Fiserv Study Says Markets Are Improving

Fiserv on Monday released a report that analyzed housing financial data from fourth quarter 2009, which seemed to suggest real estate could be improving. “Optimism that a sustainable economic recovery is underway and is driving increases in home prices across many U.S. metro areas. More and more, consumers have confidence that buying a home doesn’t mean catching a falling knife,” says David Stiff, chief economist for global financial technology firm Fiserv. Among the conclusions of the report were:

• California markets collapsed about one year before much of the rest of the U.S., creating increased affordability. Year-over-year prices are up in eight of 28 California metro areas and prices have increased from recent lows in 24 of 28 metro areas. The strongest rebounds were in coastal markets, including the Bay Area, Los Angeles, Orange County, and San Diego, where there are decreasing levels of foreclosed homes. Markets in the interior have also experienced a price bounce, mainly due to strong investor demand.
• In Washington, D.C., home prices were up 5.2 percent year-over-year. Since the market bottomed in early 2009, prices in this metro area have risen more than 9 percent. Washington boasts a relatively strong local economy with 6.8 percent unemployment compared to 9.9 percent for the U.S. The earlier rapid decline in prices also substantially improved affordability.
• Ohio and Michigan, two states hit hard by the recession and loss of manufacturing jobs, are seeing signs of stabilization. Housing is very affordable across metro areas in these states. There is less uncertainty about the future of the U.S. auto industry and jobs in auto and auto parts manufacturing have been increasing since December 2009.
• Other markets where investor purchases of foreclosed homes have dominated housing sales are also coming back into balance. This includes metro areas such as Minneapolis, Detroit, and Memphis, where recent sales have included more regular, non-distressed homes.

Source: Fiserv (06/14/2010)

Chinese Status Symbol: A Hong Kong Home

For many wealthy Chinese, the ultimate travel souvenir is a vacation home, especially a vacation home in Hong Kong. According to one of Hong Kong’s largest real estate companies, Centaline, Chinese buyers represented 18 percent of all real estate purchases in Hong Kong in 2009. Other estimates say the Chinese are responsible for 40 percent of all Hong Kong purchases of property over $1.13 million. Benedict Ma, associate director of research at CB Richard Ellis, says buying Hong Kong property is a status symbol. “You buy an apartment, go back, and tell your friends all about it. If you can afford a place in Hong Kong, you are saying you have arrived.” Ma says many Chinese are also interested in buying U.S. properties, but strict visa policies restrict Chinese visitors to the U.S.

Source: Newsweek International, Alexandra A. Seno

The 'Cher House' Sold in Miami

ONE Sotheby’s Realty in Miami closed this week on the resale of a mansion sold by singer Cher in 2006 to Sean Wolfington. The recent sale brought $10.45 million, about $2 million more than Wolfington paid.

"There's a shortage of trophy properties on the market and we are seeing an increasing number of wealthy foreign buyers from Latin America and Europe looking to capitalize on the weak U.S. dollar," says Daniel De La Vega, broker of ONE Sotheby's Realty.

Associate Jorge Uribe, who listed the property, says, "A lot of people told me to lower the price by 20 percent to 30 percent because everything was down, but I advised my client to be patient. In the end, the new owners paid a great price for one of the most unique properties in Miami.”

Source: ONE Sotheby’s Realty (05/06/2010)

How Much Will Home Owners Insurance Cost?

The price of insuring a property can raise the cost of ownership significantly. There are various factors that affect the cost of insuring a home: · Location. A home near a fire hydrant or protected by a professional fire department, as opposed to volunteers, will cost less to insure. · History of claims. Previous claims push up the cost of insurance. Ask the seller to provide a home’s insurance claims history report. This information is available from the sources: The CLUE report is $19.50 and can be purchased at: http://tinyurl.com/26m57uo. The A-Plus report is $9 by mail and $13 by fax and available at: http://tinyurl.com/293slq7. · Need flood or earthquake insurance? Policies for both of these perils are sold separately and can be pricey. · How old are the systems? Electrical and plumbing systems that are less than 10 years old cost less to insure.
Source: Associated Press (04/23/2010)

Credit Issues Slowing Recovery

A survey of 200 real estate executives by Akerman & Co, a national commercial real estate company, reveals they believe credit issues and the volume of distressed properties continue to inhibit the recovery of the real estate market. The report found that:

• 79 percent of respondents said availability of credit and other financing challenges was the most pressing issue facing the industry.
• 65 percent believe that large inventories of lender-owned properties are preventing a recovery in the commercial real estate industry.
• 44 percent said inventories of distressed properties and their effect on pricing was the second most pressing issue.
• 54 percent believe residential is the real estate sector best positioned for a recovery.
• 20 percent said the industrial sector is best positioned.

Source: Akerman Senterfitt (04/05/2010)

No Authoritative Estimate of Total Foreclosures

How many foreclosed homes are really out there? No one can say for sure, but the number seems to be somewhere between 500,000 and 1 million. To date, no one has been able to track the total number of properties owned by banks, the U.S. Department of Housing and Urban Development, and mortgage investors. Here are a few approximations: • Barclays Capital uses foreclosure data from mortgage securities to estimate that there are slightly more than 600,000 homes in the process of foreclosure. • RealtyTrac, which examines public records, estimates the number is closer to 700,000. • Independent housing economist Tom Lawler combines data from Fannie Mae, Freddie Mac, the Federal Housing Administration, Federal Deposit Insurance Corp., and securitization trusts to conclude that there are actually about 500,000. Source: The Wall Street Journal, James R. Hagerty (03/19/2010)

Sam Zell: Recovery Is Underway

Sam Zell, the billionaire investor who made his fortune in real estate, told Bloomberg News yesterday that he expects the U.S. housing market to start recovering at the end of 2010 and strengthen in the middle of 2011.

Zell, who according to the Forbes’ tally is the 237^th richest person in the world, said, “Conditions are getting better, but there’s a lot of uncertainty. The real question is: Can confidence return enough so that what you call the green shoots can continue forward?”

Zell said he expects more turmoil in the commercial real estate business, pointing toward General Growth Properties Inc., the mall owner that is fighting a takeover, as an example.

Source: Bloomberg, Rita Nazareth (03/16/2010)