Buyers Lured to Bargain Luxury Properties
Prices for luxury second-home markets are falling out of the stratosphere–and attracting buyers who were previously priced out of the market.
Prices in the Caribbean have dropped by $500,000 and European retreats in Spain, Malta, and Portugal are down 30 percent, says Lucy Russell, managing director of Quintessentially Estates.
“The second-home market has suffered considerably,” says Marc Cohen, director of Ledbury Research, the London-based luxury consultancy.
He says active buyers have changed from the typical 65-year-old retiree who has sold his business or retired from a high-salaried job to a younger person who sees opportunity in declining markets.
“Those who need to sell will do so for substantially less than they would have six months ago,” says Charles Weston-Baker, managing director of Savills, U-K real estate services provider.
Source: Newsweek International, Ginanne Brownell (01/12/09)
Top 10 U.S. Rental Markets
It will likely be a challenging year for all kinds of commercial real estate, according to the real estate services company and investment firm Grubb & Ellis Co., which released its 2009 forecast Monday.
Office space. The report found that 90 million square feet of office space was under construction at the end of 2008, most of which will be available for use in 2009. This new space combined with a projected 45 million square feet coming available as tenants vacate and a big jump in subleased space, will push vacancy rates up by 2 percentage points to end 2009 at 16.5 percent, the report predicted.
Retail. The retail real estate market will be hard hit by the downturn. Grocery store-anchored centers in mature trade areas will hold their ground in 2009, the report said, while centers on the urban fringe, where housing construction has stalled will suffer.
Industrial. The quest for cost-saving efficiencies should sustain demand for industrial space in 2009, despite the weak economy, according to the report. Nevertheless, the vacancy rate will rise slightly to end 2009 at 9.4 percent.
Apartments. Apartments will have a tough year, even with the addition of renters who have lost their homes to foreclosure, because of the increasing supply of unsold condos and homes now available for rental.
The top-10 rental housing markets from 2009-2013 will be:
- Los Angeles
- San Francisco
- Orange County, Calif.
- Oakland/East Bay, Calif.
- Washington, D.C.
- San Diego
- New York City
- San Jose, Calif.
- Long Island, N.Y.
- Portland, Ore.
Source: Grubb & Ellis (01/05/09)
Rising Property Taxes Really Hit a Nerve
Politicians all over the country are preparing legislation in response to angry homeowners who are demanding property tax rollbacks even as municipalities move to raise those same taxes.
State government in New York, Georgia, Oklahoma and Wyoming are about to consider proposals in their 2009 sessions to put the brakes on property tax increases.
Indiana already enacted a cap on property taxes and is considering a state constitutional amendment that would permanently cap property taxes at 1 percent of the property value.
Florida last year amended the state’s constitution to add property tax-related amendments. Citizens groups in Nevada and Arizona are working to get the same sort of measures on the ballot.
In New York, Gov. David Paterson is supporting a 4 percent statewide cap on property-tax increases.
“People are just astounded that this year, of all years,” the assessed value “of their property has increased,” said Georgia Rep. Larry O’Neal, a Republican and chair of the state’s House Ways and Means Committee.
Source: The Wall Street Journal, Jennifer Levitz (01/05/2009)
Mortgage Deals Abound, for Some Borrowers
Now’s the time to get a great deal on a mortgage, but borrowers should shop around.
Rates are changing constantly and they differ widely among lenders. Borrowers typically need a FICO score of at least 720 for the best interest rates, although for a fee Fannie Mae and Freddie Mac will guarantee loans with FICO scores as low as the mid-600s. Having enough cash for a 20 percent down payment is also important. But borrowers can get loans with lower downpayment requirements. FHA, for instance, makes loans available for a minimum 3.5 percent down.
For a conforming loan, monthly mortgage payments can’t exceed 28 percent of gross income, while all debt payments, including student loans, can’t exceed 36 percent of gross income.
Source: Business Week, Peter Coy (12/31/2008)
Where Buyers are Picking Up Housing Bargains
Smart investors in all parts of the country are picking up fabulous housing bargains.
Bill Leon, president of Florida’s Broward (County) Real Estate Investors Association, has been buying and selling investment property for years, but he thinks today’s deals are unprecedented. “People are afraid not to sell because they don’t know where the bottom of the market is,” he says.
David Dweck, a hard-money lender, believes the best buys are in what he calls “workforce housing,” aging bungalows on small lots. They are selling for as little as 10 cents on the dollar compared to what they were going for in 2006, he says, then fixed up and resold or rented quickly.
“People have been beaten down by fear, negativity, constant media bombardment,” says Dweck. “There is a silver lining. The future looks bright.”
Sheresa Pompay, an associate with Hunt Real Estate ERA in Chandler, Ariz., says bad publicity is good for real estate investors. “I love the people who read about all the gloom and doom, because they stay on the sidelines and go, ‘It hasn’t hit bottom.’ Whatever. By the time everyone jumps back in, we’ll be out and doing something else.”
Fortune magazine predicts that these will be the 10 worst-performing real-estate markets – and the best places for finding bargains – in 2009:
Los Angeles, down -24.9 percent
Stockton, Calif., -24.7 percent
Riverside, Calif. -23.3 percent
Miami-Miami Beach, -22.8 percent
Sacramento, -22.2 percent
Santa Ana-Anaheim, Calif., -22 percent
Fresno, Calif., -21.6 percent
San Diego, Calif., 21.1 percent
Bakersfield, Calif., -20.9 percent
Washington, D.C., -19.9 percent
Source: Fortune, David Whitford (12/23/2008)
Inspector’s Advice: Disclose Everything
Building inspector and syndicated columnist Barry Stone urges real estate sales professionals to be forthright about a property’s shortcomings. Taking a laissez-faire approach can increase a practitioner’s liability if something goes awry after the sale has closed.
He particularly urges brokers to insist that associates be proactive about haveing properties professional inspected.
“The message should be: ‘This brokerage cannot afford disclosure-related lawsuits. If you work for this company, you must recommend only the most thorough home inspectors available. Here is the list of inspectors we have found to be the most qualified,’” Stone says.
Source: Access Media Group, Barry Stone (12/27/2008)
It’s a Dirty Job, But Someone’s Got to Do It
So-called “trash-out” businesses that clean up foreclosed homes are a big growth industry.
While there are no official numbers on how many trash-out businesses have opened, a Internet search turns up hundreds of listings, and Entrepreneur Magazine put foreclosure cleaner Cyprexx Services of Brandon, Fla., on its 2008 “Hot 100 Fastest Growing Businesses” list.
Clean-out servicers estimate that it costs about $2,000 to clean out a foreclosed home–more if the departing residents did a substantial amount of damage.
Cassandra Black of Foreclosure Cleanup in Riverdale, Ga., cleans out about 12 homes a month. She says 90 percent of her business comes from real estate practitioners.
With 575,090 loans nationwide entering the foreclosure process during the third quarter, the business is likely to get better before it gets worse.
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