CIM Group of Los Angeles appears set to build the tallest residential tower west of the Mississippi River. CIM has closed on a $14.5 million purchase of nearly 2 acres in downtown Austin, Texas, the Austin American-Statesman reports.
Along with Constructive Ventures and Aspen Heights, the Mid-Wilshire L.A. real estate company plans to build a 58-story tower. It not only would be Austin’s tallest building, according to the newspaper, the $300 million tower would be the tallest residential building in the West.
The tower, with 370 planned condos, could break ground early next year, the Statesman reports. The site was acquired from the City of Austin.
We all know how expensive nursing homes can be, often running into five figures each month.
And it’s not just cost, most of us would be happier close to our families when we become too old to cope alone or we require nursing care. Well check this out, this nifty idea combines a nursing home environment with a ‘Granny Pod.’
The MedCottage supports the idea of family-managed healthcare. The MEDCottage is a mobile, modular medical home designed to be temporarily placed on a caregiver’s property for rehabilitation and extended care. Simply stated, it’s a state-of-the-art hospital room with remote monitoring available so caregivers and family members have peace of mind knowing they are providing the best possible care.
These pre-fabricated and pre-equipped medical cottages can be installed in a backyard behind a caregiver’s home (zoning laws permitting), and hooked up to the existing sewer, water and power lines.
The inside maintains a comfortable home, using the space efficiently to create sleeping, living and bathing areas. Equipped with the latest technical advances in the industry, MEDCottage was made to assist with many care-giving duties. Using smart robotic features, it can monitor vital signs, filter the air for contaminants, and communicate with the outside world very easily. Sensors alert caregivers to problems, and medication reminders are provided via computers.
3 models: 288 sq ft – 299 sq ft – 605 sq ft
Electricity and water connected directly to homeowner’s utilities
A kitchen with a small refrigerator, microwave, and medication dispenser.
Bedroom and additional accommodation for a caregiver’s visit.
The bathroom is handicapped accessible.
The units are equipped with interactive video an devices that monitor vital signs like blood pressure and blood glucose, and transmit real-time readings to caregivers and physicians. The basic MEDCottage is about 12 by 24 feet, or the size of a master bedroom, has vinyl siding, double French doors (to accommodate a wheelchair and hospital equipment) and looks like a small bungalow.
It should be abundantly clear and obvious that thegovernment and Wall Street want nothing more than to keep home prices inflated and are sticking out a giant middle finger to the majority of Americans.
You might have missed the glorious news that our stunningly cunning Senate decided to reinstate the heightened loan limits for Fannie Mae, Freddie Mac, and the FHA (aka the entire stinking mortgage market). Of course the lobbying arms of the housing industry went gaga for this policy even though it keeps prices further inflated in bubble states like California and New York. Good job politicians, I’m sure the checks from the FIRE industry will come in just in time for the 2012 election!
Since our politicians care so deeply about working Americans, they are also examining a push at giving residential visas to foreigners looking to buy at least $500,000 in real estate. Forget about the fact that the median home in the U.S. costs more like $170,000 to $180,000. Then we have the Federal Reserve artificially keeping mortgage rates at historic lows and you hit the trifecta of housing welfare for expensive bubble ridden states while the overall economy falters.
After climbing in early 2010, home prices have dropped once again, and have reached a new eight-year low. According to data from the S&P Case-Shiller Index, prices are down by 3.5% year-over-year, and by 32% from their peak in 2006. Sales activity is also down, by 12.9% year-over-year, albeit from a high level in 2010 that was stimulated by a home-buyer tax credit. The nation’s homeownership rate has dropped from a peak of 69% in 2006 to 66.4% as of Q1 2011, a rapid decline drop in such a short time period.
What is driving this downturn? Two dominant factors: Negative consumer psychology and still-high foreclosure activity.
Households that are under water with their existing mortgage or that have recently been foreclosed upon are not in a good position to purchase a new home at this time. Millions of homeowners whose credit scores dropped during the Great Recession and no longer meet toughened mortgage-lending requirements are also not in a position to buy a new home. Still others look at their finances – or in many cases financial losses – and at the headlines regarding home depreciation, and say “Not now.”
Foreclosure activity remains disturbingly high, despite a drop of 36% in the past year and 45% since the peak in Q1 2009 in sale of homes either owned by banks or in some stage or foreclosure, according to data from RealtyTrac. While the number of distressed sales is down, so is the number of total sales, keeping the percentage that is distressed at 28% according to the most recent data, down from 32% a year ago. And it appears that the distressed-sale factor will remain with us through at least year-end 2012, placing a damper on price appreciation.
The downturn in the housing sector is placing a clear drag on the nation’s general economy. Profits and job growth remain weak in sectors that are related to housing, including construction, building materials, real-estate finance, architecture, engineering and real-estate brokerage. Manufacturers and retailers of appliances, furniture and garden equipment have also been negatively impacted. According to Moody’s, cuts in spending in residential fixed investments accounted for more than 30% of the decline in the GDP in recent years.
But is it all bad news?
Not completely. We are making progress on clearing the inventory of distressed loans. The market is finding a new equilibrium. In addition, prices have dropped and fundamentals have improved to the point where the market is now under-priced. For-sale housing costs, which take mortgage rates and prices into account, are low relative to long-term relationships between for-sale housing costs and: (1) incomes and (2) rents. Total vacancy rates are currently low to moderate, and appear likely to drop into very tight territory in coming years due to a dearth of construction activity. In addition, employment growth is taking place once again.
The for-sale housing market will inevitably correct upward to reflect the new fundamentals. However, we have to wait until consumer sentiment turns positive and/or the inventory of foreclosure product is substantially reduced before we see any major improvement. This could take well into the second half of 2012 and even 2013, assuming job growth returns back to a healthier 200,000 positions a month. At this still lackluster pace, the economy won’t be expanding sharply, but enough demand will be released from demographics-based household growth to improve sales and pricing.
The implications from the recent double dip in the housing market include less-than-normal growth in the economy and in CRE demand during the early recovery years (i.e., 2010, 2011 and into early 2012). However, once the housing market finally begins its recovery, it could stimulate above-normal growth in the economy and in demand for CRE late in the recovery cycle: 2012, 2013 and into 2014. This is a very different pattern from previous recovery periods and will likely be amplified for CRE product that is sensitive to the real estate market, including home-improvement stores, appliance stores and office and retail space geared toward real-estate industry-dependent tenants. It also will likely be amplified in development-prone communities, such as Las Vegas, Phoenix, the Inland Empire, and parts of Texas and Florida.
Hessam Nadji is managing director, research and advisory services, for Marcus & Millichap Real Estate Investment Services. Contact him at firstname.lastname@example.org.
There will be no sustainable housing recovery until the shadow inventory is cleared out. As of April with the latest data close to 6.4 million loans are delinquent or in foreclosure. This is a massive number of homes. What is downright disturbing of the 2.2 million homes in foreclosure you have 675,000 homes (31 percent of the pool) that have not made a payment in over two years. That is right, two full years. Apparently one-third of the bank’s strategy in dealing with foreclosures is simply to ignore missed payments. Glad it took them giant bailouts and four years to figure that one out. The housing crisis strategy is really a banking-centric one and that is why nothing has really been resolved since the crisis started. Banks are dictating the movement going forward so the idea of keeping prices inflated is simply one to protect banking interests. Since the market has very little desire for inflated real estate, banks just slip it under the rug for another day. Keep in mind that many Americans are seeing lower wages so lower home prices are actually good for their bottom line since it eats away less of their hard earned income. Plus, one-third own their home outright and another 30 percent rent. So this idea of keeping home prices high just for the sake of keeping them high is a ploy that comes out of the suspension of mark-to-market logic. Do people finally get that home prices have to fall to reflect local area incomes?
-2.24 million loans less than 90 days delinquent.
-1.96 million loans 90+ days delinquent.
-2.18 million loans in foreclosure process.
-For a total of 6.39 million loans delinquent or in foreclosure in April.
That is a large number of homes. Now keep in mind many foreclosures are now starting to make their way onto the MLS since banks are actually taking full possession of the homes (although the reality that 675,000 people have not made a single payment in two years tells you where things stand). Think about the above data; you have roughly 600,000 to 800,000 as current REOs (all the way through the foreclosure process) but you also have 675,000+ people in foreclosure who haven’t made a payment in two years:
I’ve seen some pundits argue that many of these loans will cure. We know for a hardcore fact that if you are behind on your payments for two years it is likely that your home is going to move from the shadow inventory into the REO pipeline. This also doesn’t examine the fact that we have close to 2.2 million homes in foreclosure. How many have made no payment in one year? Keep in mind we are only looking at the foreclosure category so far. So the entire U.S. banking system is being overwhelmed with 600,000 to 800,000 active REOs yet we have that many in foreclosure without two years of payments. Here is a good estimate of REO data in the U.S.
The above doesn’t cover the entire universe of REOs but does a good job. I went ahead and took a quick look at active foreclosures in the state of California and found the following:
Depending on what data source you look at California has roughly 80,000 to 89,000 homes that are REOs and ready for sale. That still leaves another 600,000 to 700,000 REOs across the country that need to be sold. You also have to wonder of the 675,000 foreclosures with two years of missed payments how many are in massively overpriced bubble states like California or New York? Well I can tell you that California currently has 157,000 homes in the foreclosure process that have yet to go REO. The bottom line is you have a massive pipeline of distressed properties waiting to make their entrance on the MLS stage.
And the foreclosures will work through the system like a rabbit filtering through a python. We have another 4.2 million homes delinquent where the foreclosure process hasn’t even started (1.96 million of the loans 90+ days late). Don’t fool yourself because many of these will end up as REOs at some point (could be years down the road given the absurd timeline we are experiencing). It can’t be stated enough that keeping the process slow and providing banks with trillions of dollars of bailout money is simply a method of clogging the financial pipes so the FIRE economy can figure out what other sector to gut and inflate into a bubble. In the end it is the taxpayer that will foot the bill unless something radical changes.
I wanted to draw the current distress universe to show how little of the shadow inventory is being shown to the public:
The bars are drawn to scale to show actual magnitude relative to other buckets. The only homes the public is viewing are those in the purple box above. But look at what we have coming down the pipeline. Things don’t seem to be changing so it is looking more and more likely that we will witness a Japan like real estate market with zombie banks walking the Earth in search of easy capital brains.
It is extremely troubling that we have so much money being lobbed at the banks with such horrible results. But what do you expect? Someone was going to pay for this decade long orgy in real estate. As it turns out it is the prudent public and middle class. The people living rent free are simply the other side of the coin to the morally bankrupt financial sector. We have to go back to watching archived films to remember a time when banking and finance actually carried a positive connotation.
I’m curious to know how many people are living in million dollar homes rent free. We’ve seen homes in foreclosure in Beverly Hills so it is certainly happening and readers have sent over confirmation of this in their own neighborhoods. Talk about a giant mess. The New York Times had an interesting graph showing how long it would take to move 872,000 foreclosures:
Source: New York Times
It would take roughly 40 months to clear the current foreclosure inventory (aka the tiny blue rectangle in our earlier chart). And more will be coming into the pipeline but banks are trying to make their speculative gains in other bubbles to soften the blow here. After all, they wouldn’t want to spoil the trillions in loot they have stolen from Americans.
The number of foreclosure proceedings initiated by lenders between July and September edged higher on a quarter-to-quarter basis for the first time since early last year. But the number of home owners who went all the way through that process to foreclosure dipped from the previous quarter and a year ago, a real estate information service reported.
A total of 83,261 Notices of Default (“NODs”) were recorded at county recorder offices during the July-through-September period. That was up 18.9 percent from 70,051 in the prior quarter, and down 25.5 percent from 111,689 in third-quarter 2009, according to San Diego-based MDA DataQuick.
“Over the past year, with some minor ups and downs, financial institutions and their servicers have been processing a fairly steady number of defaults each quarter. That probably has more to do with their capacity to process defaults, than with higher or lower levels of incoming distress,” said John Walsh, DataQuick president.
The number of Trustees Deeds (“TDs”) recorded, which reflects the number of houses and condos foreclosed on, totaled 45,377 during the third quarter. That was down 4.8 percent from 47,669 for the prior quarter, and down 9.3 percent from 50,013 for third-quarter 2009. The all-time peak for TDs was 79,511 in third-quarter 2008.
As prices fall later this year, we might see another increase in NODs. Although NODs will decline in 2010 from 2009, the number will still be very high and 2010 will be the third highest on record (only behind 2009 and 2008).
There are many details in the press release – the median origination month was August 2006, Countrywide made the most bad loans (no surprise), and the top beneficiaries were Bank of America (15,992), Wells Fargo (10,069), MERS (5,292), and JP Morgan Chase (5,172).
It will be interesting to see what happens in Q4. Since this is the first stage of the foreclosure process, and almost all foreclosures in California are non-judicial, I’d expect little or no impact from “foreclosure-gate”.
The economic recovery continues to slowly but steadily deepen its roots. Consumer sentiment ticked up in March and it appears businesses are feeling more positive as well. According to a CEO Economic Outlook Survey, America’s top CEOs are expecting an increase in sales, along with increased or stabilized capital spending and employment.
Over the past several months, the hot topic of health care reform took much of Congress’s attention. Now, with the bill passed into law, the government is turning its attention to other matters to help bolster the economy including the job bill and financial reform.
High unemployment and elevated levels of foreclosures and distressed homeowners continue to be two of the biggest factors in preventing a robust recovery. The government’s attentive attitude toward these obstacles is seen as a positive sign by industry and economic experts.
Existing Home Sales:
Existing home sales softened in February. According to Lawrence Yun, NAR chief economist, the widespread winter storms during the month may have masked underlying demand as “buyers couldn’t get out to look at homes in some areas and that should negatively impact near-term contract activity.” February sales of 5.02 million remained 7 percent above the 4.69 million-units last year.
Median Home Price:
The median price for an existing home was $165,100 in February, a 1.8 percent drop from February 2009. Distressed homes, which accounted for 35 percent of sales last month, continued to skew prices downward as they typically were discounted in comparison with non-distressed homes. Continue reading “US Real Estate Market Update from Keller Williams”→