By cooperj on April 3, 2013
There are many bits of data in this recently released survey that merit the attention of every realtor. What do the typical home seekers of a particular region look for? What about a certain age group? Just how do the desires of a young couple compare with those of an established family of four or five members? The differences between these groups are obvious to most experienced realtors, but to have them quantified and updated and then broken down into categories provides a definite advantage. Knowing what these desired features are and matching them to your client can help the latter organize and focus on their ideal home.
The data for this study was captured from home-buyers who made their purchases between the years 2010 and 2012, making it as current and relevant as possible.
The differences between regions is especially interesting and, unless one has worked in various parts of the country, enlightening. Which regions show a preference for larger homes? According to the study, those in the Southeast and Northeast do, with an average square footage of 2,000 and 1,850, respectively.
Of all the thirty-three features covered in the survey, central air conditioning tops the want list of most buyers, with 65% wanting it. Next in importance was a home that is internet ready with either cable or satellite already installed. Combining these two features, 94% of those who mentioned them actually went on to buy houses with both A/C and cable/satellite wiring.
Which features are so important that buyers are actually prepared to spend extra for them? Again, central air conditioning tops the list with buyers willing to spend an extra $2,520 for it. Following in importance turned out to be modern kitchen appliances, for which they would be willing to spend an additional $1,840 and third, a walk-in closet in the master bedroom for $1,350 more.
Ninety-seven percent of the 
respondents, all recent home-buyers, expressed a desire for more storage space or larger closets, even though they were happy with their purchase. This desire for more space was also expressed by half of them wishing for larger kitchens and nearly 40% wanting a larger home overall.
These and many more useful data can be had from this valuable survey here: NAR Survey . The complete report is available for $14.95 for members of the National Association of Realtors and $49.95 for non-members
Posted in Uncategorized | Tagged home features, NAR Survey, real estate
By cooperj on January 8, 2013
(Must be that time of year again.)
Last Monday (December 31, 2012) Treasury Secretary Tim Geithner let Congress know that the debt limit had been reached, but that by use of some “extraordinary measures” $200 billion could be “created” to avoid default. This sets the scene for another contentious round of debate over whether the limit should be raised or not, even though President Obama says the subject is “off the table” as a negotiating point.
Because of the uncertainty of the myriad new taxes becoming effective with the new year, including a 2% raise in the payroll tax, it is hard to predict just what the government’s cash flow situation will be. Some economists say it is possible that because of the new taxes, the government will be able to push back the impending default several months. Then again, some economists think that because of the dampening effect the new taxes, mandatory cuts, and new regulations will have on the economy, government income may not be as high as some would wish it to be. Either way, much will depend on the success Congress and the White House have in coming to an accord on which course to take.
There are several actions the government proposes to take in order to free up some funds immediately. On Friday, the government suspended a program that helped states and localities manage their borrowing, which it estimates will make available some $4 to $17 billion to spend elsewhere. Even more (around $185 billion) would be created by dipping into the money-market fund used by federal employees as part of their thrift savings plans. Treasury could also raid the Exchange Stabilization Fund for about $23 billion. (This fund is for emergency intervention in currency markets.)
Geithner is said to be anxious to get back to private life and may be looking forward to leaving the administration before the debate over raising the debt limit gets heated. He has indicated to White House officials that he’s looking at the end of January for his departure. Jack Lew, the president’s chief of staff is said to be a likely successor, at least temporarily.
Whoever is selected, he’s going to have his hands full. The president insists that the debt limit should be raised but many Republicans plan to tie it to corresponding cuts. To up the ante, S&P has indicated that it could further lower the government’s bond rating if the discussion goes as poorly as it did last time.
Mr. Geithner must certainly understand the old Chinese curse: “May you live in exciting times” as perhaps, may we all.
Posted in Federal Budget, Federal Debt, Federal Debt Limit, Taxes | Tagged congress, Federal Debt, Federal Debt Limit, geithner, Taxes
By cooperj on January 3, 2013
Two national indices both reported last week that home prices are indeed going
up. Standard & Poor’s/Case-Shiller 20-city index showed a 4.3% rise over a year ago and the Lender Processing Services Price Index Report looked even better with a 5.2% increase over last year. These almost surely indicate a strong rebound even though the wider economy is generally still looking anemic. It is the first time since 2006 that housing prices have gone up on an annual basis.
Several supply and demand factors have led to this heating up. After the reporting of abuses in the paperwork processing of foreclosures by banks a couple of years ago, banks have slowed down the foreclosure process and are moving ahead much more carefully. This has resulted in many fewer foreclosed properties being available. As demand for housing has increased, the upward pressure on prices has been natural and unmistakable.
As well, homeowners who have considered selling their houses have been discouraged by the rock bottom prices prevailing over the past few years and have withheld their properties from the market in hopes of better prices in the future. This has put a damper on supply and accounts for some of the trending upward of prices.
In fact, a frustrating lack of inventory has spurred some buyers into purchasing new homes instead. In one new home development in San Francisco’s East Bay, some prospective buyers are actually paying campers $250 a day to camp out on the building site in order to lay claim to the new houses.
Ivy Zelman, chief executive of research firm Zelman & Associates, thinks “The tide has changed. “People feel it’s OK to go back into residential real estate—it’s no longer taboo—and that change in sentiment could have a very powerful effect.”
Although three cities in the Case-Schiller 20-city index showed seasonally adjusted lower returns in the October results over the previous month, “Annual rates of change in home prices are a better indicator of the performance of the housing market than the month-over-month changes because home prices tend to be lower in fall and winter than in spring and summer,” explained David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices.
Some economists view the hardy bounces in home prices in some of the hardest hit cities as normal rebounds from the market lows experienced recently and expect them to settle down after the initial surge. Also, the impending tax increases from the “fiscal cliff” could eventually dampen buyers’ enthusiasm.
To see the full WSJ report: http://on.wsj.com/X14R1f
Posted in Home Sales | Tagged foreclosure, real estate
By cooperj on November 15, 2012
Not since Q4 of 2007 has the apartment sector’s volume equaled this year’s Q3 of $23.3 billion of transaction volume. However, the responsibility for the lion’s share of this figure lies with the final buyout by Lehman of its partners in the privatization of the Archstone-Smith Trust. This alone added $9.4 billion to the final number. (Archstone is a real estate investment trust holding properties mainly on the east and west coasts.) This buyout may not have taken place but for the rebound of apartment prices, which helped Lehman win the day.
Significant apartment sales made it to $16.5 billion if the Archstone deal is left out. Transaction volume for the year so far is still up 21% over the same time last year as money flowed to generally smaller but higher yielding markets. A slow down also took place in price appreciation.
A trending gap between the high-rise and garden sectors grew as sales for the latter surged 18% over last year (YOY) while those for mid/highrise declined 9% in the same period. This too is exclusive of the Archstone numbers.
The rapid price appreciation we saw in 2010/2011 has slowed down appreciably in 2012. This is explained by a couple of factors. Rather than buy at premium prices, a good number of institutional buyers and REITs are choosing to develop. Also, the secondary and tertiary markets are experiencing surges in sales by 21% and a solid 54% respectively versus the major metro apartment sales plummeting 23% in Q3.
Q3 also saw the average cap rate headed up approximately 20 BPS to 6.3%. The above mentioned turn to development instead of buying prime properties, along with a notable move in sales to higher yielding markets was responsible for this. There is significant action taking place in the secondary and tertiary markets, cap rates there averaging 70 to 140 BPS higher than in the major metro category. The upward turn in average cap rates does not signify a general re-pricing in the apartment sector. Rather, cap rates are still under a downward pressure due to a competitive lender environment and lowering mortgage interest rates.
Investors continue stimulating demand for student housing and the volume for such properties was up 23% in Q3 to $1.8 billion. Although not included in apartment sector totals, senior housing is off significantly for lack of substantial portfolio or entity transactions. Nonetheless, individual senior housing properties saw a healthy 43% rise in Q3, driving the sales figure up to 23% for year so far.
Posted in Apartment | Tagged apartment, commercial, CRE, development, Jackson Cooper, multi-unit, real estate
By cooperj on November 1, 2012
We find ourselves in a time of unquestionable doubt and mystery regarding that which the financial and economic futures may have in store for us. As a result, the hesitancy to make a move is very palpable throughout the market, particularly for those in the commercial real estate market. Has the market bottomed out? Is the stimulus working? What would the market be like without the enormous intervention of the federal government? Often the answers to these vital questions depend too much on the political stance of the expert we’re looking to, and no matter what they say, there are usually convincing arguments supporting the opposite view.
With the unprecedented availability of “free money”, we know that the spectre of rampant inflation is a very real possibility. Sure, inflation is good for commercial real estate, but it is horrible for the economy as a whole. In an age of rock bottom interest rates, higher yields can be and are being obtained rather easily as commercial property sale prices stay high. There’s a problem resulting from this, however, and there are several aspects to it.
Of mode lately, in commercial real estate lending especially, is the practice of many banks of restraining from foreclosing on problem loans, preferring to restructure them so that the borrowers can continue to pay on them in the hopes that they may get out of trouble and eventually pay off the loan. The bank is extending the loan while “pretending” there is no problem, hence the sobriquet “extend and pretend”. Under normal circumstances, these property owners would be forced to sell and there would be many more properties on the market. Now, however, most of the sellers are not being forced into their sales and are holding to their premium asking prices, keeping the market buoyed in an artificial sea of scarcity.
Adding to this phenomenon are the continued low interest rates, making money for purchase of properties more available than it would be otherwise. The result then is more cheap money looking for fewer high-priced properties, exacerbating the problem even more. With an abnormally high cash-on-cash return possible, many investment companies are not willing to pass up the apparent opportunity.
The dark cloud looming behind this scenario is that such low interest rates as have prevailed in the past few years are going to have to end sometime, probably well within the next five years. Since today most loans are written with five year terms with an option to renew in another five years, you can bet that the new terms are not going to be as sweet as the first. If we just look at a return of interest rates to a near normal 7%, we’re going to see those wonderful 10% or so cash-on-cash returns now possible diminish to somewhere around 6.8%, which equates to a 32% drop! It’s going to be hard to make up the difference by bumping up rents, and selling the property even at its original purchase price might be rather difficult since the new buyer is going to be looking for an even better return. This could mean that even more properties are going to get the “extend and pretend” treatment if the government and banks don’t overhaul the rules.
If this is an accurate reading of the current and future situations, we could be looking at a rather catastrophic turn of events somewhere around 2015 or 2016, when the Fed finally allows interest rates to seek their natural level and more mortgages come due. It would be prudent indeed to review one’s long term view and exit strategies!
Posted in Uncategorized
By cooperj on October 26, 2012
US office construction is on the rise, bouncing off what appears to be 2011’s bottom. Last year’s completions amounted to just 9.23 million square feet, an 18-year low, but 2012’s will reach an estimated 9.92 million square feet. Tech companies are the major driving force behind this turn-around, with Apple, Amazon, Facebook all beginning major office projects.
Another hopeful sign is the receding rate of defaults from 2010’s rate of 15.2% to to 11.1% in Q2 2012. As the default rates decline, we’re seeing a net gain in construction loans. Q3 2011 loans totaled $14 billion while the same quarter this year will be an estimated $16.1 billion. Currently, the nation’s banks have approximately $173.9 billion out in construction and development loans, a number that does not include single-family and small residential mortgages. This is considerably lower than the $438.6 billion tally for Q3 2008.
Sign of the Times?
Construction starts in 2010 totaled 57 million square feet, a number one would have to go back to 1960 to equal. Last year (2011) they totaled 60 million square feet and will probably dip to 59 million this year as federal stimulus programs dry up. However, some industry economists expect that we’ll see this number increase to about 64 million square feet next year.
For the past three years, it has been mainly government, data centers, and private projects such as corporate headquarters that have driven construction. The cyclical nature of the tech industry has been of minor influence during this time but it appears that it is now going to be the force that pulls the numbers up and out of their doldrums.
Slow economic growth has cut into new supply coming on to the market which in turn has kept the vacancy rate low. Only 2.84 million square feet of new office space was completed in Q3 2012, which adds up to the equivalent of several medium-sized office buildings.
This paucity has led to an improvement in demand for new space, which although gradual, should continue into the new year.
Locally, this national trend may be boosted by Boise Mayor Dave Bieter’s announcement on September 25 of a city program to defer impact fees for the next six months. Instead of paying these fees when they take out their permits, builders won’t need to pay until their projects are finished. David Chatterton, Boise City’s Director of Planning and Development Services, noted that “If there’s a project that’s just on the bubble, we’d like to help remove some of that element of risk.”
Such a program was attempted a few years ago but its success then was less than stellar. However, with the increase in construction nationwide, it may be Boise’s time to join the trend
Posted in Office | Tagged Banks, Boise, commercial, CRE, development, foreclosure, Idaho, Jackson Cooper, loans, multi-unit, office, real estate, recovery, single tenant, Sperry Van Ness, SVN, treasure valley
By cooperj on October 18, 2012
Robert White, President of Real Capital Analytics, shares his forecasts for both national and specific market segments along with a review of Q3 2012 in this valuable and exclusive investment forum.
In an optimistic overview, 
Mr. White explores the good
signs he sees right now, noting
that capital is beginning to spread
out, there is obvious growth in the
apartment sector (up 23%), and multi-family land sales are also turning around and warming up around the country.
Learn more about why RCA is
feeling cautiously optimistic about the year to come: http://vimeo.com/51303445
(Password: economic_white)
Posted in Loan Sales, Multi-Unit Franchise, Multifamily, Office, Sales Leaseback
By cooperj on August 10, 2012
Developers purchased over $2 billion worth of significant multifamily development sites in the first half of 2012, close to double the sales volume in all of 2011. Cities such as Manhattan, San Francisco, Seattle, and Raleigh have experienced increased transaction activity over 2005-2007 levels and account for much of this concentrated recovery. Distress sales, while leveling, have brought down overall average prices, accounting for 15 percent of overall transactions. Several REITs are among the most active buyers for multifamily sites.
In the Treasure Valley
In our Treasure Valley market we are seeing several new proposed projects for the first time in over eight years. With occupancy near 97 percent and record-low interest rates, new apartments will once again be built. There is still a gap in the market, which means that the number of units available and to be built will not quite meet the demand of the market. Because of this, rents will begin to rise and occupancy will remain high. How long this pattern will last will be determined by the amount of new inventory that is built and the level of confidence in the economy.
Posted in Multifamily | Tagged apartment, Boise, CRE, development, Idaho, Jackson Cooper, multifamily, real estate, Sperry Van Ness, SVN, treasure valley
By cooperj on July 23, 2012
Before costs and fees, lenders recovered 69 percent of the outstanding balance of defaulted commercial mortgages liquidated in Q2 2012. After a sluggish first part 0f 2012, recovery rates have returned to 2011 levels. Lenders, because of this relatively stable recovery, are better able to budget and manage loss expectations.
Not surprisingly, given the trends over the past year-and-a-half, multifamily recovery rates are the most impressive at 74 percent. At 93 percent, Manhattan ranks highest nationally in recovery. Other noticeably improving cities include San Francisco and Miami. With declines in recovery rates, Las Vegas, Phoenix, Detroit, and Atlanta are among the lowest nationally in recovery.
Posted in Uncategorized | Tagged apartment, Boise, commercial, CRE, Jackson Cooper, multifamily, rates, real estate, recovery, Sperry Van Ness, SVN
By cooperj on May 9, 2012
As outlined in our previous entry, the Treasure Valley has seen marked economic improvement characterized by steady, broad-based job growth and increasing property values, both residential and commercial. Valley County, whose idyllic mountain towns serve as second home sites for many in the Treasure Valley, is expected to benefit from this recent trend. As a result, McCall, Donnelly, and Cascade land and home sales should see strong increases in the next year and a half.
In addition to this “trickle down” property value relationship, Valley County is beginning to see improvements in its overall economic infrastructure, potentially providing the county with a more solid, autonomous foundation for long-term economic health. Midas Gold, a mining company publicly registered in British Columbia, Canada, has control of 24,000 acres in the Stibnite, Yellow Pine area and is calling it “The Golden Meadows Project.” Midas is expected to complete their preliminary exploratory drilling and environmental permitting processes this summer. Midas Gold currently has approximately 150 full-time workers at the project. The company has raised approximately 85 million dollars to begin the mining of four minerals. The project could employ as many as 350 full-time workers when permitted.
Another boost for Valley County will be the eventual disposition and/or resolution of Tamarack Resort, which is expected to come to a head before the end of 2012. It is anticipated that the ill-fated resort go to the court house steps this year, where either Credit Suisse or an outside investor will step in and buy this Valley County Gem. Either way, the project will move forward in some fashion, creating significant construction-related employment, further aiding in the increase in area property values.
Posted in Uncategorized | Tagged commercial, CRE, Jackson Cooper, McCall, real estate, Sperry Van Ness, Valley County
There are many bits of data in this recently released survey that merit the attention of every realtor. What do the typical home seekers of a particular region look for? What about a certain age group? Just how do the desires of a young couple compare with those of an established family of four or five members? The differences between these groups are obvious to most experienced realtors, but to have them quantified and updated and then broken down into categories provides a definite advantage. Knowing what these desired features are and matching them to your client can help the latter organize and focus on their ideal home.
respondents, all recent home-buyers, expressed a desire for more storage space or larger closets, even though they were happy with their purchase. This desire for more space was also expressed by half of them wishing for larger kitchens and nearly 40% wanting a larger home overall.
