Global Property Investments on the Rise

Global direct property investment is expected to rise 20 percent in 2011 to $380 billion, led by a sharp rise from the United States.

Commercial real estate investments — such as malls, offices, and industrial properties — reached $316 billion in 2010. That represented a 50 percent increase from an eight-year low in 2009 of $209 billion.

“Barring further sovereign debt crises or financial shocks, the momentum of 2010 is expected to continue over the next 12 months, and we predict global volumes for 2011 should increase by 20 to 25 percent,” Arthur de Haast, head of Jones Lang LaSalle’s International Capital Group, told Reuters News.

The property consultancy company expects volumes in the Americas to jump 40 percent to $135 billion this year. U.S. recovery has been spurred by investor interests in New York, Washington, D.C., and San Francisco.

The Europe, Middle East, and Africa (EMEA) and Asia-Pacific regions are expected to rise by between 10 and 15 percent to $150 billion and $95 billion, respectively, according to Jones Lang LaSalle.

Source: “Global Property Investments to Hit $380 Bln in 2011,” Reuters News (Jan. 19, 2011)

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Best, Worst Real Estate Markets

More than 15 states are projected to experience housing inflation or appreciation during the year, according to Housing Predictor, which releases an annual report of its choices for best and worst housing markets.

The top five housing markets are:

1. Portland, Maine
2. Kansas City, Kan.
3. Tri-Cities, Wash.
4. Omaha, Neb.
5. Fargo, N.D.

However, not all markets will fare well in 2011, with the foreclosure crisis particularly still battering some areas as well as high unemployment and overbuilding during the boom era that has led to high home inventories.

The top 5 worst markets, according to Housing Predictor, are:

1. Bend, Ore.
2. Las Vegas
3. Atlantic City, N.J.
4. Miami, Fla.
5. Medford, Ore.

View all 25 best and 25 worst markets that made the list in the Housing Predictor report.

Source: “Best and Worst Real Estate Markets Announced in 2011,” PR.com (Jan. 17, 2011)

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Americans Are on the Move, Study Shows

More people are moving, according to Atlas Van Lines’ annual Migration Patterns study. In the 2010 U.S. Census, long-distance moves hit a record low. However, Atlas Van Lines says its recent study has shown monthly increases starting in late 2010 with the number of household who are back on the move again.

“As the economy forges ahead and the prevalence of these issues subsides, Americans are starting to move again,” says Francis Yuen, an analyst with CoStar’s Property & Portfolio Research. “The questions are: to where, and how can investors make money from it?”

Residents of Rust Belt states, in particular, are relocating, due to high unemployment numbers that plague the region. States next to the Rust Belt, therefore, are seeing some of the largest increases in new residents.

Here are some of the findings from the Migration Patterns study:

Washington, D.C. — for the fifth year in a row — had the highest percentage of inbound moves. Kentucky, North Carolina, and Maryland were popular states to move to.
Ohio had the highest percentage of people leaving, with Indiana also seeing an increase in people leaving the state.
Phoenix, Austin, Texas, and Raleigh, N.C., are projected to have some of the strongest 2011 household growth rates.
Summer continues to be the most popular season for moving.

Source: “People Are Moving Again,” CoStar Group (Jan. 12, 2011)

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December Existing-Home Sales Jump

Existing-home sales rose sharply in December, when sales increased for the fifth time in the past six months, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3 percent to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9 percent below the 5.44 million pace in December 2009.

Lawrence Yun, NAR chief economist, said sales are on an uptrend. “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” he said. “The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”

The national median existing-home price for all housing types was $168,800 in December, which is 1.0 percent below December 2009. Distressed homes rose to a 36 percent market share in December from 33 percent in November, and 32 percent in December 2009.

“The modest rise in distressed sales, which typically are discounted 10 to 15 percent relative to traditional homes, dampened the median price in December, but the flat price trend continues,” Yun explained.

Inventory Levels
Total housing inventory at the end of December fell 4.2 percent to 3.56 million existing homes available for sale, which represents an 8.1-month supply at the current sales pace, down from a 9.5-month supply in November.

NAR President Ron Phipps said buyers are responding to very good affordability conditions despite tight mortgage credit. “Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market,” Phipps said. “Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.71 percent in December from 4.30 percent in November; the rate was 4.93 percent in December 2009.

Transaction Types
A parallel NAR practitioner survey shows first-time buyers purchased 33 percent of homes in December, up from 32 percent in November, but are below a 43 percent share in December 2009.

Investors accounted for 20 percent of transactions in December, up from 19 percent in November and 15 percent in December 2009; the balance of sales were to repeat buyers. All-cash sales were at 29 percent in December, compared with 31 percent in November, but up from 22 percent a year ago. “All-cash sales have been consistently high at about 30 percent of the market over the past six months,” Yun said.

Single-family home sales jumped 11.8 percent to a seasonally adjusted annual rate of 4.64 million in December from 4.15 million in November, but are 2.5 percent below the 4.76 million level in December 2009. The median existing single-family home price was $169,300 in December, down 0.2 percent from a year ago.

Existing condominium and co-op sales surged 16.4 percent to a seasonally adjusted annual rate of 640,000 in December from 550,000 in November, but remain 5.2 percent below the 675,000-unit pace one year ago. The median existing condo price was $165,000 in December, which is 7.4 percent below December 2009.

Performance by Region
Regionally, existing-home sales in the Northeast jumped 13.0 percent to an annual pace of 870,000 in December but are 5.4 percent below December 2009. The median price in the Northeast was $237,300, which is 1.4 percent below a year ago.

Existing-home sales in the Midwest rose 11.0 percent in December to a level of 1.11 million but are 4.3 percent below a year ago. The median price in the Midwest was $139,700, up 3.3 percent from December 2009.

In the South, existing-home sales increased 10.1 percent to an annual pace of 1.97 million in December but are 2.5 percent below December 2009. The median price in the South was $148,400, unchanged from a year ago.

Existing-home sales in the West surged 16.7 percent to an annual level of 1.33 million in December but remain 1.5 percent below December 2009. The median price in the West was $204,000, down 5.6 percent from a year ago.

— NAR

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What Would a Foreclosure Claims Commission Do?

Sheila Bair, Federal Deposit Insurance Corp chair, called for a new commission that would compensate home owners who have lost their homes to foreclosure because of mistakes lenders made.

She suggested the claim’s commission be modeled after ones created to compensate victims of the BP oil spill and the Sept. 11, 2001, terrorist attacks.

Her plea for a commission is to address accusations in recent months that banks have taken illegal shortcuts in foreclosure proceedings and “robo-signing” hundreds of unread foreclosure documents a day.

“Every time servicers have delayed needed changes to minimize their short-term costs, they have seen a deepening of the crisis that has cost them — and the rest of us — even more,” Bair said at a Mortgage Bankers Association event.

Source: “FDIC’s Blair Calls for Foreclosure Claims Commission,” Reuters News (Jan. 19, 2011)

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House Flipping Fraud on the Rise

A high percentage of mortgage applications from house flipping is causing investigators to become increasingly alarmed. House flipping is when investors buy properties for quick resale and profit.

Lenders have reported greater occupancy fraud, employment fraud, and undisclosed debt on many of these mortgage applications.

Mortgage fraud continues to increase across the nation, rising by more than 20 percent since fraud rates reached a low point in early 2009, according to CoreLogic’s 2010 Mortgage Fraud Trends Report. CoreLogic’s recent study also found that one in every 24 REO sale transactions are associated with a fraudulent resale.

“Fraud continues to shift to areas of the lending business where large volume increases occur over short periods of time, or where advanced risk mitigation processes are not squarely in place,” says Tim Grace, senior vice president of Fraud Solutions at CoreLogic.

The biggest home flipping hot spots are Southern California, Phoenix, Detroit, and Atlanta.

Source: “Open House; Flipping Tied to Mortgage Fraud,” The Herald News (Jan. 16, 2011)

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Housing Industry Stands Ready to Protect MID

The National Association of Home Builders is the latest housing group to announce it plans to fight Congress to preserve mortgage interest deduction, which is expected to become a target of Congress as it looks to control mounting deficits. The National Association of REALTORS® and Mortgage Bankers Association have also been lobbying to protect MID.

“There are a couple of sacred cows in the tax code, and the mortgage interest deduction is one of those. Politicians take it on at their own risk,” warns J. P. Delmore, the senior federal legislative director for the National Association of Home Builders.

At its recent International Builders Show last week, NAHB outlined a strategy on how it plans to lobby on behalf of mortgage interest deduction, including plans for aggressive media coverage and an emphasis on how removing MID will cause home prices to fall by possibly 15 percent. NAHB also recently launched a Web site, Savemymortgageinterestdeduction.com, to rally public support.

Experts predict tax legislation to advance in Congress either this year or next year. One idea being proposed in some circles is to replace the interest deduction with a 12 percent tax credit.

For the latest news and to learn more about NAR’s efforts on MID, visit REALTOR.org.

Source: “Housing Industry Readies Mortgage Tax Break Fight,” MarketWatch (Jan. 14, 2011)

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Bank Admits Overcharging Troops on Mortgages

JP Morgan Chase, one of the nation’s largest banks, says it overcharged some 4,000 troops on their mortgages and improperly foreclosed on 14 military families.

The bank admitted the mistake during a lawsuit that was filed by Marine Capt. Jonathan Rowles, who was on active duty when the bank overcharged him and his family by as much as $900 a month on their mortgage.

Active-duty troops get their mortgage interest rates lowered to 6 percent and are protected from foreclosure under the Servicemembers Civil Relief Act. But Chase says it mistakenly had been charging Rowles, who had a resetting adjustable rate mortgage, at rates above 9 percent or 10 percent before later correcting his rate to 6 percent. Collection companies said the family owed $15,000 in uncollected fees.

“We are deeply appreciative of those who fight to protect our country and Chase funds a number of programs that provide benefits to military personnel and veterans, and while any customer mistake is regrettable, we feel particularly badly about the mistakes we made here,” Chase chief communications officer Kristin Lemkau told NBC News in a statement.

To make amends, Chase will be mailing about $2 million in refunds to families who were overcharged. Most of the families who were improperly foreclosed upon have already gotten their homes back.

Source: “No. 2 Bank Overcharged Troops on Mortgages,” MSNBC.com (Jan. 17, 2011)

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Is Real Estate Jeopardizing Economic Recovery?

Analysts are blaming the housing sector for the slow economic recovery.

Analysts say the real estate market often leads to economic recoveries. However, “I expect housing will not provide as much support to this recovery has it has in previous ones,” says Eric Rosengren, the president of the Boston Federal Reserve Bank.

Joel Naroff, president of Naroff Economic Advisers, says 2011 would be a “transition year” for housing with the market “not going anywhere.”

Housing construction has leveled off but some are still skeptical whether the real estate market is in true recovery mode yet. Housing starts for December are expected to fall 2.2 percent to a seasonally adjusted annualized rate of 543,000 after rising 3.9 percent to a 555,000 rate in November.

Building permits have reached their lowest levels since April 2009. Most experts blame the low building permits on the upswing in foreclosures.

The National Association of REALTORS® will release its December existing-home sales report on Thursday, which experts say will help shed more of a light on how the real estate market is really doing. Economists are expecting existing-home sales to rise.

Source: “Housing: U.S. Economy’s Achilles’ Heel,” MarketWatch (Jan. 16, 2011)

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Virginia Aims to Slow ‘Drive-by Foreclosures’

Virginia lawmakers are fighting against “drive-by foreclosures,” saying the foreclosure process in the state is one of the fastest in the nation and needs to be slower and have judicial review.

Bills in the Virginia House and Senate will set out to slow the state’s fast foreclosure pace by increasing the time required for foreclosure notice from two weeks to 30 or 45 days. The goal is to give borrowers more time to challenge the foreclosure if needed.

“We simply don’t have enough time to stop a foreclosure because of the fact that it’s in 10 days or seven days,” Todd Condren, a title insurance lawyer from Vienna, Va., told the House Courts of Justice Committee.

The bills also set out to require lenders to face court review before foreclosing on home owners. Lenders will also be subjected to fines if it’s found that any foreclosure was based on fraudulent documents or documents that contained any errors. The proposed bills also will have a requirement that lenders maintain updated real estate loan records in county courthouses and give borrowers an opportunity to avert foreclosure by paying off any delinquency.

Virginia’s banking lobby officials argue that slowing foreclosures and requiring updated county land record filings would just prolong the already four year housing slump.

Source: “Bill Seek Judicial Review of Foreclosures in Va., Better Mortgage Ownership Records,” The Associated Press (Jan. 17, 2011)

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