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To the survivors go the spoils of wrecked housing market

By DUANE MARSTELLER
McClatchy Newspapers
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MANATEE, Fla. – Residential developers and homebuilders who survived the housing bust now are feasting on the remains of those who didn’t.

They’ve been on a buying spree, using cash savings to acquire finished, but unbuilt lots and subdivisions that have been stalled or lost to foreclosure or bankruptcy. They’re paying up to 75 percent off peak land prices during the housing boom, and planning to succeed where others have struggled or failed.

“It’s survival of the fittest among the developer set,” said Jack McCabe, a real-estate analyst and consultant in Deerfield Beach, Fla.

Observers say it is happening throughout Florida, but especially in regions where raw land generally is less expensive and in greater supply.

In Manatee County, D.R. Horton Homes, Medallion Homes and Minto Communities have been among the most active buyers.

Horton, a national homebuilder from Fort Worth, Texas, has purchased 170 lots and has contracts or options on 110 more in several developments. Local builder Medallion has paid $9.26 million for finished lots in four subdivisions. And Minto, a subsidiary of a private Canadian firm, has bought an undeveloped condominium project on Perico Island and several lots in Lakewood Ranch’s Country Club area.

All say discounted land prices attracted them, but it was the local housing market’s long-term potential that made them buy.

“We wanted to expand our presence in Florida and take advantage of the lower land costs,” said Mike Belmont, executive vice president of Minto’s West Central Florida region. “Plus, it’s a great place to establish a new market.”

Minto’s Florida operations were focused on the state’s east coast until September, when it paid $8 million for St. Joe Co.’s stalled SevenShores project and $2 million for an adjacent marina property. St. Joe had approval for 686 condo units, but suspended the project, first because of slow pre-sales and later, the housing slump.

Minto is taking its time with its new acquisition: It won’t be taking pre-construction orders until either late this year or in early 2011, Belmont said.

It is moving faster on a dozen Lakewood Ranch Country Club lots it purchased for more than $1.1 million in two separate transactions late last year. Model homes have already been built on the property.

Horton also entered the Manatee market in September, when it paid $165,000 for four lots in the GreyHawk Landing development in East Manatee.

Since then, it’s bought about 170 lots – and between pending contracts and options to buy more lots, that number could exceed 270. Those purchases have cost at least $3.38 million, according to public records.

All are being marketed, and Horton is about to close on two more deals for another 130 or so lots.

The builder had been eyeing Manatee for a long time, said Darren Saltzberg, sales and marketing vice president for the company’s Tampa-Sarasota region.

“We’ve been up in Tampa for 5 1/2 years, but we couldn’t get down to Manatee and Sarasota until last year because of the lot prices,” he said. “Now they’ve come down significantly. We’re trying to take advantage of the market.”

So is Medallion, a local builder since 1984.

In the past year, it has bought more than 350 lots in the area. And it might not be done buying.

“We are cautiously looking for opportunities,” said Pete Logan, Medallion’s vice president. “Right now you’re able to buy a finished lot for less than what it costs to develop it.”

Builders and developers now on the lookout for acquisitions share several characteristics, analysts said.

They survived the downturn by slashing operating expenses, lowering home prices and reducing product sizes. They also adjusted their business plans to target first-time homebuyers, a move that was boosted by the recently expired federal tax credit.

And they conserved cash. With commercial credit and investment still somewhat scarce, only the well-capitalized can finance land acquisitions in the current market, analysts said.

For example, Horton had $1.8 billion in unrestricted cash at the end of its most recent quarter.

“Those who are positioned with enough cash to pick up what is really raw material are doing so,” said Robert Dunham, a real-estate market analyst and certified appraiser in St. Petersburg, Fla. “They’re betting that they’ll be positioned, cost-wise and timing-wise, to be ready to hit the market with a developed lot and home when it picks up. The bigger players are thinking that time must be close.”

McCabe said something else might be driving the buying spree: Amendment 4. The state constitutional amendment would require voter approval of any changes to county and municipal land-use plans.

Developers and builders contend the measure will stifle development, but are hedging their bets if it passes, McCabe said.

“They’re all trying to get in before that door slams shut on them,” he said. “You’re going to see a major rush of developers trying to get their entitlements prior to the vote on Amendment 4.”

Posted on Thu, May. 13, 2010 07:16 AM

Read more: http://www.kansascity.com/2010/05/13/1943129/to-the-survivors-go-the-spoils.html#ixzz0nsa1m0Pe

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Friday May 14, 2010
Bloomberg
Properst Files for Bankruptcy on Property Market Drop (Update2)
May 13, 2010, 11:45 PM EDT
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(Updates with comments from analyst in fourth paragraph.)
By Tomoko Yamazaki and Katsuyo Kuwako
May 14 (Bloomberg) — Properst Co., the Japanese property developer that had Madonna promote high-rise apartment sales in central Tokyo, filed for bankruptcy protection as the credit crisis pushed condominium sales to almost two-decade lows.
Properst’s liabilities totaled 55.4 billion yen ($597 million) as credit dried up after Lehman Brothers Holdings Inc. collapsed, leading condominium prices lower and denting demand, the Tokyo-based firm said in a statement today. The company will maintain its stock listing on the Jasdaq market as it undergoes the bankruptcy process, in part through capital raisings via private placement and debt equity swaps, it said.
New condominium sales in greater Tokyo last year fell to the lowest level in 17 years, commercial land prices declined to the lowest in at least 36 years, and real estate firms accounted for eight of the 10 biggest bankruptcies among listed Japanese firms in 2009. The filing marks the second by a listed real estate company this year amid a continued deterioration in Japan’s property market.
“Mid-to-small sized real estate firms are still struggling to sell condominiums,” said Takashi Ishizawa, an analyst at Mizuho Securities Co. in Tokyo. “I expect further consolidation, especially among smaller property firms going forward.”
Properst shares were poised to fall by their daily limit of 300 yen to 980 yen at the lunch break in Tokyo. The stock was untraded as offers outnumbered bids. It slid 24 percent yesterday.
Madonna
Established in 1987, Properst has focused its business on property developments in the metropolitan area ranging from small-sized apartments to condominiums in high-rise buildings.
Madonna was in advertisements for the Brillia Mare Ariake luxury condominiums in Tokyo Bay that went on sale in 2007.
Commercial RE Co., a real estate management company whose largest stakeholder is Goldman Sachs Group Inc., filed for bankruptcy protection on May 6 with 15 billion yen in liabilities.
New condominium sales in the Tokyo area totaled 36,376 units in 2009, the lowest in 17 years, and compared with the peak of 95,635 units sold in 2000, according to the Real Estate Economic Research Institute.
Japanese commercial land prices declined 6.1 percent in 2009, more than the 4.7 percent drop a year earlier, the Ministry of Land, Infrastructure, Transport and Tourism said in a report released in March. Values are at their lowest since the ministry began collecting comparable data in 1974.
–With assistance from Tak Kumakura in Tokyo. Editors: Fergus Maguire, Andreea Papuc
To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net; Katsuyo Kuwako in Tokyo at kkuwako@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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Existing home sales not as weak as reported, Realtors say
May 13, 2010 07:01:00 PM
SCARLET SIMS / News Herald Writer
PANAMA CITY — Bay County existing home sales continued to slump while sales rose 24 percent statewide, according to Florida Realtors association numbers released this week. Local Realtors say those numbers are misleading.

“We’re as busy now as we were during the boom — it’s just cash buying as opposed to financing,” Overstreet realty owner Connie Overstreet said.

Bay County saw existing home sales and prices increase dramatically about 2005, but sales faltered when the worst recession in decades collapsed the state’s real estate market. Bay County sales dried up for the last 18 months, Prudential Shimmering Sands Realtor Art Lester said.

“Last year was horrendous,” Lester said.

This year, sales are getting better, Realtors say. Prices are falling less slowly and investors are coming back.

Multiple Listing Service data shows the first three months of this year are up about 6 percent over 2009, Overstreet said. April numbers show even better sales — up more than 20 percent in combined total sales, said Charlie Commander, Realtor at Century 21 Commander Real Estate. Sales in April were 285, compared to 236 the same time a year ago, he said.

Florida Realtors will release April numbers later this month, but Metro Market Trends, a company that tracks real estate, reported April sales rose from 139 last year to 200 this year.

Realtors disagree with the Florida Realtors report that shows Bay County is one of only two metro areas to show a slump in existing home sales for the first quarter of this year. The report shows Bay County sales were down 4 percent from the 243 sales seen last year. Sales were weak compared to surrounding areas, like Fort Walton Beach, where 578 existing homes sold the first quarter compared to 233 sales in Bay County.

Metro Market reported existing home sales dropped nearly 7 percent in January and were down about 2 percent in February. Sales picked up to nearly 8 percent in March but not enough to offset earlier declines.

Bay County Realtors Association President Darren Haiman said the Florida Realtors’ numbers are too narrow in scope to show what is really happening. The numbers don’t include homes like manufactured homes or duplexes, he said.

“Our numbers are much, much better than have been reported,” Haiman said.

Sales are actually up this quarter over the same time last year by about 5.7 percent, Haiman said.

Florida Realtors spokeswoman Marla Martin wrote in an e-mail she thought the association’s numbers are accurate. The numbers are based on a survey of MLS sales.

Realtors say 2010 will be a better year for the real estate market. Home prices are falling more slowly, inventory is shrinking and the real estate market is stabilizing, Commander said. Interest remains low, banks are loosening up on credit and the federal government unveiled a new plan to expedite sales of distressed property this month.

“I think we’ll be strong during the remainder of the year,” Overstreet said.

———————————-

Florida Sales Report – First Quarter

Existing Homes

• Bay County 233, 2010; 243, 2009

• Florida 38,846, 2010; 31,410, 2009

Condominium Sales

• Bay County – 146, 2010; 95, 2009

• Florida – 16,897, 2010; 10,131, 2009

Source: Florida Realtors

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Author : National Association of Realtors
Category : Press Release
News Alerts by Email ( click here )
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WASHINGTON, DC — 05/13/10 — The Federal Housing Administration plays a key role in today’s housing market, but changes are necessary to support recovery in the real estate market and general economy. That was the focus of today’s “Restoring the Balance of Public and Private Capital in Mortgage Finance” session, part of a three-day summit during the Realtors® Midyear Legislative Meetings & Trade Expo here this week.
“Realtors® are working to reshape real estate in America, and FHA’s role and prominence have shifted significantly over the past few years,” said National Association of Realtors® President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “Many first-time home buyers rely on FHA loans to purchase a home, and because of its vital role in helping families achieve the dream of homeownership, FHA must be strengthened and supported. At the same time, private financing must also return to support a full recovery.”

In 2009, more than 50 percent of first-time buyers used FHA to finance their home purchase, and nearly 80 percent of FHA’s purchase loans were to first-time home buyers. FHA also serves those who need to refinance out of risky adjustable-rate mortgages or subprime loans with high interest rates. In 2009, approximately 835,000 borrowers refinanced into lower interest rate FHA-insured loans, saving them an estimated $1.3 billion.

Vicki Bott, deputy assistant secretary for Single Family Housing, U.S. Department of Housing and Urban Development, acknowledged FHA’s current significance in mortgage financing. “FHA has become a vibrant part of the market, but our goal is not to build market share, nor is it to retract from the market. We need to support the housing market, but we also support improving market liquidity and bringing private involvement back to the market,” she said.

Bott joined panelists Steve Adamo, president and CEO, Weichert Financial Services; Scott Griffith, ERA Griffith Realty; and David Katkov, president and EVP, PMI Mortgage Insurance Co. Realtors® voiced their concerns with current lending challenges, including limited liquidity in the resort and second-home market and appraisal concerns related to the Home Valuation Code of Conduct. Panelists acknowledged there was still progress to be made, but that FHA had played a valuable role in averting larger problems.

“Thank God FHA was there,” said Katkov. “FHA stepped in, as they should, but as the market heals, the balance should be restored.” Katkov described an ideal mortgage insurance balance as 50-60 percent private sector, 35 percent FHA, with the remaining portion covered by loans guaranteed by the Veterans Administration.

“As the leading advocate for homeownership, NAR strongly supports FHA’s single- and multifamily mortgage insurance programs,” said Golder. “Yesterday, Realtors® visited Capitol Hill to tell Congress to strengthen FHA while still allowing for access to safe, affordable financing by responsible borrowers, and to make the higher loan limits permanent to prevent dramatic decreases in the availability of affordable, safe financing nationwide.”

Decreasing the current loan limits would reduce the availability of mortgages in 612 counties in 40 states, plus the District of Columbia. The resulting average limit reduction of more than $50,000 would have a dramatic impact on liquidity and could halt the housing recovery, according to NAR.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Information about NAR is available at www.realtor.org. News releases are posted in the Web site’s “News Media” section in the NAR Media Center.

REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.

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Big Push on Capitol Hill for Real Estate Reforms
12 May 2010 @ 03:18 pm EDT

RealtorS® are asking Congress to strengthen the Federal Housing Administration, extend the FHA’s high-cost loan limits, and get flood and disaster insurance reforms passed as part of their push on Capitol Hill this week during NAR 2010 Midyear Legislative Meetings & Trade Expo.

Several thousand REALTORS® are in town and will be meeting with members of Congress over two days this week. Here’s a look at some of REALTORS®’ top legislative priorities:

Support for small business. REALTORS® would like the government to help small businesses get much-needed financing by allowing federal credit unions to loan a higher percentage of their assets than they can now. The increase is needed to help offset the difficulty small businesses are facing in getting loans from banks.

Stronger commercial market. Extending the Term Asset-Backed Securities Loan Facility (TALF) will help improve commercial mortgage market liquidity and push Congress to act quickly on reauthorizing funds for the popular Rural Housing Service (RHS) Sec. 502 loan guarantee program, which is on the verge of running out of money.

Various FHA reforms. Legislation to strengthen the FHA would allow the agency to increase its annual mortgage insurance premium, which borrowers can fold into the loan amount. FHA Commissioner David Stevens has said that once the agency has that authority, it’ll be able to reduce its upfront mortgage insurance premium, which it raised several months ago to meet congressionally mandated reserve requirements. The upfront premium hurts borrowers more because it has to be paid in full at closing.

The FHA legislation would also give the agency more tools for enforcing rules against bad lenders. The legislation has passed the House Financial Services Committee. NAR’s goal is to put the bill on fast-track passage in the House, then get it introduced and passed in the Senate as soon as possible.

NAR is also seeking to make the FHA’s high-cost loan limits permanent. The limits, now at $729,750, expire in the fall. If the limits aren’t extended, they would drop to about $417,000, too low to make the FHA a viable financing option in many larger metropolitan areas like Boston, San Francisco, Washington, and New York.

Flood and disaster insurance. The reforms NAR is seeking of the national flood insurance and disaster insurance programs aim to strengthen private insurers’ role in handling most disasters, reserving federal involvement as a backstop. REALTORS® will be asking their members of Congress to pass the legislation in the House before Memorial Day. Then attention would turn to the Senate.

Helping the commercial securities market recover. The commercial mortgage-backed securities (CMBS) market, which for years has been the principal means for getting financing into commercial markets, is starting to come back. Yet new CMBS issues remain only a fraction of the volume that’s needed to meet demand. NAR is calling on the government to extend its TALF program to the end of the year so investors will have low-cost loans available to them to invest in commercial securities at a time when a lot of uncertainty remains about the strength of the market.

Preventing bad amendments. The big focus of Congress now is financial services reform. The bill is huge in scope but only a part of it directly concerns real estate. Realtors® have been successful in defeating draconian amendments, including one that would have required all borrowers to put down a minimum 5 percent. Supporters of that amendment and other tough measures that could hurt housing, including a defeated amendment that would have ended federal control of secondary mortgage market companies Fannie Mae and Freddie Mac in the near future, are expected to be introduced again at different junctures of the legislative process, so REALTORS® will be sharing with their members of Congress the danger the requirements would pose to the market now.

Careful treatment of Fannie and Freddie. NAR’s position on Fannie Mae and Freddie Mac reform is that it must be taken up separately, next year, and must be undertaken carefully. REALTORS® oppose ending federal control before a structure is in place to ensure the availability of mortgage financing in the market, in good times and bad, which is the role the two companies are playing today.

- Robert Freedman, REALTOR® Magazine

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Video: Foreclosures Down 2 Percent From Last Year The Associated Press

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Thursday, May 13, 2010Listen to the show
Banks focus on closing out foreclosures
A new report says foreclosures are down 2% from a year ago. That’s good news, right? But that same report says the number of houses being repossessed is up 45%. Alisa Roth breaks down the numbers and what it means for the housing market.
A padlock and real-estate agent key lock boxes are seen on the front door of a foreclosed home in Antioch, Calif. (Justin Sullivan/Getty Images)
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Over 900,000 foreclosures in 1Q
An April report from RealtyTrac revealed that more than 900,000 homes went into foreclosure in the first three months of this year. Jeremy Hobson helps break down the numbers.
TEXT OF STORY

KAI RYSSDAL: You know, one of the downsides of being on later in the daily business news cycle is that a lot of the key economic numbers come out pretty early in the morning. So you’ve probably already heard the foreclosure figure by now. A report that says they’re down, both month-to-month and on an annual basis as well. And that, on the face of it, is good. Until you read a little deeper and discover that the number of houses being repossessed is up 45 percent.

We asked Marketplace’s Alisa Roth to break down those numbers, and what they might mean for the housing market.

ALISA ROTH: Foreclosure is a legal process. It can take anywhere from a couple of months to more than a year. The repossession happens at the end. It’s when the bank actually takes the keys.

Today’s report comes from a website called realtyTrac. And it says banks have been initiating fewer foreclosures but finishing more of them.

RICK SHARGA: They’re focusing less on moving people into foreclosure and more on processing the loans that are already in foreclosure.

Rick Sharga works at RealtyTrac. And he says this is a change in the way banks are dealing with foreclosures.

SHARGA: The banks are trying to clear those out before they initiate new ones.

Some people who watch the housing market say the way RealtyTrac counts is misleading. And they point out that monthly numbers almost always jump around. But they do agree: A lot of people are still losing their homes.

Alan White is a professor at the Valparaiso University Law School. He says there’s a huge inventory of foreclosed properties on the market.

ALAN WHITE: That inventory obviously puts downward pressure on home prices. So until we can stop increasing the number of foreclosed homes and homeowners facing foreclosure, we’re going to continue to see a decline in home values.

White says housing prices won’t really recover until people start getting jobs again, and homeowners whose properties are worth less than their mortgages stop walking away.

I’m Alisa Roth for Marketplace.

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Speculators Dominate China’s Real Estate Market   
Thursday 2010-05-13  15:23

May 13 — Rich people making up 10 percent of China’s total population accounted for 50 percent of real estate transactions conducted in China, reports Beijing Morning Post, citing Wang Xiaoguang, researcher from the Chinese Academy of Governance.

According to Wang, demand by speculators for real estate in China accounts for more than 50 percent of the market. In cities such as Shenzhen, speculators account for between 80 percent to 90 percent of the demand for real estate.

Wang added that China should increase the cost for speculators through hikes in the interest rate and levying property taxes.

The share price of China Vanke (000002) rose 0.41 percent to close at 7.37 yuan today.

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California Real Estate Market Sees Progress On Distressed homes
Published on: Thursday, May 13, 2010
Written by: Jon Prior

April brought good news for California’s real estate market, with foreclosure  filings down dramatically, and a rise in cancellations suggesting that the combination of anti-foreclosure programs is making headway. However, many of those cancellations are destined for re-filing and the level of impending foreclosure inventory fell only slightly. See the following article from HousingWire for more on this.

Foreclosure filings in California dropped in April for the first time since the beginning of the year, according to ForeclosureRadar, which tracks the filings.

Notices of default dropped 16% from March, after rising 3.75% from February. Default notices also increased 41% from last year, reaching 27,832 in April. The notices of trustee sale declined 10% from March to 30,578 in April. The amount of properties heading back to the bank as REO dropped 5.5% from March but stayed 19% above levels seen last year.

But the inventory of properties in pre-foreclosure or scheduled for sale did not drop as much. Pre-foreclosure inventory includes properties that have received a notice of default but have not been scheduled for sale. Pre-foreclosures dropped 3.17% from March, while the properties scheduled for sale dropped 2.7%.

Foreclosure cancellations, however, continue to increase after passing REO levels in December 2009. Cancellations increased another 11% in April, a sign that foreclosure alternative programs such as the Home Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives (HAFA) program could be making a dent in California.

“The steady rise in cancellations leads us to believe that loan modifications and short sales are gaining traction” said Sean O’Toole, founder and CEO of ForeclosureRadar.com. “I’d caution, however, that cancellations also occur due to filing errors and extended postponements, which require the notice of trustee sale to be re-filed. In fact, 14.6 percent of new notice of trustee filings in April were on previously canceled foreclosures.”

This article has been republished from HousingWire. You can also view this article at HousingWire, a mortgage  and real estate news site.

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