Posts Tagged ‘New York’

Foreclosures Decline, But Expect a Spike Thanks to Banks Settlement

Monday, March 26th, 2012

Foreclosure filings declined eight percent in February, the smallest year-over-year decrease since October 2010, as lenders began working through a backlog of seized properties, according to RealtyTrac Inc. A total of 206,900 homes received notices of default, auction or repossession last month, down two percent from January, according to the data firm, which noted that one in every 637 households received a filing.  Those numbers could rise sharply in coming months.

Banks slowed foreclosures for more than a year as attorneys general in every state investigated charges of shoddy and incomplete paperwork.  A $25 billion settlement with the five largest lenders removed some roadblocks to property seizures and gave the go-ahead for future actions, Brandon Moore, RealtyTrac’s chief executive officer, said.  “February’s numbers point to a gradually rising foreclosure tide.  That should result in more states posting annual increases in the coming months.”

“The pig is starting to move through the python,” said Daren Blomquist, RealtyTrac’s director of marketing.  The banks “have already adjusted their foreclosure practices to fit the terms of the settlement.  We expect that to continue as (the settlement) gets finalized,” Blomquist said.

The settlement clarifies the way in which foreclosures must be handled.  That is expected to let banks speed up their processing, putting many delinquent homeowners into the foreclosure process.  Cases could move forward after being on hold for months — even years — with their delinquent owners still living illegally in the properties.

“The foreclosure and mortgage settlement filed in court earlier this week will help pave the way to a properly functioning foreclosure process by providing a clear roadmap for necessary foreclosures,” Moore continued.  “That should result in more states posting annual increases in the coming months.  Not surprisingly, many of the biggest annual increases in February were in states with the more bureaucratic judicial foreclosure process, which resulted in a larger backlog of foreclosures built up over the last 18 months in those states.”

Cities with the highest foreclosure rates were Riverside-San Bernardino in California (one in 166 housing units); Atlanta (one in 244); Phoenix (one in 259); Miami (one in 264); and Chicago (one in 302).

The Department of Housing and Urban Development’s (HUD) Office of the Inspector General’s report found that several banks violated servicing standards and foreclosure procedures and engaged in extensive robo signing.  The banks agreed to follow new servicing standards and offer relief to borrowers by providing $10 billion in principal reductions, $3 billion in refinancing loans and $7 billion in alternatives to foreclosure.  Foreclosures in the 26 states with a judicial foreclosure process rose 24 percent over last year, while activity in the 24 states that follow a non-judicial foreclosure process fell by 23 percent

Default notices, the initial step in the foreclosure process increased more than 20 percent in 12 states, including Hawaii, Maryland, Connecticut, South Carolina, Indiana, Pennsylvania and Florida.  State attorneys general have filed lawsuits against major lenders in New York, California and Nevada in recent months, further slowing the pace of foreclosures in those states.

Foreclosed Homes Total a Three-Year Supply

Tuesday, June 14th, 2011

The current national inventory of foreclosed homes represents a three-year supply, according to RealtyTrac.  Not surprisingly, that is depressing home prices.  “This is very bad for the economy,” said Rick Sharga, a RealtyTrac spokesman.

In Las Vegas, the foreclosure situation is so dire that more than half of all homes sold in Nevada are foreclosures.  In California and Arizona, 45 percent of sales are foreclosures; that totals 28 percent of all existing home sales during the 1st quarter of 2011.

Additionally, the nation’s stock of foreclosed homes are selling at deep discounts, particularly REOS, which are bank-owned homes.  The typical REO sold for about 35 percent less than comparable properties, according to RealtyTrac.  In some areas, the discounts were ever steeper: In New York, the discount for REOs was 53 percent during the 1st quarter and almost 50 percent in Illinois, Ohio, and Wisconsin.

“Short sales,” homes where the selling price is less than what is owed by the borrowers, are also dragging down the market.  These sell for an average nine percent discount.  When you consider both REOs and short sales, Ohio had the biggest discount of any state, at 41 percent.

During the 1st quarter, there were 158,000 sales involving distressed properties nationally, less than half the nearly 350,000 during the same period of 2009.  With the slower pace of sales, it will take three years to sell off the inventory of 1.9 million distressed properties, according to Sharga.  “Even if you look at REOs alone, it will take 24 months to clear them and that’s without any new foreclosures at all coming into the system,” he said.

RealtyTrac found that the average sales price of properties in some stage of foreclosure, scheduled for auction or bank-owned — was $168,321, down 1.89 percent from the 4th quarter of 2010.

A total of 158,434 bank-owned homes and those in some stage of foreclosure were purchased during the 1st quarter, a 16 percent decline from the 4th quarter of last year and down 36 percent from the 1st quarter 2010 total.  Bank-owned properties that sold in the 1st quarter had been repossessed an average of 176 days before the sale, while properties that sold in earlier stages of foreclosure in the 1st quarter were in foreclosure an average of 228 days before they were sold.  According to James J. Saccacio, chief executive officer of RealtyTrac, “While this is probably helping to keep home prices relatively stable, it is also delaying the housing recovery.  At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks’ books, or in foreclosure.”

Foreclosures are particularly attractive to all-cash buyers who demand discounts,  pushing down the value of all properties.  More than 75 percent of American cities experienced price declines in the 1st quarter.  Bank-owned homes totaled 107,143 sales in the 1st quarter, down 11 percent from the 4th quarter and almost 30 percent from 2010.  Sales of homes in default or scheduled for auction totaled 51,291, a 26 percent decline, according to RealtyTrac.  That was less than half the peak of 348,629 distressed deals in the 1st quarter of 2009.

Writing on the website 24/7wallstreet.com,  Douglas A. McIntyer offers an interesting perspective.  “Any economist will say that when some homes are sold at 27 percent below the normal market, all home prices will be pulled lower.  That may be the key to the home market recovery.  Foreclosure inventory will continue to rise as banks put more backlogged homes onto the market.  The glut will probably push down the average of all homes by several percent. This may be a reason home prices are predicted to fall another 10 percent this year.  Buyers will not come back to the housing market until they believe that prices are too good to resist.  That may mean homes that sold for $500,000 in 2005 will have to sell for $300,000 next year.  Prices will not be driven down quickly without the reduction in inventory of foreclosed homes.  There has to be a bottom to prices.  The sooner it is found the better.  The housing market is more than half dead.  The only tonic is a belief by buyers that prices are so remarkably low that new buyers will make money on a house and not lose it.  If the housing market is to continue to drop, the drop needs to be swift.  Mortgage rates are near all-time lows.  Inflation and concerns about the value of Treasuries due to the U.S. national deficit could change that.  Home prices that are viewed as affordable need to be married with low mortgage rates for the market to catch fire.”

Up In the Sky! It’s 2010’s Best Tall Buildings

Monday, July 19th, 2010

The Council on Tall Buildings and Urban Habitat recognizes 2010’s best tall buildings.  The Council on Tall Buildings and Urban Habitat (CTBUH) recently announced the finalists for its 2010 “Best Tall Building” awards.  The annual awards recognize exceptional tall buildings from each of four geographical regions and are chosen for their design and technical innovations, sustainable attributes, and the enhancement they provide to their cities and the inhabitants.

The 55-story Bank of America Tower in New York was hailed for its commitment to sustainability, which has made human health and corporate responsibility a priority.  Its exceptionally high indoor environmental quality results from hospital-grade, 95 percent filtered air; abundant natural daylight; an under-floor ventilation system; and views through floor-to-ceiling glass curtain wall.

This 51-story Pinnacle at Duxton includes 1,848 public housing units in central Singapore. It redefines urban high-density living by weaving continuous Sky Gardens on the 26th and 50th stories through the seven tower blocks.  Multiple access points to the Sky Gardens also mean that they are an ideal evacuation strategy.  Because they are connected, the seven tower blocks share three sets of water tanks and pumps and one building maintenance unit.

A key design element of the 23-story Broadcasting Place in Leeds, England, is the irregular elevations, tailored to optimize daylight and reduce solar penetration. An innovative analysis calculates the optimum quantity and distribution of glazing/shading at all points on the façade to ensure high levels of natural day lighting but without overheating.

The unprecedented height of Dubai’s 163-story Burj Khalifa required rethinking design techniques, building systems, and construction practices to create a practical and efficient tower. The building’s shape references regional architecture in the pointed ends of the “Y” which are reminiscent of Islamic archways.  As the tapering tower rises, setbacks occur at the end bay of each wing in an upward spiraling pattern that decreases the tower’s mass as the height increases.  These setbacks minimize wind forces.

The best tall building of 2010 will be announced at the CTBUH’s awards ceremony in October.

Investors Are Choosing London

Thursday, January 28th, 2010

London beats Washington, D.C., as preferred destination for commercial real estate investment.London has overtaken Washington, D.C., as the preferred city for commercial real estate investment,  primarily because investors believe that prices have bottomed out and the time to get into that market is now. The British capital has overtaken the previous favorites of Washington, D.C., and New York, according to a survey conducted by the Association of Foreign Investors in Real Estate (AFIRE).

“London currently offers investors the advantage of a ‘re-priced’ market,” says James Fetgatter, AFIRE’s CEO.  “The re-pricing began sooner than it did in other cities.”  London’s score is 31 points higher than the perennial favorite Washington, D.C., and 40 points ahead of New York City.  A year ago, London occupied second place, ranking four points behind Washington.  The survey of the association’s approximately 200 members was taken in the fourth quarter of 2009 and represents ownership of more than $842 billion of commercial real estate.  Of that, $304 billion is invested in the United States.

London, along with the rest of the United Kingdom, has rebounded with investment rising 56 percent from the first to the second half of 2009.  Property values rose 2.4 percent in November, the largest monthly increase in 15 years.  Savills, the real estate advisory firm, is predicting London will eclipse New York as the fastest growing global financial center.

Despite London’s success, the United States is still preferred as the “most stable and secure real estate investment environment,” according to 44 percent of survey respondents.  This is the first time the United States ranked below 50 percent in the survey.  It ranked 53 percent in 2008 and 57 percent in 2007.  Germany occupies second place with 21 percent.  In terms of price appreciation, the United States ranks first, followed by the United Kingdom and China.

The preferred property for investment is multifamily residential, followed by office, industrial, retail and hotel.

Tiffany & Company Earnings Report Shines

Tuesday, December 1st, 2009

tiffany3As well-known national retailers like Circuit City and Linens ‘n’ Things go out of business, one high-profile merchant saw its profits fall just one percent during the third quarter of 2009.  Venerable Tiffany & Co. — renowned for its signature blue box – recently raised its year-end forecasts after reporting an uptick in domestic and foreign sales.

Tiffany’s – like the rest of the luxury retail sector – had seen its sales fall significantly during the recession as customers shied away from purchasing expensive jewelry.  Now that the economy is starting a long and likely slow recovery, Tiffany’s quarterly performance is a positive sign.  The firm earned $43.3 million, or 35 cents per share, for the quarter ending October 31, 2009.  Revenues fell three percent to $598.2 million.  The results clearly beat Wall Street expectations, which predicted a profit of 24 cents per share based on sales of $575.1 million.

Domestic sales are still down nine percent, with revenues at the flagship New York store down eight percent.  Overseas results were more positive, with Asia-Pacific sales up 10 percent and European sales rising 12 percent.

The trend bears out a report by Bank of America/Merrill Lynch that luxury goods sales next year will increase by five percent with a spike of 13 percent in net profits expected.  (Baum & Company is a little more cautious, predicting a one percent sales growth next year.)  Part of the issue is cost cutting and efficiency by the retailers and part maybe renewed confidence because of the rebounding stock market – something that correlates closely with personal spending.

Will Yankees World Series Victory Unleash the Bulls on Wall Street?

Thursday, November 19th, 2009

Odd correlation between Yankees World Series victories and Wall Street.  There’s a rather odd correlation between the New York Yankees winning the World Series and Wall Street.   A Yankee win historically has coincided with a bull market.  An analysis by Standard & Poor’s Capital IQ reveals an average of double-digit yearly returns from stocks when the Yankees win the World Series.  By contrast, the stock market tends to fall in years when the Yankees lose the championship.

An analysis of the 22 years since 1936 in which the Yankees won the World Series found that the Standard & Poor’s 500-stock index rose a minimum of 10 percent over the previous year.  By contrast, when the Yankees lose the World Series, stocks fell 13 percent on average.  Additionally, when the series ends after six games (as happened this year), the average return rises to 15 percent.  The average fell to just eight percent if the series goes for seven games.

Despite the Yankees’ record, Wall Street tends to prefer National League victories versus the American League.  An analysis of the 30 World Series wins by National League teams since 1936 show that the stock market rose an average of 15 percent the following year.

There are exceptions to the rule.  When the Yankees won the 1936 World Series, the stock market declined 34.7 percent over the next year.  The worst record belongs to the Boston Red Sox, who saw the stock market decline by 37 percent after their 2008 World Series victory.  Coincidence or not, it will be interesting to see if this yardstick proves true this time around.

Distressed CRE Hits $108 Billion

Monday, August 3rd, 2009

More than $108 billion of commercial properties in the United States are now in default, foreclosure or bankruptcy.   That preliminary statistic is nearly double the amount reported at the start of 2009, according to New York-based Real Capital Analytics, Inc.19and20

At the end of June, 5,315 buildings were reported to be in financial distress.  Hotels and retail properties are the most “problematic” assets after bankruptcy filings by mall owner General Growth Properties, Inc., and Extended Stay America, Inc.  The lack of credit is spurring property defaults throughout the country and among every type of investor.

“Perhaps more alarming than the rapid growth in the distress totals is the very modest rate at which troubled situations are being resolved,” according to Real Capital Analytics.  The good news is that approximately $4.1 billion of commercial properties have emerged from distress.  “In far more situations, modifications and short-term extensions are being granted, but these can hardly be considered resolved, only delayed,” the report notes.

Wall Street Relocating to Constitution Avenue

Friday, July 17th, 2009

America’s financial capital is now Washington, D.C. With Congress and the White House acting forcefully to stop the bleeding resulting from the worldwide financial crisis, numerous investors and brokers are relocating from New York to Washington because that’s where the action is these days.

wall-street-flagOne of the nation’s healthiest metropolitan areas, Washington is benefiting from government hiring as the Obama Administration works to strengthen the nation’s financial system.  The collapse of prominent investment banking firms such as Lehman Brothers and Bear Stearns has triggered increased scrutiny of large banks and created a need for additional workers with auditing and investment expertise in government regulatory offices.

The government’s deep involvement in the financial sector is bringing in investment that in other times would have gone to Manhattan.  German banks, for example, are investing significant dollars in hotels and office buildings.

According to Ramon Kochavi, regional manager of Marcus and Millichap, “The government will grow.”  Kochvai foresees declining defense contracting and an expansion of biotech firms under the Obama administration.  New R & D firms are opening facilities in Rockville, MD, and along Virginia’s Dulles Corridor to support the National Institutes of Health in Bethesda, MD.  Medical services growth is also expected as access to healthcare is a national priority.

No Port in the Global Fiscal Storm

Wednesday, April 22nd, 2009

Shipping activity has plunged as much as one-third at U.S. ports most heavily invested in the once red-hot but now declining Asia trade. 

Freight rates from South China to Europe have slid as much as 42 percent from some ports since November, leading shipping industry authority Drewry Container Freight Rate Insight Report to speculate that this once-robust market is in freefall.titanic-sinking-7790481

As freight rates fall to record lows shipping companies are playing hardball to remain competitive, even though relatively little product is being shipped these days.  According to Drewry, container lines could see a $68 billion plunge in global revenues this year, compared with 2008 revenues of $220 billion.  Drewry notes that global all-in freight rates fell to $1,681 per 40-foot box, down from $2,098 in November.  That’s a steep $400 drop per feu (forty-foot equivalent unit) or 20 percent in just two months.

The ports of Los Angeles and Long Beach are slashing cargo rates to retain old customers and attract whatever new business they can.  Spanning 10,000 acres, these vast ports typically handle $357 billion in goods every year.  The ripple effect of this year’s overall 18.1 percent downturn is evident in California’s vital Inland Empire logistics market, where higher vacancy rates – now approaching nine percent — are translating to cheaper rents.

Conditions are slightly better at the East Coast ports of New York and New Jersey, because their diverse mix of trading partners include Asia, Europe, Latin America and South America.