NEW YORK – May 16, 2012 – Home values will start to climb again and related consumer industries will grow in 2012 and beyond as the U.S. housing market finally turns the corner, according to a new study released today by The Demand Institute, a new nonprofit, non-advocacy group formed in February by The Conference Board and Nielsen.

According to the Institute, the housing market recovery will have “far-reaching impacts in the coming years across the United States and international markets as U.S. consumers increase their spending on buying, renovating, furnishing and maintaining their homes.”

It also won’t be like earlier recoveries, the Institute suggests, with homestead owners leading the way. Instead, real estate investors buying rentals will supply the homebuying demand.

The Institute’s report, The Shifting Nature of U.S. Housing Demand, predicts that average home prices will increase by up to 1 percent in the second half of 2012. By 2014, home prices will increase by as much as 2.5 percent.

From 2015 to 2017, the study projects annual increases between 3 and 4 percent, though unevenly nationwide. The strongest markets “could capture average gains of 5 percent or more in the coming years.”

“In these initial years, the prime driver of recovery won’t be new home construction, but rather demand for rental properties,” says Louise Keely, chief research officer at The Demand Institute and a co-author of the report. “This is a remarkable change from previous recoveries. It is a measure of just how severe the Great Recession has been that such a wide swath of Americans had to delay, scale back, or put off entirely their dreams of homeownership.”

Bart van Ark, chief economist at The Conference Board and co-author of the report, says he doesn’t expect to see the homeownership rate to change.

“Over 80 percent of Americans in recent surveys still agree that buying a home is the best long-term investment they can make,” van Ark says. “What will be intriguing to watch is how their aspirations around homeownership are affected by this period of extended austerity.”

Between 2006 and 2011, some $7 trillion in American wealth was wiped out when home prices dropped 30 percent after dramatic climb in valuations during the housing bubble. Looking forward, the moderate growth expectations for coming years suggest a return to normalcy. As home prices continue to drop and interest rates fall further, first-time buyers and others who remained relatively cautious will be drawn back into the housing market. And, as the market recovers, so too will consumer spending.

“As the U.S. housing market strengthens, almost every consumer-facing industry will be impacted in the coming years,” said Mark Leiter, chairman of The Demand Institute. “Business and government leaders will benefit by fully understanding the nature of this recovery. In doing so they will be better able to anticipate how consumer demand will evolve, and to formulate critical business and policy decisions to lead their organizations.”

Key findings

In addition to the projected gains in home prices, the report discusses in detail the dynamics at work in the U.S. housing market and the impacts across industries. What follows are highlights from the report:

• The recovery will be led by demand from buyers for rental properties, rather than, as in previous cycles, demand from buyers acquiring new or existing properties for themselves. More than 50 percent of those planning to move in the next two years say they intend to rent.

• Young people and immigrants will lead the demand for rental properties. Developers and investors will fulfill it: developers by building multifamily homes for rent, and investors by buying foreclosed single-family properties for the same purpose.

• Rental demand will help clear the huge oversupply of existing homes for sale. In 2011, some 14 percent of all housing units were vacant, while almost 13 percent of mortgages were in foreclosure or delinquent – increases of 12 and 129 percent respectively over 2005 levels. It will take two to three years for this oversupply to be cleared, and at that point homeownership rates will rise and return to historical levels.

• The housing market recovery will not be uniform. Some states will see annual price gains of 5 percent or more. Others will not recover for many years. The deciding factors will include the level of foreclosed inventory and rates of unemployment.

• There will also be vast differences within states. Here, additional factors count, such as whether local amenities, including access to public transport, are within walking distance of homes. The report looks at seven factors and then sorts cities and towns into four categories, with each category predicting the speed of a local home price recovery.

• The average size of the American home will shrink. Many baby boomers who delayed retirement for financial reasons during the recession will downsize. They will not be alone. Most Americans will scale back their housing aspirations. The size of an average new home is expected to continue to fall, reaching mid-1990s levels by 2015.

• Consumer industries including financial services, home furnishings and home remodeling will experience shifts in demand and new growth opportunities. Part of this spending is linked to increases in wealth from improving home valuations, while an even bigger part is tied to the “transaction” of buying or selling the home which sets in motion increased demand for a wide range of products and services.

• Despite the number of Americans who have been hurt financially by the housing crash, the desire to own a home remains strong. The Institute doesn’t expect to see a long-term drop in ownership rates.

© 2012 Florida Realtors®
 

GAINESVILLE, Fla. – May 15, 2012 – Florida’s real estate market outlook improved in the first quarter of 2012, according to the University of Florida (UF).

The Survey of Emerging Market Conditions, conducted quarterly by the Kelley A. Bergstrom Center for Real Estate Studies at UF, found general optimism in the commercial sector based on a falling unemployment rate – down to 9 percent from December’s 9.9 percent – and a boost in rental housing activity, such as lease signings.

The UF Commercial Real Estate Sentiment Index, a measure of the respondents’ personal business outlook, reached its highest level since 2007. Bergstrom Center officials attribute it to a better lending environment with banks, as well as an improving economy.

“With billions of dollars of loans coming due over the next year, the increased lending activity is a welcome sign for real estate owners and investors looking for debt capital to refinance quality properties,” says Timothy S. Becker, director of the Bergstrom Center.

Property fundamentals, including occupancy and rental rates, improved this quarter with progress in single-family and condominium development, apartments, industrial, land investment and capital availability. Occupancy expectations were rated most favorably in the premium office market, with respondents citing the better employment outlook as a reason.

While generally optimistic, respondents said they were still concerned about the possible impact of national policies. Specific concerns include the Bush tax cuts and payroll tax break scheduled to expire at the end of 2012, and $1.2 trillion in spending cuts that take effect in 2013. Since policy changes might not be in place before the November elections, the issues add an element of risk to the market. Respondents also were concerned with artificially low interest rates, inflation and increased gas prices.

Overall, the survey found that a majority of respondents expect a slow and measured recovery until the conclusion of the presidential elections.

A total of 189 Florida professional real estate analysts and investors, representing 13 urban regions of the state and up to 15 property types, participated in the survey.

© 2012 Florida Realtors®

 

WASHINGTON – May 11, 2012 – Commercial real estate executives participating in The Real Estate Roundtable’s latest quarterly Sentiment Survey generally said market conditions have improved since a year ago. However, they also signaled a lack of confidence for the coming year, citing global economic risks, Washington’s ability to deal with looming budget and tax issues, ongoing Euro zone turmoil, and the vast amount of commercial mortgages maturing this year and beyond.

“Although more respondents in our Q2 survey see current conditions, asset values and capital availability as being better than a year ago, anecdotal responses continue to show a high level of uncertainty about economic conditions here and abroad, as well as tremendous concern about the array of issues awaiting action or clarification by U.S. policymakers,” says Roundtable President and CEO Jeffrey DeBoer. “Add to that growing concern over borrowers’ ability to refinance vast amounts of maturing commercial mortgage debt, and it’s no surprise that expectations for the year ahead are relatively flat.”

The survey’s “Overall Index” now stands at 70 – up slightly from 68 in Q1 – indicating that respondents see the commercial real estate industry on a generally favorable slope and expect slightly improved market conditions during the coming year. Although the Overall Index is not back up to where it was in the first half of 2011 at 77, it has recovered significantly from its nosedive to 59 in the 4th quarter of 2011.

The “Current Index” – a subcategory that reflects attitudes about conditions right now –rose from 66 to 71 between Q1 and Q2, while the “Future Index” slid from 70 to 69.

The current survey also shows a 13 percent jump since Q1 in the percentage of respondents who gauge overall market conditions and asset values as being at least “somewhat better” than they were one year ago. Views on capital market conditions were even more improved between Q1 and Q2. The Index had a 19 percent jump in those who characterized debt capital as being at least somewhat more available than one year ago, and an 11 percent increase in perceived equity availability since a year ago.

Looking ahead, a majority of respondents still expects at least some improvement in overall market conditions, asset values and capital availability one year from today; however, more than one-third see asset values and capital market conditions remaining the same or worsening.

“Fostering a commercial real estate recovery that extends beyond so-called ‘Class A’ or trophy assets in gateway markets still depends on an improved jobs picture, more confidence among businesses and consumers, and reduced uncertainty on looming tax and budget issues,” says Roundtable Chairman Daniel M. Neidich. “Our Q2 survey confirms the need for swift policy action to boost employment, business investment and economic certainty.”

With roughly $1.4 trillion in commercial mortgages coming due in 2012-2015 and many properties now “underwater,” DeBoer says it is “imperative that policymakers adopt measures now to foster increased equity investment in U.S. commercial real estate.”

The quarterly Sentiment Survey seeks to capture feedback from a broad range of real estate industry segments, asset classes, ownership vehicles and capital structures, including owners and asset managers, financial services firms and operators. The results of the next Sentiment Survey, covering Q3 2012, will be released in early August.

© 2012 Florida Realtors®

NEW YORK – May 10, 2012 – Tighter housing inventories are starting to lift home prices, says Anand Nallathambi, CoreLogic’s CEO.

CoreLogic’s latest home price index, which includes distressed sales, shows a slight month-over-month nationwide increase of 0.6 percent in home prices from February to March. But some markets are seeing much more of a price boost this spring, including Florida, which ranked No. 5 overall for home price increases.

“This spring, the housing market is responding to an improving balance between real estate supply and demand, which is causing stabilization in house prices,” says Mark Fleming, CoreLogic’s chief economist. “Although this has been the case in each of the last two years, the difference this year is that stabilization is occurring without the support of tax credits and in spite of a declining share of REO sales.”

States with highest appreciation

According to CoreLogic, the following states had the highest appreciation in March (this includes distressed sales):

• Wyoming: +5.9%
• West Virginia: +5.3%
• Arizona: +5.1%
• North Dakota: +4.7%
• Florida: +4.5%

States with biggest depreciation

Meanwhile, the states with the greatest depreciation, when also figuring in distressed sales, are:

• Delaware: -10.6%
• Illinois: -8.3%
• Alabama: -8%
• Georgia: -7.3%
• Nevada: -5.8%

Source: Melissa Dittmann Tracey, Realtor® Magazine Daily News

© 2012 Florida Realtors®
 

DOVER, Fla. – May 7, 2012 – The person on the other end of the phone had all the right lingo and promised Anthony Curatolo that he was preapproved to refinance with a government-backed mortgage.

The new loan would save him hundreds of dollars a month.

“They said they were authorized to give out 2 percent loans because the government was giving stimulus money for them to do that with,” Curatolo said. “They give you a name like they’re a mortgage company, and they’re not.”

Curatolo, very close to falling behind on his payments, jumped at the chance. But there was a catch: First he had to make two payments totaling $1,000.

He did. Then the company disconnected its phone.

Curatolo didn’t know it, but the company had pulled a disappearing act before.

There are pages of online complaints from consumers across the country detailing the same story. Federal authorities and local consumer advocates say this scenario is the latest twist on a scam to trick desperate homeowners into forking over cash.

The scammers collect lists of homeowners who are in default on their mortgages or in foreclosure. They often say they are “authorized by the government” to provide a low-interest loan. They require money upfront, then do nothing to help the homeowner.

When someone falls for the phony pitch, they’re likely to be hit by other scam artists. That’s because they land on a “suckers list,” as it’s called by Kevin Jackson of the Hillsborough County Consumer Protection Agency.

“Once you get on it, it’s hard to get off,” Jackson said. “Once you fall for it, the scammers figure you’ll fall for it again. And they sell those lists.”

That’s what happened to Curatolo.

A few weeks after his money disappeared, he received a phone call from the same customer service representative. This time the man gave a different company name.

“I said, ‘Aren’t you the same person I’ve already talked to?’ The phone went click,” Curatolo said. “He recognized my voice, I think.”

Refinance scams are popular, Jackson said, and the crooks are former mortgage professionals who know how to make it all sound legitimate. Sometimes they even invoke the U.S. Department of Housing and Urban Development.

“They like to use some of the names and acronyms out there that you’ll see on HUD, trying to make it look like they’re connected to those programs,” he said.

The disconnected phone number Curatolo tried to call was registered to a company in California called Certified Processing. All the phone numbers linked to the company are disconnected.

The Better Business Bureau in Los Angeles has given Certified Processing an F rating. The website for the bureau cites complaints about loan modification promises that customers say the company did not keep.

In addition, the state attorney general in Maine filed a cease-and-desist order in January against the company. The order says the company did not comply with state requirements and prohibits it from soliciting customers in the state.

The Florida attorney general’s office said there is no active investigation into Certified Processing in Florida.

Jackson said consumers should check out any company selling mortgage help.

For one thing, it’s against Florida law to charge upfront fees to help with a refinance or loan modification.

A few other things to be on the lookout for: companies that tell you to stop talking to your lender or to stop paying your mortgage. Some companies even tell you to send your mortgage payment to them instead.

As for Curatolo, he learned his lesson the hard way. But his phone keeps ringing.

© 2012 the Tampa Tribune (Tampa, Fla.), Shannon Behnken. Distributed by MCT Information Services

WASHINGTON – May 2, 2012 – According to the NAIOP Research Foundation, 2011 was the first year to post gains in the development and construction of commercial real estate – office, industrial and retail buildings – since the recession began in 2007.

NAIOP’s report, How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2011, found the total economic impact of the development (pre-construction, construction and post-construction) of commercial real estate during 2011 added $261.6 billion to the GDP compared to $231.7 billion in 2010 – a 13 percent increase.

Construction spending on commercial real estate totaled $92.3 billion, an increase of more than 12 percent over 2010, on 238.3 million square feet of new space, an increase of 2.5 percent from 2010. Total new space can accommodate 610,000 new jobs with a potential payroll of $26.8 billion, according to the report.

“2011 was a transition year for the U.S. economy and the construction sector,” says, economist Stephen S. Fuller, PhD, director of the Center for Regional Analysis at George Mason University and author of the report. “The U.S. economy shifted from a federal stimulus to private-sector driven growth pattern, and construction spending grew accordingly.”

The report predicts that project construction spending will increase further in 2013 and 2014.

“For the first time we are seeing across the board increases in this sector,” says Thomas J. Bisacquino, NAIOP president and CEO. “We believe this is the most solid evidence yet of a strengthening recovery.”

Impacts felt regionally

The following states posted the highest amounts of direct spending in all three phases of development across all categories of commercial real estate. The number in parenthesis refers to that state’s rank in 2010:

1. Texas (Previous rank: 2), $7.9 billion in spending
2. New York (1), $6.5 billion in spending
3. West Virginia (48), $5.9 billion in spending
4. California (3), $4.5 billion in spending
5. Arizona (14), $4.2 billion in spending
6. Utah (26), $3.6 billion in spending
7. Florida (4), $3.4 billion in spending
8. Illinois (10), $3.0 billion in spending
9. Massachusetts (21), $3.05 billion in spending
10. (tie) North Carolina (7), $3.05 billion in spending

© 2012 Florida Realtors®