr. Glass handed out cards advertising the $5,000 commission rebate he is offering for homes sold for less than $1 million and higher discounts (often around $8,000 to $10,000) for homes priced higher. “Home buyer tax credit gone,” the card declares. “We’re giving you another chance.”

“I did see things drying up a lot after the tax credit went away, which is kind of curious since it wasn’t a great deal of money,” Mr. Glass said. But “it did seem to drive a lot of purchasing earlier this year.”

As a result, Mr. Glass decided to reframe a commission discount he had been offering clients since 2008 as a rebate more comparable with the expired credit. Here’s how it works.

When he’s the seller’s broker, the rebate comes out of his commission (which is 2.5 percent when there are two agents involve in the transaction). And when he’s the buyer’s broker, the seller pays him his commission and then he gives the buyer the rebate out of that amount. Mr. Glass said the rebate has helped him sign on clients and close more deals annually than when he wasn’t his own boss.

So if asking for such a commission discount seems to be a good plan, bear in mind that independent brokers may be more likely to offer it than those that work for a large firm. Mr. Glass, for instance, said that when he wasn’t his own boss, he was able to offer such discounts only in rare circumstances. But if you plan to work with an independent broker, you should be sure to check references to lessen some of the risk.

In addition, your agent may be more likely to say yes to a discount if you’re buying in a city with expensive home prices (like San Francisco, New York, Los Angeles and Chicago), where commissions tend to be higher as a result. “It really does work best in cities where the price tags are high,” Mr. Glass said.

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Wednesday, December 15, 2010

Home Buying for the Long Haul Pays Off



An article from Bloomberg Businessweek says that even though housing is in a slump, in the right markets, housing remains a good long term investment. Here is an excerpt:

The era of get-rich-quick real estate is dead. The era of increasing long-term wealth in your home is back.

Historical data from the National Association of Realtors (and adjusted for inflation by Businessweek.com) show that in 18 of the 25 largest metro areas in the U.S., the value of homes purchased in 1990 had increased by 2010, often by double digits. And this in a year when real estate prices around the country have softened since their peak in 2006. These houses would have been worth even more a few years ago

While that's cold comfort for the many Americans whose homes have lost more than $1.7 trillion in value in 2010, according to a new, it underscores the fact that homeowners who buy for the long term have historically seen the value of their investment increase over the years. In inflation-adjusted terms, the median U.S. home sale price in the third quarter remains approximately 9.5 percent higher than in 1990, despite falling 26 percent from peak levels, according to calculations based on NAR data.

Says Greg Hebner, chief operating officer at Sorrento Capital, an Irvine (Calif.) asset management firm: "You should at least be looking at housing now," especially as interest rates are low and homeowners can deduct mortgage interest from their income taxes. "It's still a good game" if a buyer understands the risks, has consistent income, and purchases a house he can afford, Hebner says.

Based on data since 1968, nominal U.S. home prices have risen 5.5 percent annually and outpaced inflation by about 1 percent to 2 percent, says Lawrence Yun, NAR's chief economist. The main reasons housing has grown faster than inflation, he says, are that more people wanted to buy in places with a finite supply of developable land, which drove up prices, and owners increased the value of their properties through home improvements.

A national housing survey by Fannie Mae shows that in the third quarter this year, 66 percent of consumers believed buying a home is a safe investment, compared with 16 percent who believe stocks are safe.


Fannie Mae's survey also showed that 59 percent of respondents still believe owning a home is a good way to build wealth, and 84 percent believe buying makes more sense than renting.

Assuming home prices continue to increase 1 percent to 2 percent better than inflation, a buyer needs to own the property for at least five years to break even and cover selling costs, says Sorrento Capital's Hebner.

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Tuesday, December 14, 2010

Rates, loan applications up for fear of missing the boat

An interesting article from the Calculated Risk blog, which notes an increase in mortgage applications in concert with the increase in mortgage rates, possibly showing some urgency in the housing market as people are afraid of missing "the perfect time to buy" for fear of future rate increases.


The seasonally adjusted Purchase Index increased 1.8 percent from one week earlier. This is the third weekly increase for the Purchase Index which reached its highest level since early May 2010, when the tax credit was expiring.

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