Crafting the Right Contract

Posted By Michael Collins

With the economy still shaky, many potential home buyers are sitting on the fence, especially when it comes to so-called "common-interest" communities like master-planned communities, condominiums and mixed-use developments. Would-be buyers are worried that they won't be able to cancel a contract if prices of similar unsold units fall, or that they'll buy a home in a failing development.

We talked to Roger Winston, a real estate attorney at Ballard Spahr Andrews and Ingersoll who specializes in common-interest law, at his office in Bethesda, Md. Here are excerpts from the conversation:

The Wall Street Journal: Many people are walking away from deposits that they've made on new condos or homes, because prices fell while their place was being built. How much of that are you seeing?

Mr. Winston: I have been seeing a lot of contract defaults. People who put down $50,000 on a $750,000 unit see that they could buy the same place now for $600,000. The money that they could lose by going through with the deal is greater than the deposit, so they walk away. Morally, they shouldn't, but from an economic standpoint, they may be better off.

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European Real Estate Market Experiencing Challenges

By Michael Collins

While it is well known that the American real estate market is tanking, is the same true for Europe? The answer is complicated. Interestingly, Central and Eastern Europe have not taken as much of a hit as Western Europe has, and cities like Moscow, Istanbul are still seeing investment and development. Warsaw, the capital of Poland, has actually seen increased investment and development in 2009.

Even the Western European housing market seems to be rebounding somewhat, according to europe-re.com. In the United Kingdom, although prices are still falling, many Britons are taking advantage and buying. “31% more Chartered Surveyors reported a rise than a fall in new buyer enquiries up from 21% in February. Interest is strong in every region with London and Wales leading the way. In the former, 63% more Chartered Surveyors reported a rise than a fall in new buyer enquiries, up from 46% in February. The rise in interest reflects both the drop in asking prices and the sharp fall in the cost of money. As house prices drop, those with finance are now looking to do more than window shop.”1

Despite the fact that Central and Eastern Europe have not seen the same problems as Western Europe, the region has not emerged unscathed. Eastern Europe’s real estate market is known for its high risk level, which may scare away potential investors. Slovenian banks are very reluctant to lend money for real estate investment, and the largest real estate development group in Vienna, Austria, Immoeast, is considering bankruptcy.

Overall, Europeans are experiencing many of the same problems that Americans are facing when it comes to real estate, and it looks as though things are still going to get worse before they get better.

References:

1- http://www.europe-re.com/system/main.php?pageid=2616&articleid=13787

http://www.pwc.com/extweb/ncpressrelease.nsf/docid/F3FE47E9B02FF27E802575630037D0F1

http://www.sloveniatimes.com/en/inside.cp2?uid=18744117-60D7-88F7-7777-A79F4329FED9&linkid=news&cid=ED4C6575-3589-840B-A072-1B6760015E2E

March 2009 Real Estate Summary

Posted By Michael Collins

Buying A Home - Bloomberg: Your Money

posted by Soo Yeon(Pia), Shin

A Gloomy Outlook for Home Sales' Big Season

Posted By Michael Collins

The “For Sale” signs are just starting to sprout, but already experts worry that this spring home-buying season will be even grimmer than the last.

Despite tentative signs of recovery in hard-hit areas like California and Florida, the broader housing market is far from reaching bottom, economists say. Across much of the nation, prices are likely to keep falling into 2010.

So this March-to-June season, when most homes are bought and sold, will be bad, perhaps the worst since the market began to spiral down in 2006.

Across the nation, 19 million houses and apartments — nearly one out of every seven — are vacant, the highest percentage since the 1960s. But only about six million of those homes are for sale or for rent. That means millions more could still flood onto the market, depressing prices further.

For would-be sellers, the bad news keeps coming. This week, one new report showed that one in nine mortgages was delinquent or in foreclosure, while another showed that January contract signings for sales of previously owned homes fell at their fastest pace in two years.

On Wednesday, the Obama administration announced details of a plan that will pay banks to lower monthly payments for troubled borrowers, hoping to avert millions of foreclosures and keep more homes occupied. Despite that effort, most analysts expect the outlook to worsen.

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Sales of second homes fall 22 percent

posted by SooYeon(Pia), Shin

WASHINGTON (AP) — Sales of vacation and investment homes slid 22 percent last year, a sign that tough economic conditions and tight lending requirements shut out buyers, the National Association of Realtors reported Monday.

Second home sales comprised 30 percent of the entire housing market, down from a peak of 40 percent in 2005 when financing was easier.

"The vacation home market really was driven by the availability of debt," said Daniel Alpert, managing director of Westwood Capital LLC, a New York-based investment bank. "Folks were able to pick up vacation homes with very little money down and substantial loans. Given the absence of mortgage money for primary homes, one can imagine that there's no mortgage money for vacation homes."

Just 9 percent of sales last year were for vacation homes, down from 12 percent in 2007. Proportionally, investment properties held steady at 21 percent.

Wealth and age are strong factors in second home sales. Nearly half of vacation home buyers and two-fifths of investment home buyers had a household income of more than $100,000. The median age for vacation home buyers was 46, nine years older than buyers of primary homes.

Overall, second home sales dropped from about 2.09 million in 2007 to 1.63 million last year. Vacation home sales dropped 31 percent to 512,000, while sales of investment properties fell 17 percent to 1.12 million.

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Now is good time to buy home for first-time home buyers

Posted by SooYeon(Pia), Shin

Real estate professionals tell now is the good time to buy a home, especially if you are a first time homebuyer. Prices are the main reason what makes the first-time home buyers to consider buying a house. According to the CENTURY 21 First-Time Home Buyer Survey, 85 percent of potential first-time home buyers says that they think current home prices are affordable. Also, 73 percent says that current prices plays the major role in their decision to buy. Tom Kunz, Century 21 Real Estate president and CEO, said, “Current pricing, rates and incentives, such as the First Time Homebuyer Tax Credit, provide tremendous opportunities for first time home buyers to get into the market.” The first-time home buyers are possible to get up to $8,000 tax credit. Furthermore, the government has made the new tax credit to be unpaid unlike the 2008 $7,500 tax credit.

It is a good time for not only first-time home buyers but also renters. According to a New York brokerage firm, tents have fallen throughout New York. Furthermore, studio apartments in doorman buildings made the biggest drop – 8.33 percent from the same time last year. Therefore, New Yorkers whose leases expire are, now, looking for better place for less money or a few increases. Lastly, owners are starting to pay the broker fees themselves, because finding good tenants is more difficult nowadays. So, New Yorkers gets another bonus on the broker fee.

http://waldo.villagesoup.com/realestate/story.cfm?storyID=151745
http://www.pr.com/press-release/141879
http://www.nytimes.com/2009/03/29/realestate/29cov.html?_r=1&ref=realestate

When it all Falls Down...

By: Alcides Hoy Jr.

With the Big Apple being one of he many places us college graduates drift toward, we must be concerned on how those Manhattan homes and apartments are holding up. As we go through this economic crisis Manhattan real estate sales begins to decrease. We could suspect the harder the fall the further the sales will drop. So many people are losing their jobs and not receiving high paying jobs which is making it difficult for anyone to afford an apartment in Manhattan. The worst part is that inventory is accumulating faster than Real estate agents can rent these spaces. Now banks are not trying to give out credit to just about anybody which leads us to think how will we pay for these high class living quarters. Its as if they leave us with no choice but to search for different job markets to apply to. The longer we have this economic downturn the harder it will be for the New York City real estate market to get back on track. So now we have to pose a challenge to ourselves and think what can we do to change this harsh backdown?

http://money.cnn.com/2008/10/02/real_estate/manhattan_real_estate/index.htm

http://www.nysun.com/business/unthinkable-happens-manhattan-apartment-prices/84900/

http://www.nytimes.com/2009/03/08/realestate/08condo.html?ref=realestate

Fees Are Moving On Up

By:Alcides Hoy Jr.

It is common knowledge that many California real estate companies and agents are feeling a serious pinch as a result of the downturn in the real estate market. Less well known is the fact that the state agency which regulates those companies and agents is having a similar experience. Directors of the California Association of Realtors® learned about this at their recent meetings in Monterey when they were addressed by Real Estate Commissioner Jeff Davi.
Unlike many state agencies, the California Department of Real Estate (DRE) is not supported by the state's general fund. Like the Department of Fish and Game, its financing is provided by charging for various fees and services. In the case of the DRE, the bulk of the money it brings in is from the issuance of new and renewal licenses and from fees charged for the administration of licensing examinations. Click to Read More

IRA: To put or not to put Real Estate... That is the question

By Alcides Hoy Jr.

With IRA investments into real estate nearly doubling it makes you want to know the WHATS THE SECRET? As stocks decrease real estate seems like an easier way to save any accounts that are doing bad. In an article Walter Updegrave said "Dealing with the myriad rules governing IRA accounts makes the task even more challenging." This is a statement many of can agree with because with news laws being passed everyday the government makes it harder and harder to incorporate real estate into your IRA. With only a small amount of twenty percent of IRA having balances of over $100,000 no one can really afford to buy any piece of property. Then if you gain the funds to fall buy few properties into your IRA your portfolio could loose diversification over time. As you weigh your portfolio to only Real Estate this could increase your risk due to the it being less diversified. With the real estate industry doing as poorly as it is now, if investors were to have mostly real estate at this time their portfolio would be loosing money. This is why diversification is important because without it your portfolio could depend too much on one asset. So if you decide to include real estate into your IRA make sure it is a balanced amount somewhere between ten to fifteen percent.

http://money.cnn.com/2005/08/11/pf/updegrave_0509/index.htm

http://money.cnn.com/2005/04/22/pf/expert/ask_expert/index.htm

http://money.cnn.com/2007/11/30/pf/expert/expert.moneymag/index.htm

Know Before You Go

By Alcides Hoy Jr.

Many of us are approaching the home buying phase real soon. There are few things we should know first before we go.

Commercial Renters Have a New Worry: A Landlord’s Default

Article Posted By Andrew Cho

Office landlords have always scrutinized the financial stability of prospective tenants, but now they are finding themselves under the lens.
Prospective tenants are asking for financial statements from landlords, hoping to avoid companies that might default on their mortgages and leave tenants at risk of losing the space. Tenants are also more wary of subleasing space, and are tending to flock to buildings with stable owners.
“We have to be more attentive to the finances of our landlords than we’ve ever been to get a sense of their financial stability and ability to service their debt,” said David N. Feldman, a managing partner at the law firm Feldman Weinstein & Smith, a 12,500-square-foot office tenant at 420 Lexington Avenue near Grand Central Terminalthat, with a lease expiring in 2011, will soon start looking for office space.
During the recent era of cheap money that led to the real estate boom, many investors bought their office buildings at high prices with extensive debt, hoping to flip the building quickly. Some landlords calculated their cash flow too optimistically, intending to lease poorly performing office buildings at high rents to maximize their profit, and are having trouble paying their debt, in some cases falling behind on payments.

“Today, we have this environment where we know that anyone who bought a building in the last few years is at jeopardy of losing that building,” said Howard Fiddle, a vice chairman at the commercial real estate brokerage CB Richard Ellis. “So, just from a purely operational perspective, you want to know who your landlord is.”

Click the following for full article:

http://www.nytimes.com/2009/03/04/realestate/commercial/04tenants.html?ref=realestate

Real Estate vs Stocks

By: Alcides Hoy Jr.

Round 1
Performance
Real estate has packed quite a punch of late, appreciating 12.4% annually between 2001 and 2006, according to the S&P/Case-Shiller U.S. Home Price index. That clobbered stock prices, which gained only 4.3% a year as measured by the S&P 500.
But over the long run stocks win easily. A new study by Jack Clark Francis, a finance and economics professor at Baruch College in New York City, and Yale's Roger G. Ibbotson compared the annual returns of real estate from 1978 to 2004 compared with those of 15 different "paper" investments, including stocks, bonds, commodities futures, mortgage securities and real estate investment trusts (REITs).
The results? Housing delivered a solid but unimpressive annualized return of 8.6%. Commercial property did better at 9.5%. The S&P, however, delivered a crushing 13.4%.
Other studies argue that real estate's returns are much worse. Yale finance and economics professor Robert Shiller, author of Irrational Exuberance, who looked back to 1890, contends that only twice has real estate produced truly outstanding returns: after World War II, when returning troops were starting their families, and from 1998 to 2005, a period he thinks is a bubble.
Housing's rate of return, he argues, has to trend back to the mean of about 3% a year - barely above the inflation rate. If that's starting to happen now, he says, we could be facing many years of losses.

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Real Estate Success

By:Alcides Hoy Jr.

In todays world everybody feels like buying real estate is just that simple. Many times it is the backstage tips that will allow us to flruish when it comes to property buying and selling. You have to ask yourself before WHAT DO I REALLY KNOW ABOUT REAL ESTATE? Here are some tips that could possibly change your life or better yet change the way you look and react toward buying and selling property.
When selling a home people minds are trained to search for the highest value. But in reality when we are in an economy that is so vulnerable hiking up the price will only hurt you. Your best bet is to keep your house at an affordable price so that you can seal the deal which is the main objctive. The longer it sits in the houses for sale pool, the more the price could be forced to drop. Also when selling make sure that the walk from the driveway to the inside of the front door sets the tone. Many times people want to see the appeal on the exterior in order to want to see the interior.
There are some sellers but almost twice as many buyers in the world. Many times you want to set the trend of the askign price. Do your reasearch to find out what the going price is on a the type of house you are buying and how long has it been sitting on the market. And lastly dont expect the unexpected because you could set yourself up for dissapointment. Overall as a home buyer and seller you need to have a strong business plan so that if one thing goes wrong you will have a counteraction for to get as close to success as possible.


http://money.cnn.com/2006/05/04/real_estate/realestatetips_selling/index.htm

http://www.nytimes.com/2005/02/13/realestate/13assets.html?_r=1&scp=5&sq=real%20estate%20tips&st=cse

http://money.cnn.com/2006/05/04/real_estate/realestatetips_buying/index.htm

Taking Advantage of the U.S. Housing Slump

Posted By: Andrew Cho



As the US housing market slumps and the Canadian dollar rises, many Canadians are looking to buy a home in US vacation areas. Ozzie Jurock gives some tips for Canadians looking to buy south of the border.

Capitalize On Foreclosures

By: Alcides Hoy Jr.

Real Estate Appraisal

-Lionel Creech

Investment Spot: Panama

By: Alcides Hoy Jr.

Housing Market Predictions in 2009

Jin Zheng

By Elizabeth Rhodes

Summing up the 2008 housing market, Glenn Crellin, was succinct:

"Challenging at best," said the director of the Washington Center for Real Estate Research at Washington State University. "We clearly have a situation where consumers have exited the market, rightly or wrongly, on the presumption that housing prices are going to fall precipitously and they'll be able to get tremendous bargains if they wait."

Will they?

Truth be told, that's too simple a question. Too many things that affect housing are in play for there to be a simple answer. Foremost among them are the deepening recession, the condition of the mortgage market, and the new administration's plans to stimulate the economy.

Here's a look at what 2008 brought and 2009 may bring.

Click here to read more.

Flood of foreclosures

By: Xavier Guerrero

The United States is currently facing many problems: the sub prime problem, mortgaging problems, and as of late, one problem has been underestimated and under measured: Foreclosures. In 2008, banks took back around 860,000 homes, which was more than twice than 2007, and the number of homes that are currently filing for foreclosure has hit a high of 3.1 million. This flood of foreclosures may be positive for those who have taken advantage of the current housing prices for their personal benefits, but the amount of houses under bank possessions only helps to increment the problem of there being more supply than demand in the housing market. To worsen the situation, new reports are informing that one third of the houses that are filing for foreclosures aren’t listed in foreclosure databases. In conclusion, the housing market will only see a greater supply of houses being foreclosured, which will inevitably lower the price of the other houses already owned by banks, not helping to stimulate the economy and only creating a larger deficit, and since banks are being slow at listing the repossessed homes in their databases, the whole scope of the problem will only be able to be seen entirely in the grim future that is to come for the housing market.


For more information on the problem of delay time on houses appearing in databases, click on the link: