Home Prices and Debt–Crippling Post-Graduates March 1, 2012
Posted by admin1 in Real Estate.Tags: Mortgage Interest Rates, Real Estate, student debt
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Tougher times cause everything to shift in one direction or another. The housing crisis, that long lasting thorn in America’s paw, is causing the real
estate market to have a major gimp in it’s stride. Recent college graduates have long chased the American dream of finishing the arduous task of
schooling, landing their dream job and naturally progressing into home ownership. It is the mounting pile of student debt that comes with achieving the
increasingly required schooling necessary for snagging the dream job that is preventing college grads from adding the status of homeowner to their
lives. It now seems that student debt is an additional thorn in America’s paw that will only lead to further crippling America’s real estate market.
Today, outstanding student debt has surpassed credit card debt in America. Students are leaving with an average of over $25,000 in debt, which prevents them from receiving mortgages because lenders are being stricter with qualifications required to receive a loan. These recent graduates are starting further and further behind as the debt of schooling and education continues to rise; if they are unable to find a job out of school, it further slows their progress, making that hole even harder to emerge from.
The numbers are continuing to slide against the recent college graduates. The unemployment rate of people 25 to 34 is about 9 percent. Right now,
people 25 to 34 make up 27% of homeowners, but a decade ago they made up 33%. In the span of a decade (2001 to 2011) only 9 percent of 29-34 year old Americans qualify for mortgages, whereas ten years ago 17% qualified. But where are these people living? About 6 million people between 25 to 34 are living in their parent’s homes, up from 4.7 million in 2007 when the tough economic period started.
This caustic mix of high unemployment and high amounts of debt will undoubtedly have a cascading effect later in America’s future. When the current poor economic conditions started in 2007, it caused many Americans to go back to school, which added to the total of outstanding student debt. With interest rates for mortgages at very low rates, it would seem that it should make the housing market boom, but the additional student debt has held many people back. With fewer and fewer homes being filled by the 25 to 34 demographic, these houses will sit unsold, slowing down construction and housing industries and possibly adding to unemployment in that sector.
With America’s economy going through tough times, the news of recent grads struggling not only in the job market but also in the housing market doesn’t give many people hope for change for a better chance at achieving their version of the American dream. With the election year upon us, it’ll be interesting to see what is proposed to help homeowners and students alike.
Inner City Migration December 29, 2010
Posted by admin1 in Real Estate.Tags: Inner City, Migration Habits, New York, NYC
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As maintenance and mortgage costs increase many Manhattan apartment leasers and owners are looking to downsize and or save money. Increasing Co-Op board fees projected between 5 to 8% as well as endless maintenance fees to maintain those highly coveted Pre-War buildings, are causing many Manhattanites to assess their housing situation and move out, out of Manhattan that is. The borough of Brooklyn is quickly becoming a hot migration point for who are dying to escape the escalating rent, co-op board fees, and general maintenance fees.
Neighborhoods such as Williamsburg in Brooklyn were historically blue collar immigrant families settlements. Present day, this neighborhood is attracting celebrities and young professionals because of its comparably less expensive rent, short commute into Manhattan, vast array of restaurants, stores, cultural events, and offer of more spacious living. Be weary though, the demand for more moderately priced apartments a short subway ride into Manhattan is beginning to cause rents in these neighborhoods to rise.
Yet, the overall trend for 2010 in the real estate market was individuals looking for alternatives. Renters and buyers were looking for ways to save money and trying painfully hard not to compromise on convenience and quality. Renter and buyers were and are using a fine tooth comb to scour the market for better prices without losing amenities, even if it means moving across the bridge. While overall, Manhattan is still more expensive than Brooklyn—with a median rent in the month of January around $3,100 in comparison to $2,050. The trend of young people flocking to less expensive neighborhoods, in turn creating high demand and ultimately increased pricing in these neighborhoods, is proof that in this troubled economy people are looking for alternatives, and have a vested interest in getting more for their money.
Mortgage Interest Rates Jump to Highest Level Since August April 8, 2010
Posted by admin1 in Real Estate.Tags: High, Mortgage Interest Rates, Real Estate
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Source: Washington Post
Author: Elizabeth Razzi
URL: http://voices.washingtonpost.com/local-address/2010/04/jumping_mortgage_rates_and_ope.html
Mortgage interest rates jumped this week to the highest level since August, Freddie Mac economists report today. Thirty-year fixed rates hit an average of 5.21 percent — which is up from last week’s 5.08 percent — and a half a percentage point above the record low recorded in early December. Thirty-year loans also charged 0.6 point in prepaid interest, on average. One point equals 1 percent of the loan amount.
Freddie Mac economists chalk it up to a couple of positive economic reports posted recently, including better employment numbers and a surprise 8.2 percent jump in pending existing-home sales logged in February. They didn’t mention it, but retail sales also showed gains — and the Fed’s extraordinary program designed to drive down rates by buying mortgage-backed securities issued by Fannie Mae and Freddie Mac expired at the end of March, both of which could have helped boost mortgage rates.
Perversely, rising interest rates tend to boost home sales — at least in the short term. Buyers who had been sitting on the fence often get jolted into action when they see rising rates eat into their new-home budget. Combine that with a major nationwide marketing push by Realtors to hold open houses on as many of their listings as possible over the April 10-11 weekend, and the market could get pretty interesting over the next week or so.
The Realtors are doing this open house push as we enter the final three weeks of the government’s tax credit program for home buyers. Buyers need to be under contract by April 30 to qualify for the $8,000 first-timer tax credit or the $6,500 credit available to some repeat buyers.
Do you think the open house extravaganza is a good idea — something that should be repeated more often? Or are you getting all the info you need from online photos? Share your thoughts in the comments!
Talks of Real Estate Development at Ground Zero April 3, 2010
Posted by admin1 in Real Estate.Tags: City, Commercial Real Estate, Ground Zero, New York, NYC, real estate development, Twin Towers, World Trade Center
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Source: NY Times Editorial
URL: http://www.nytimes.com/2010/04/03/opinion/03sat4.html
“A Deal at Ground Zero?”
Mayor Michael Bloomberg and other politicians are celebrating a deal to finally finish the major buildings at the World Trade Center site. Let’s hope they are right to break out the confetti. Larry Silverstein, who is developing office towers on the site, and the Port Authority of New York and New Jersey, which owns the 16 acres, need to make sure that the agreement does not fall apart yet again, as they fill in the remaining details.
No one should be surprised to hear that the latest stalemate — which has dragged on for more than a year — was about money. Mr. Silverstein has been insisting that the Port Authority use scarce public funds to help finance his three private office towers. The authority has rightly balked, citing more basic needs like tunnels and bridges and ports. Last week, both sides agreed in principle to go ahead with two skyscrapers, and Mr. Silverstein will pick up more of the bill than he wanted.
The Port Authority has pledged to provide $1.2 billion in financing to complete the first tower, which would cost an estimated $1.75 billion. For that tower and the second one, expected to cost almost $2 billion, Mr. Silverstein would commit to using what is left of the huge insurance payout he got after the attack and from tax-free Liberty Bonds. He has also committed to raising $300 million and finding renters for 400,000 square feet (16 percent) of the office space in the second tower before the city, state and authority provide $600 million more in financing.
Plans for the third tower will be wisely kept on hold, the area preferably turned into a park, until the downtown real estate market is ready for more offices.
The details still to be worked out include questions about development fees for Mr. Silverstein and the interest rate for the authority’s financing. The two sides need to settle those and get things moving. The 10-year anniversary of the attacks is 17 months away. With good faith and a serious effort, the memorial to the victims of Sept. 11, the site’s centerpiece, can be ready by then.
Phoenix Suffers Commercial Real Estate Downturn March 18, 2010
Posted by admin1 in Real Estate.Tags: Commercial Real Estate, Economic Downturn, Phoenix
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Source: NY Times
Author: John Collins Rudolf
URL: http://www.nytimes.com/2010/03/17/realestate/commercial/17phoenix.html
PHOENIX — Perhaps it was just a matter of time, but three years after this city’s housing market collapsed in spectacular fashion, commercial real estate has followed it off the cliff.
An old building in downtown Phoenix that was to be renovated into a boutique hotel is nearing foreclosure.
The average price paid for office space in the Phoenix metro area tumbled more than 50 percent last year, from $205 a square foot in 2008 to $102 a square foot in 2009, according to data compiled by Kammrath & Associates, a local real estate analysis firm. Retail and industrial space underwent similar declines.
“Prices are falling like a stone,” said Bob Kammrath, who has studied the commercial market in Phoenix since 1981. “I see them going lower.”
The recession has been the main instigator of the crash, but overbuilding and speculation set the stage. In a mirror image of the housing bubble, relaxed lending standards and a boom mentality prompted the construction of hundreds of offices, shopping centers, industrial buildings, hotels and apartments from 2005 to 2009 — about 86.5 million square feet of new commercial space in all, according to research by CB Richard Ellis.
In 2006, when growth peaked, about 30 percent of the Phoenix area’s economic output was tied to real estate and construction. So it was not long after the once white-hot housing market fell apart, in 2007, that the rest of the city’s economy stumbled, and hard. As jobs in construction and real estate dried up, and stock market losses curbed the relocation of retirees from the north, in-migration to the city radically slowed.
Commercial brokers blame a confluence of factors for the worst downturn in memory: rampant overbuilding, a national economic crisis, spiking unemployment and a near halt in population growth. The result is visible all over the city in the form of empty storefronts and “for lease” signs affixed to office buildings.
The worst-off of these projects were built in marginal locations on the outskirts of the metropolitan area, and stand completely empty months and even years after completion.
“We’ve got some see-through shopping centers,” said David Wetta, senior vice president and managing director in the Phoenix office of the real estate brokerage Marcus & Millichap.
A handful of major developments throughout the metro area simply collapsed midconstruction and linger, half-built, as gloomy reminders of the sudden end of good times.
One such failure, the Hotel Monroe, sits in the heart of downtown Phoenix, just a few blocks from City Hall. Started in 2006, its plans were extravagant even by the bloated standards of the bubble era. The 144-room boutique hotel was to be housed in a rehabilitated 12-story Art Deco office building from the 1930s and would include opulent “Rock Star” suites, a five-star restaurant, a rooftop nightclub and 24-hour room service.
Construction began in 2007 but ground to a halt a year later when the project’s banker, Mortgages Ltd. — for a short time, Arizona’s largest private lender — cut off financing, en route to its own bankruptcy. The hotel remains unfinished, with dark windows and a desolate mien; Grace Communities, its developer, was recently cited by the City of Phoenix for code violations including graffiti on exterior walls and trash and debris around the premises.
When or how the hotel will be finished is uncertain, as the building is in foreclosure and headed to a trustee’s sale in April. There, 13 investors will try to recoup $76.5 million in loans, though experts say the building is unlikely to fetch anywhere near that amount.
Yet it is not just new commercial developments that are foundering. Older properties — in particular, those that sold at big premiums during the market run-up — are also struggling with rising vacancy rates, shrinking rent rolls and high debt loads.
A prime example is the Viad Corporate Center, a 24-story, 478,000-square-foot high-rise in midtown Phoenix, which was built in 1991 and bought for an estimated $105 million in 2006. Earlier this month, Bank of America filed a motion in court to appoint a receiver for the property, citing the failure of the building’s owner to stay current on a $65 million loan.
Bank of America’s move to foreclose on the tower is one prominent sign that lenders are losing patience with large commercial borrowers and are stepping up efforts to resolve problem loans behind big properties. Commercial mortgages in Phoenix are souring at their highest rate in years: according to Foresight Analytics, a banking analysis firm, 5.3 percent of commercial mortgages in the metro area were delinquent in the fourth quarter of 2009, up from 2.3 percent at the same period in 2008.
How The Housing Bubble Burst March 9, 2010
Posted by admin1 in Real Estate.Tags: Bubble, Burst, Economy, Housing, Real Estate
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A lot of people are wondering what can be done to fix the real estate market, but the question that isn’t posed enough is what went wrong in the first place? How did the housing bubble burst? It’s a sensitive topic, but an important one to bring up. If we can understand how and what happened to cause the real estate market to collapse than we may be capable of preventing something like it from ever happening again. There’s not one specific area to point to and say, “That’s what caused the housing bubble to burst”. Rather, there any many different causes that came together to and lead to the crumbling of the housing market and eventually the economy.
One of the first causes was that Americans love to own homes. They love to own homes so much that many analysts of the market have said that around 2005 (the peak of the housing bubble) there was a type of mania and madness going on with people who wanted to buy and own real estate. This started the trend of people buying houses they really loved, but ultimately couldn’t afford. This was the proverbial snowball ready to gain speed down the mountain. If you add this housing madness with the belief that owning rather than renting is a great and smart investment (which some experts say is not necessarily true, but rather is based on a case by case basis), the housing bubble may not have immediately burst but it was being incessantly poked at.
The bubble may have also burst because something imploded right before it. When the stock and the dot-com market crashed in 2000 many took their money away from stocks and used it to buy housing. Some would argue that so much money being taken out of the market and thrown into the supposedly “smart” investment of a house caused a housing frenzy that put people in houses they could never pay for. With so many buying, interest rates and values of homes went down which caused many to hold homeowners accountable for their loans and thus make them pay what they couldn’t afford. Foreclosure rates then increased in 2006 and 2007 and it spelled the beginning of not just troubles for the housing market but for the nationwide economy.
We are now at a point where the market (both housing and economic) is rebounding, but now is more important than ever to remember how we got here. If we do that, we may be able to prevent the housing bubble from ever bursting again.
Flipping Houses – No Easy Task February 13, 2010
Posted by admin1 in Real Estate.Tags: Flipping Houses, Real Estate
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With Spring right around the corner, I started looking into one of my favorite dreams – flipping houses. I always assume the best time to get into the business is when the weather breaks. I think to myself how great it would be to work on houses all summer. So, naturally, every year around spring time I start reading up on housing and real estate. I came across an article on MSN that pretty much took the wind right out of my sails.
The article more or less painted a pretty scary picture of house flipping. Between all of the legal jargon and the failure statistics they talked about, it almost made flipping houses more of a nightmare than a dream. However, after thinking about the article some more, I determined that every job has it’s bad aspects and there are bound to be risks involved with opportunity taken. What distinguishes my attitude towards flipping houses from everyone else is the fact that I absolutely love home renovations and all of the work that in entailed. I have a drive to complete every project I work on 100% no matter how much work is involved. I’m constantly looking to help friends and family members out with their home renovation projects. I just can’t see why I wouldn’t want to do it for myself some time. Granted, the point they made about not being able to buy houses with no money down was valid. You do see a lot of shows on TV and infomercials that make flipping houses sound like a breeze. I know better than that though. I have to believe that some people get into the business just to make money but really have no desire to do any work. I think that despite the article basically making it sound like you need to be a professional to flip houses, I would still pursue a future opportunity to flip a house based on my desire to work on houses, the attention I pay to detail, my dedicated work ethic and my passion for being financially independent. Maybe someday in the future I’ll have an update for you that will include my first flip.
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