According to the Associated Press, sales of existing homes in the West took a huge jump in September. As a result of continued low interest rates and dscounting of foreclosed homes, sales of existing homes reached 100,000 units across the 13 state West Region.
Sales were up nearly 43 percent from the same month last year, but declined 9.6 percent versus August's total, according to the National Association of Realtors.
With sharply discounted foreclosures making up a larger slice of overall sales, the median price in the West plunged almost 19 percent from a year ago to $253,600 - slightly higher than what the median was five years ago, the association said.
To read the entire article by ALEX VEIGA of the Associated Press click on the link http://www.forbes.com/feeds/ap/2008/10/24/ap5604091.html
Friday, October 24, 2008
Wednesday, October 22, 2008
SEATTLE REAL ESTATE RATED #1
Survey of metropolitan areas reveals best investment value here
By DAN RICHMANP-I REPORTER
Among major metropolitan areas, Seattle's real estate is the best in the nation as a prospective investment, a national report released Tuesday says.
On an eight-point scale reflecting investment value, Seattle was ranked 6.2, according to the 30th annual study of emerging trends in real estate from PricewaterhouseCoopers and the Urban Land Institute.
That ranking reflects averaged ratings by more than 600 surveyed real estate professionals, who assigned a number of 0 to 8 to each the nation's top 10 regions. The better the location for investment purposes, the higher the rating.
"It's saying a dollar invested in Seattle real estate would be more likely to yield more than a dollar invested anywhere else -- but it says nothing about how much the yield would be, or over what time period," said Rick Kalvoda, a PricewaterhouseCoopers director.
Study participants -- including investors, developer and brokers -- supported their high rankings by pointing to the large and diverse types of companies that call Seattle home, singling out Amazon, Boeing and Starbucks.
Survey subjects also said low vacancy rates at Seattle-area shopping centers are buffering those malls against a possible consumer pullback. And they said the Puget Sound region's ports are the most attractive in the country, in part because of their low vacancy rates and low rents.
Despite Seattle's strengths, it should "brace for some buffeting," study participants said in comments they submitted along with their numerical ratings.
About 3.5 million square feet of new office space, plus increasingly tepid job growth, will increase the sub-10 percent downtown office vacancy rate, they predicted.
"Owners are scrambling to find tenants as Washington Mutual teeters and Starbucks downsizes," one respondent wrote. Though Bellevue's office-vacancy rate remains low, it's mostly because of Microsoft's massive presence there -- so that market is vulnerable to any future layoffs by the software company, others noted.
Housing demand in Seattle is slipping, and prices are dropping, while still remaining "well above the national averages." Condo sales are "falling dramatically," but the market is still rated a strong buy for apartments, with rents moving up, vacancies heading down and a limited number of new projects.
Ranked second as a real-estate investment was San Francisco, followed by Washington, D.C. New York City, which has traditionally topped the list, was ranked fourth this year, mainly because the Wall Street implosion cost jobs and created office vacancies there.
Chicago was ranked last among the top 10 markets, with apartments doing well but condos weakening as speculators leave the market.
Nationwide, real estate markets are expected to reach bottom in 2009 and to flounder in much of 2010, with ongoing drops in property value, more foreclosures and delinquencies and a "limping economy that will continue to crimp property cash flows," the study says.
"Commercial real estate was the last to leave the party, will feel the pain in 2009 and may be the last to recover," Tim Conlon, a partner with PricewaterhouseCoopers, said in a news release.
P-I reporter Dan Richman can be reached at 206-448-8032 or danrichman@seattlepi.com.
By DAN RICHMANP-I REPORTER
Among major metropolitan areas, Seattle's real estate is the best in the nation as a prospective investment, a national report released Tuesday says.
On an eight-point scale reflecting investment value, Seattle was ranked 6.2, according to the 30th annual study of emerging trends in real estate from PricewaterhouseCoopers and the Urban Land Institute.
That ranking reflects averaged ratings by more than 600 surveyed real estate professionals, who assigned a number of 0 to 8 to each the nation's top 10 regions. The better the location for investment purposes, the higher the rating.
"It's saying a dollar invested in Seattle real estate would be more likely to yield more than a dollar invested anywhere else -- but it says nothing about how much the yield would be, or over what time period," said Rick Kalvoda, a PricewaterhouseCoopers director.
Study participants -- including investors, developer and brokers -- supported their high rankings by pointing to the large and diverse types of companies that call Seattle home, singling out Amazon, Boeing and Starbucks.
Survey subjects also said low vacancy rates at Seattle-area shopping centers are buffering those malls against a possible consumer pullback. And they said the Puget Sound region's ports are the most attractive in the country, in part because of their low vacancy rates and low rents.
Despite Seattle's strengths, it should "brace for some buffeting," study participants said in comments they submitted along with their numerical ratings.
About 3.5 million square feet of new office space, plus increasingly tepid job growth, will increase the sub-10 percent downtown office vacancy rate, they predicted.
"Owners are scrambling to find tenants as Washington Mutual teeters and Starbucks downsizes," one respondent wrote. Though Bellevue's office-vacancy rate remains low, it's mostly because of Microsoft's massive presence there -- so that market is vulnerable to any future layoffs by the software company, others noted.
Housing demand in Seattle is slipping, and prices are dropping, while still remaining "well above the national averages." Condo sales are "falling dramatically," but the market is still rated a strong buy for apartments, with rents moving up, vacancies heading down and a limited number of new projects.
Ranked second as a real-estate investment was San Francisco, followed by Washington, D.C. New York City, which has traditionally topped the list, was ranked fourth this year, mainly because the Wall Street implosion cost jobs and created office vacancies there.
Chicago was ranked last among the top 10 markets, with apartments doing well but condos weakening as speculators leave the market.
Nationwide, real estate markets are expected to reach bottom in 2009 and to flounder in much of 2010, with ongoing drops in property value, more foreclosures and delinquencies and a "limping economy that will continue to crimp property cash flows," the study says.
"Commercial real estate was the last to leave the party, will feel the pain in 2009 and may be the last to recover," Tim Conlon, a partner with PricewaterhouseCoopers, said in a news release.
P-I reporter Dan Richman can be reached at 206-448-8032 or danrichman@seattlepi.com.
Thursday, October 9, 2008
Global Banks Unite in Unprecedented Rate Cuts
Ben Bernanke and the Fed brought financial aid to the streets, lowering the Federal Funds Rate and Discount Rate by 0.50%. In an unprecedented emergency move, central banks across the globe joined in lowering interest rates.
This move follows Washington's passing of the $700 billion Rescue Plan. From Wall Street to Main Street, a common concern has been heard by Washington. "We need money... no, let me rephrase that...we need cheap money."
Rates Could Rise From Here! Home loan rates have benefited from the weakness in the financial markets. Fixed rate mortgages remain very attractive. However, the Fed lowers short term interest rates to shore up financial markets. This could cause home loan rates to rise in the coming weeks and months if confidence returns to the stock markets.
ARM Holders Take Notice! Anyone that has an Adjustable Rate Mortgage (ARM), take note. The London Interbank Offered Rate (LIBOR) has soared from uncertainty in financial companies...And six million home loans in the United States are tied to LIBOR which determines the interest rate at the time of adjustment.
If you know someone with an ARM, let them know potential trouble lies ahead and the time to act is now. What Should You Do Now? Call me. We can go over your situation to determine how you can benefit from the actions. I look forward to hearing from you.
This move follows Washington's passing of the $700 billion Rescue Plan. From Wall Street to Main Street, a common concern has been heard by Washington. "We need money... no, let me rephrase that...we need cheap money."
Rates Could Rise From Here! Home loan rates have benefited from the weakness in the financial markets. Fixed rate mortgages remain very attractive. However, the Fed lowers short term interest rates to shore up financial markets. This could cause home loan rates to rise in the coming weeks and months if confidence returns to the stock markets.
ARM Holders Take Notice! Anyone that has an Adjustable Rate Mortgage (ARM), take note. The London Interbank Offered Rate (LIBOR) has soared from uncertainty in financial companies...And six million home loans in the United States are tied to LIBOR which determines the interest rate at the time of adjustment.
If you know someone with an ARM, let them know potential trouble lies ahead and the time to act is now. What Should You Do Now? Call me. We can go over your situation to determine how you can benefit from the actions. I look forward to hearing from you.
Friday, October 3, 2008
BAILOUT - RESCUE PLAN APPROVED!
The House of Representatives passed (and President Bush promptly signed) a $700 billion plan that'll bail out the financial system, ushering in what many saw as the economy's only hope of living to see another day.
The passage came just four days after the House voted down the original bill, causing the market to drop nearly 800 points before partially rebounding the next day. It's been quite a week in the Equity and Credit Markets this week.
The passage came just four days after the House voted down the original bill, causing the market to drop nearly 800 points before partially rebounding the next day. It's been quite a week in the Equity and Credit Markets this week.
Wednesday, October 1, 2008
GOVERNMENT RESCUE PLAN EXPLAINED
Mortgage Success Source's Barry Habib shared his opinion on the turbulent financial market and the need for Congress to pass the Rescue Plan or as some people refer to it, the "Bailout Plan".
Here are his comments: "Hi everyone. Crazy times. Whatever the political posturing, a plan needs to be passed. Credit markets are frozen and banks are going bust every day. This is not totally because of "toxic" mortgages. This has a lot to do with FASB 157, also known as "mark to market". Each day lenders must mark their assets to the marketplace. It's like you having to appraise your home everyday and if your neighbor was under duress because they got very ill, divorced, lost their job and was forced to sell their home quickly they may have sold it super cheap. Now, does that mean your house is worth that super cheap price? Clearly not. Why? Because you are not under duress. You have the time to sell your home and get a more normal price, which more accurately reflects true market conditions. But "mark to market" does not allow for this, which creates a vicious cycle. Why is this so bad? Because as lenders mark down their assets the amount that they have loaned previously becomes much riskier in relation to their assets. For example, say a bank has $1 million in assets and say they have $15 million in loans outstanding. Their ratio is an acceptable 15 to 1. But should they take a paper write down of $500 thousand due to "mark to market" requirements, their ratio suddenly changes to 30 to 1. This is because their assets are now only $500 thousand after taking the paper loss, while their loans outstanding are $15 million. And at 30 to 1 this bank is viewed as a risky investment. So the stock price starts to get hit, it becomes harder to borrow, and most importantly harder to make money. The bank is then forced to sell some of its loans to reduce its ratio...at cheap prices. And this makes the vicious cycle continue.
And a quick look at the holdings of these loans show that 95% are problem free. Additionally, the Credit Default Swaps (CDS) that are used with the pools of mortgages, are relatively safe. But this requires a bit of understanding. You see, when a pool of mortgage loans is put together it isn't just A paper or B paper etc. it's everything. Its got some A paper, B paper, C paper, and even what looks like toilet paper. An "A" investor buys the whole pool but because they are an "A" investor their safety is greater because they can avoid the first 20% (an example) of defaults. So they own the whole pool but are sheltered from the first batch of defaults, and for this they get the lowest rate of return. As you can figure from here the more risk investors want to take, the higher the return. So the investments are relatively safe, but the accounting rules currently place undue pressure on the banking institutions.
Now add to all this the opportunistic shorting done on the financial stocks, much of it illegal because those shorts did not legitimately borrow shares (called naked shorting), and you exacerbate this whole problem. Thank goodness for the recent temporary ban on shorting in the financial sector. As for the plan the government is the only one who can step in to do this. And they have to do this. And they will do this. The nauseating political posture from both sides is just part of the process.
This is not easy to understand for the general public. In fact most politicians don't get this either. That's why it is a difficult yet critical bill for them to vote on".
Here are his comments: "Hi everyone. Crazy times. Whatever the political posturing, a plan needs to be passed. Credit markets are frozen and banks are going bust every day. This is not totally because of "toxic" mortgages. This has a lot to do with FASB 157, also known as "mark to market". Each day lenders must mark their assets to the marketplace. It's like you having to appraise your home everyday and if your neighbor was under duress because they got very ill, divorced, lost their job and was forced to sell their home quickly they may have sold it super cheap. Now, does that mean your house is worth that super cheap price? Clearly not. Why? Because you are not under duress. You have the time to sell your home and get a more normal price, which more accurately reflects true market conditions. But "mark to market" does not allow for this, which creates a vicious cycle. Why is this so bad? Because as lenders mark down their assets the amount that they have loaned previously becomes much riskier in relation to their assets. For example, say a bank has $1 million in assets and say they have $15 million in loans outstanding. Their ratio is an acceptable 15 to 1. But should they take a paper write down of $500 thousand due to "mark to market" requirements, their ratio suddenly changes to 30 to 1. This is because their assets are now only $500 thousand after taking the paper loss, while their loans outstanding are $15 million. And at 30 to 1 this bank is viewed as a risky investment. So the stock price starts to get hit, it becomes harder to borrow, and most importantly harder to make money. The bank is then forced to sell some of its loans to reduce its ratio...at cheap prices. And this makes the vicious cycle continue.
And a quick look at the holdings of these loans show that 95% are problem free. Additionally, the Credit Default Swaps (CDS) that are used with the pools of mortgages, are relatively safe. But this requires a bit of understanding. You see, when a pool of mortgage loans is put together it isn't just A paper or B paper etc. it's everything. Its got some A paper, B paper, C paper, and even what looks like toilet paper. An "A" investor buys the whole pool but because they are an "A" investor their safety is greater because they can avoid the first 20% (an example) of defaults. So they own the whole pool but are sheltered from the first batch of defaults, and for this they get the lowest rate of return. As you can figure from here the more risk investors want to take, the higher the return. So the investments are relatively safe, but the accounting rules currently place undue pressure on the banking institutions.
Now add to all this the opportunistic shorting done on the financial stocks, much of it illegal because those shorts did not legitimately borrow shares (called naked shorting), and you exacerbate this whole problem. Thank goodness for the recent temporary ban on shorting in the financial sector. As for the plan the government is the only one who can step in to do this. And they have to do this. And they will do this. The nauseating political posture from both sides is just part of the process.
This is not easy to understand for the general public. In fact most politicians don't get this either. That's why it is a difficult yet critical bill for them to vote on".
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