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Feb 6, 2012
WASHINGTON ? Feb. 6, 2012 ? The list of housing markets showing measurable improvement expanded by 29 metros in February for a total of 98 entries on the National Association of Home Builders/First American Improving Markets Index (IMI).
With the latest addition of Miami, the list now includes seven Florida cities: Cape Coral, Deltona, Jacksonville, Miami, North Port, Punta Gorda and Tampa. Thirty-six states have at least one metro area that?s improving.
The index lists metropolitan areas that have shown improvement in housing permits, employment and house prices for at least six consecutive months. The February index adds some metropolitan areas that have been particularly weak. The IMI measures improvement from an economic trough, and NAHB says new notable entrants with six months of an upswing include Miami along with Boston; Detroit; Kansas City, Mo.; Portland, Ore.; Memphis, Tenn.; and Salt Lake City.
?The number of improving housing markets has risen for six consecutive months,? says NAHB Chairman Bob Nielsen. ?Despite the many challenges that continue to drag on a housing recovery ? including the tight lending environment for builders and buyers ? improving conditions are slowly but surely spreading from one housing market to the next.?
?While many of the markets on the February IMI are far from fully recovered, the index points out where employment, home prices and housing production are no longer retreating and have held above their lowest recession troughs for six months or more,? said NAHB Chief Economist David Crowe. ?This is a sign that a large cross section of the country is starting to turn the corner as local economic conditions stabilize.?
The IMI measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas (MSA). The three indicators are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. An MSA must have improvement in all three areas for at least six months following their respective troughs to be included on the improving markets list.
Seven markets dropped from the NAHB/First American Improving Markets Index in February as they experienced softening house prices: San Jose, Calif.; Washington, D.C.; Kankakee, Ill.; New Orleans; Worcester, Mass.; Jackson, Miss.; and Sherman, Tex.
A complete list of all 98 metropolitan areas currently on the IMI, and a separate breakout of metros newly added to the list in February, is available at: www.nahb.org/imi.
? 2012 Florida Realtors?
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With the latest addition of Miami, the list now includes seven Florida cities: Cape Coral, Deltona, Jacksonville, Miami, North Port, Punta Gorda and Tampa. Thirty-six states have at least one metro area that?s improving.
The index lists metropolitan areas that have shown improvement in housing permits, employment and house prices for at least six consecutive months. The February index adds some metropolitan areas that have been particularly weak. The IMI measures improvement from an economic trough, and NAHB says new notable entrants with six months of an upswing include Miami along with Boston; Detroit; Kansas City, Mo.; Portland, Ore.; Memphis, Tenn.; and Salt Lake City.
?The number of improving housing markets has risen for six consecutive months,? says NAHB Chairman Bob Nielsen. ?Despite the many challenges that continue to drag on a housing recovery ? including the tight lending environment for builders and buyers ? improving conditions are slowly but surely spreading from one housing market to the next.?
?While many of the markets on the February IMI are far from fully recovered, the index points out where employment, home prices and housing production are no longer retreating and have held above their lowest recession troughs for six months or more,? said NAHB Chief Economist David Crowe. ?This is a sign that a large cross section of the country is starting to turn the corner as local economic conditions stabilize.?
The IMI measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas (MSA). The three indicators are employment growth from the Bureau of Labor Statistics, house price appreciation from Freddie Mac, and single-family housing permit growth from the U.S. Census Bureau. An MSA must have improvement in all three areas for at least six months following their respective troughs to be included on the improving markets list.
Seven markets dropped from the NAHB/First American Improving Markets Index in February as they experienced softening house prices: San Jose, Calif.; Washington, D.C.; Kankakee, Ill.; New Orleans; Worcester, Mass.; Jackson, Miss.; and Sherman, Tex.
A complete list of all 98 metropolitan areas currently on the IMI, and a separate breakout of metros newly added to the list in February, is available at: www.nahb.org/imi.
? 2012 Florida Realtors?
Jan 17, 2012
MIAMI ? Jan. 16, 2012 ? Condo Vultures founder Peter Zalewski sees more confidence in the real estate market this year, as high-rise towers return and prices for luxury real estate inch off a bottom. That could be a problem.
?My biggest concern for 2012 is bravado,? he told an audience during a Friday morning panel discussion on the development industry. ?You are starting to see some egos return. You?re starting to see some optimism in pricing.?
Optimism ? or what passes for optimism in the post-bust South Florida ? set the tone for the Greater Miami Chamber of Commerce?s second annual economic forum.
Bankers said they had money to lend, but few businesses profitable enough for safe loans. Builders said they were almost certain housing prices have finally hit a bottom.
Trade and tourism watchers said foreign buying power continues to shield South Florida from the full impact of domestic economic woes.
Zalewski, who started his Vultures brokerage six years ago in anticipation of a historic real estate bust, specializes in distressed real estate. With condo towers in pre-sales once again and some going vertical, he warned that developers may once again be over-estimating demand for pricey apartments.
?There?s been a lot of hoopla. If these things stall in their tracks, it could create some bad buzz that I think would take us a long time to recover from,? said Zalewski, who also writes a monthly column for The Miami Herald?s Business Monday magazine.
Several speakers at the daylong event at Jungle Island shared an outlook that conditions have improved enough to make 2012 a turning point, with growth slowly gaining steam toward normalcy. But memories of past optimism tempered some of the rosy comments.
Ramiro Ortiz, a Miami banker turned consultant, opened a finance and retail discussion by reminding the audience that, in the same room last year, speakers were bidding good riddance to 2010 and expecting a strong 2011.
?Here we are a year later,? he said. ?I would say good riddance to 2011.?
Among the highlights from Friday?s forum:
? Miami-Dade?s retail industry is performing well. Allen Morris, CEO of the Allen Morris Co. commercial brokerage, said retail vacancies were a fraction of the office sector. Only about 4 percent of Miami-Dade?s retail space is available, compared to about 14 percent for office. Industrial space falls roughly in the middle at 8 percent vacant.
? Bank executives insisted they want to lend money, but that demand from small businesses is too low.
?Whoever wants it, come and get it,? said Adolfo Henriques, president of Gibraltar Private Bank in Miami. ?We are flush with cash.?
He said his staff rarely hears from stable businesses looking for a loan to fund growth. Instead, most loan requests come from marginal companies needing cash to survive.
? Don?t expect a housing rebound to spark a big return to hiring in the building industry. Carlos Gonzalez, head of the Southeast Florida division for Lennar, said the national homebuilder expects to expand in 2012. But its payrolls won?t, at least not locally.
?I don?t see any hiring this year,? he said. ?I am growing my business.?
? The construction industry shakeout continues. Ed McNeil, head of Florida operations for Turner Construction, said the widespread failures of contractors in commercial building did not materialize in 2009 and 2010, despite a nearly idle industry. But in 2011, firms began to go bankrupt and he expects more in 2012. ?How long can you hold your breath in this distressed market??
? Presidential politics looms large in predicting the future of finance. Ken Thomas, a local banking consultant, said he expects the Federal Reserve to continue pumping cash into the financial system by launching a third effort called ?quantitative easing? or ?QE3.?
Thomas said the influx of cash should help the economy in the short term, boosting President Barack Obama?s reelection chances. The president appoints the Fed chairman, currently Ben Bernanke.
?Ben Bernanke wants to keep his job,? Thomas said. ?No Republican will keep him. The only one who will is Obama.?
? Corporate America seems extremely poised for major hiring and spending.
James Glassman, an economist with JPMorgan, presented data showing national business profits were up at levels far above past recoveries. He expected that to spark more hiring, particularly among younger workers, who have been hit hardest by the unemployment crisis. As younger workers feel secure in their careers, first-time homebuyers should surge after years of delayed purchases.
He compared the current dynamics to the 1950s, when homebuying soared as an entire generation of young people made up for lost time.
?The recession is doing to our young people what the war did to the baby boomers,? he said, referring to the generation born after World War II as the country returned to normalcy. ?Young people are seeing their situations improve the most.?
Copyright ? 2012 The Miami Herald, Douglas Hanks. Distributed by MCT Information Services.
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?My biggest concern for 2012 is bravado,? he told an audience during a Friday morning panel discussion on the development industry. ?You are starting to see some egos return. You?re starting to see some optimism in pricing.?
Optimism ? or what passes for optimism in the post-bust South Florida ? set the tone for the Greater Miami Chamber of Commerce?s second annual economic forum.
Bankers said they had money to lend, but few businesses profitable enough for safe loans. Builders said they were almost certain housing prices have finally hit a bottom.
Trade and tourism watchers said foreign buying power continues to shield South Florida from the full impact of domestic economic woes.
Zalewski, who started his Vultures brokerage six years ago in anticipation of a historic real estate bust, specializes in distressed real estate. With condo towers in pre-sales once again and some going vertical, he warned that developers may once again be over-estimating demand for pricey apartments.
?There?s been a lot of hoopla. If these things stall in their tracks, it could create some bad buzz that I think would take us a long time to recover from,? said Zalewski, who also writes a monthly column for The Miami Herald?s Business Monday magazine.
Several speakers at the daylong event at Jungle Island shared an outlook that conditions have improved enough to make 2012 a turning point, with growth slowly gaining steam toward normalcy. But memories of past optimism tempered some of the rosy comments.
Ramiro Ortiz, a Miami banker turned consultant, opened a finance and retail discussion by reminding the audience that, in the same room last year, speakers were bidding good riddance to 2010 and expecting a strong 2011.
?Here we are a year later,? he said. ?I would say good riddance to 2011.?
Among the highlights from Friday?s forum:
? Miami-Dade?s retail industry is performing well. Allen Morris, CEO of the Allen Morris Co. commercial brokerage, said retail vacancies were a fraction of the office sector. Only about 4 percent of Miami-Dade?s retail space is available, compared to about 14 percent for office. Industrial space falls roughly in the middle at 8 percent vacant.
? Bank executives insisted they want to lend money, but that demand from small businesses is too low.
?Whoever wants it, come and get it,? said Adolfo Henriques, president of Gibraltar Private Bank in Miami. ?We are flush with cash.?
He said his staff rarely hears from stable businesses looking for a loan to fund growth. Instead, most loan requests come from marginal companies needing cash to survive.
? Don?t expect a housing rebound to spark a big return to hiring in the building industry. Carlos Gonzalez, head of the Southeast Florida division for Lennar, said the national homebuilder expects to expand in 2012. But its payrolls won?t, at least not locally.
?I don?t see any hiring this year,? he said. ?I am growing my business.?
? The construction industry shakeout continues. Ed McNeil, head of Florida operations for Turner Construction, said the widespread failures of contractors in commercial building did not materialize in 2009 and 2010, despite a nearly idle industry. But in 2011, firms began to go bankrupt and he expects more in 2012. ?How long can you hold your breath in this distressed market??
? Presidential politics looms large in predicting the future of finance. Ken Thomas, a local banking consultant, said he expects the Federal Reserve to continue pumping cash into the financial system by launching a third effort called ?quantitative easing? or ?QE3.?
Thomas said the influx of cash should help the economy in the short term, boosting President Barack Obama?s reelection chances. The president appoints the Fed chairman, currently Ben Bernanke.
?Ben Bernanke wants to keep his job,? Thomas said. ?No Republican will keep him. The only one who will is Obama.?
? Corporate America seems extremely poised for major hiring and spending.
James Glassman, an economist with JPMorgan, presented data showing national business profits were up at levels far above past recoveries. He expected that to spark more hiring, particularly among younger workers, who have been hit hardest by the unemployment crisis. As younger workers feel secure in their careers, first-time homebuyers should surge after years of delayed purchases.
He compared the current dynamics to the 1950s, when homebuying soared as an entire generation of young people made up for lost time.
?The recession is doing to our young people what the war did to the baby boomers,? he said, referring to the generation born after World War II as the country returned to normalcy. ?Young people are seeing their situations improve the most.?
Copyright ? 2012 The Miami Herald, Douglas Hanks. Distributed by MCT Information Services.
NEW YORK -- Inman News readers have picked Re/Max founder Dave Liniger as the People's Choice Most Influential Real Estate Leader in 2011.
Liniger's selection, based on a popular vote by readers, was announced today during the Inman News Real Estate Connect conference in New York City, which runs through Jan. 13 at the Marriott Marquis hotel in Times Square.
Last year's winner was tech blogger Chris Smith, who now serves as Inman News chief evangelist and is a major contributor the InmanNext agent advice and information website.
Liniger, 66, who co-founded Re/Max with wife Gail in 1973, serves as chairman of the board for the global franchisor and remains involved with company decisions. He often travels abroad to meet with new regional Re/Max owners, in places ranging from India to Argentina to Brazil.
Liniger oversaw the expansion of Re/Max global franchise operations to eight additional countries in 2011 -- there is now a brand presence in every country in Central America and South America, and the franchisor has more than 90,000 affiliated real estate sales professionals in about 80 countries.
A resident of Castle Rock, Colo., Liniger consulted with lenders in 2011 about the need to improve the short-sale process, and he also advocated for higher conforming loan limits, less restrictive lending standards, and the availability of refinancing for underwater homeowners.
Liniger's top 10 real estate predictions for 2012:
1. Continued low interest rates.
2. Home prices stabilizing and starting to rise.
3. Increasing numbers of home sales.
4. Rising inventories, mostly due to increased foreclosures.
5. Distressed properties will make up about half of all sales.
6. An improved short-sale process to help avoid foreclosure.
7. Homeownership rates continue to fall.
8. Foreign and domestic investors will buy 25 percent of homes.
9. Increasing reliance on real estate agents.
10. Increased use of mobile and social technologies.
2. Home prices stabilizing and starting to rise.
3. Increasing numbers of home sales.
4. Rising inventories, mostly due to increased foreclosures.
5. Distressed properties will make up about half of all sales.
6. An improved short-sale process to help avoid foreclosure.
7. Homeownership rates continue to fall.
8. Foreign and domestic investors will buy 25 percent of homes.
9. Increasing reliance on real estate agents.
10. Increased use of mobile and social technologies.
Colleagues report that Liniger "starts his day early, and, most days, is the very first person to arrive at the office." The company has shared some of its success with charities such as the Children's Miracle Network Hospitals and Susan G. Komen for the Cure. Liniger's hobbies include golf, boating, ballooning and car collecting -- he was a part of a crew that sought to circle the globe in a high-flying balloon in 1999, and he has previously been a race-car driver and team owner.
Liniger also selected to the annual Inman 100 list of Most Influential Real Estate Leaders for 2011 -- tht list is separate and distinct from the individual People's Choice recognition, and is based on a reader nomination process and an in-house review and selection process by Inman News.
WASHINGTON ? Jan. 11, 2012 ? After nearly three years of unemployment, David Mote will be back at work next week, overseeing construction of a medical school building in Dothan, Ala.
Mote, whose $2,000 weekly salary was cut to $360 in unemployment benefits before he lost even that 10 months ago, can again contemplate going out for dinner and taking in a weekend football game. ?It feels great,? says Mote, 52. ?I?ve got a job. I got my (health) insurance back.?
His employer, Batson-Cook of Atlanta, called Mote back to work amid a surge in health care and apartment construction as young adults who had doubled up with relatives find jobs and move into their own homes.
After losing 2.2 million jobs in the economic downturn, the construction industry is projected to add 113,000 this year, more than doubling last year?s pace and placing it among the fastest-growing sectors, according to a 2012 job market forecast by Moody?s Analytics. Even a moderate rejuvenation of the troubled sector ? thanks largely to a multifamily building boom ? helps the economy because of its ripple effects across industries such as furniture, steel and concrete.
The job outlook has brightened the past two months as higher consumer spending, improved business confidence and a stock market rally have somewhat eased concerns about further shocks from Europe?s financial turmoil.
Economists recently surveyed by the Associated Press expect employers to add 2.1 million jobs in 2012, an average of 175,000 a month. That would top the monthly pace of 136,000 last year and 78,000 in 2010, though still fall short of the 250,000 to 300,000 needed to cut unemployment quickly.
The USA has recovered just 2.6 million of the 8.8 million jobs lost in the recession.
?It?s not going to be a breakout year,? says Mark Zandi, chief economist of Moody?s Analytics. Moody?s projects job gains of about 130,000 a month ? about 1.6 million for the year ? in line with 2011.
Moody?s also predicts:
Three categories ? professional and business services, education and health care, and leisure and hospitality ? will lead job gains, collectively producing more than 1 million. The booming energy sector will also continue to hire.
Sun Belt states hammered by the recession ? Florida, Arizona, Georgia and Nevada ? will rebound some as an easing of the foreclosure crisis lets homeowners move more easily. All four are projected to be among the 10 fastest-growing job markets.
Rust Belt manufacturing bastions such as Illinois, Ohio and Indiana will generate jobs more slowly as the European financial crisis hampers exports.
Driving the improvement in overall job growth is a pickup in hiring and confidence among small businesses as banks modestly ease credit standards. Small firms, particularly start-ups, typically account for two-thirds of the new jobs created in a recovery. Also, productivity gains that have allowed companies to do more with fewer workers are slowing, government reports show.
?Small businesses are being more aggressive? than large ones, says consultant Harry Griendling of DoubleStar.
A wild card: The retirement of Baby Boomers could help trim the jobless rate even without blockbuster job growth, says Dean Maki, chief U.S. economist for Barclays Capital.
The optimism is heavily tinged by caution. Many experts expect payroll growth to slow the first half of the year amid an expected drop in exports and a pullback in consumer spending. With real income growth running at a tepid 1 percent annual rate, Americans had to dip into savings to fuel their holiday buying binge ? a trend that many analysts say can?t be sustained.
And many businesses are hesitant to ramp up hiring significantly amid lingering concerns about Europe?s debt crisis and a presidential election year that will leave battles over taxes and regulation unresolved.
A survey of 18,000 employers released last month by staffing giant Manpower underscores both buoyancy and prudence. Employers? hiring outlook for the first quarter was at its highest since 2008. At the same time, the level of employers unsure of their hiring plans was the most since 2005.
Big companies cautious
Many large companies, in turn, are holding off on permanent hiring and relying heavily on contractors and temporary workers to complete projects, says Janette Marx, senior vice president of staffing company Adecco. The good news: That?s fattening payrolls for third-party providers, such as engineering and accounting firms.
While big corporations are hiring cautiously, they?re sitting on record cash reserves and driving job growth more than consumers, who make up 70 percent of the economy but remain burdened by debt. Companies, for instance, are boosting travel budgets and shifting their computer software systems to remote, cloud-based networks.
The expenditures are forcing professional and business services to beef up staffing. Cleveland-based accounting firm Cohen & Co. is enlarging its 250-employee staff by about 10 percent this year as highly profitable corporations seek to reduce taxes, weigh mergers and navigate increasingly complex banking rules stemming from financial reform, says CEO Randall Myeroff.
Engineering firm Black & Veatch, of Kansas City, with about 6,000 U.S. employees, plans to add several hundred this year as utilities retrofit power plants to meet stricter pollution limits and smartphone carriers expand networks, says CEO Len Rodman. Yet that?s far less than the 1,000 U.S. employees the firm added last year. Rodman worries that electricity providers could rein in spending if the European crisis hurts their customers? exports. ?We have taken a conservative approach,? he says.
Health care providers are scrambling to meet the needs of an aging population. Philadelphia-based Genesis HealthCare, whose 40,000 employees provide rehab services in nursing homes in the Eastern U.S., is expanding to Arizona, New Mexico and Oklahoma, hiring 10,000 workers. ?The Baby Boomers are getting older,? says Vice President Mike Guglielmo.
Hotels, meanwhile, are looking for bellhops, front desk clerks and maids as companies replenish travel budgets slashed in the recession and tourism picks up moderately. That?s a boon for Texas, where a population boom and business growth feed off each other. Joseph DePalma, president of DePalma Hotel, says occupancy at his eight franchise hotels in Texas has risen to about 65 percent from 55 percent the past year. ?Companies are back to traveling again,? he says. DePalma plans to increase his Texas staff of 1,200 by more than 100 this year.
Texas is again projected to top the nation in total job gains, with more than 200,000.
Meanwhile, North Dakota, home to one of the nation?s biggest untapped oil reserves, is expected to lead in the pace of job growth, at 2.8 percent. Continental Resources is adding 50 to 75 workers to its existing base of about 160 in the Bakken oil field as it drills about 240 new wells, says Chief Financial Officer John Hart. Much of the activity has been fueled by benchmark crude oil prices that have hovered around $100 a barrel. ?I have a better return that enables me to take a risk,? Hart says.
The frenzy has turned North Dakota, with a population of 684,000, into a job hunter?s magnet that added 17,000 workers last year, a 4.5 percent gain. Continental?s recent advertisement for a computer specialist drew 518 applicants from as far away as South Africa.
Uneven job growth
Not every sector is expected to grow robustly. Retailers likely will pull back hiring as consumer spending moderates, according to the Moody?s study. State and local governments will continue to shed jobs amid budget constraints, though likely at a slower pace than last year. And factory payrolls could flatten or even contract slightly amid a slowdown in exports.
Some manufacturers plan to add workers because they can?t wring more output from existing ones. Paulson Manufacturing in Temecula, Calif., laid off more than half its 220 employees in the recession, though revenue fell just 25 percent. The company, which makes face shields for industrial and public safety use, installed automated technology to boost efficiency and got more out of each worker, helping it increase profits, says CEO Roy Paulson.
But with sales expected to rise about 15 percent this year, Paulson plans to hire 12 to 15 employees.
?We might have worn out some of these people a little bit,? he says. If he forced his workers to shoulder a still bigger burden, ?Worker compensation costs go up and your sick rate goes up.?
Even more encouraging: Small businesses ? which create an outsize share of jobs ? appear to be launching and expanding again. The number of establishments opening hit a record low of 1.1 million in 2011?s first quarter, the most recent data available, according to the Labor Department. But anecdotal evidence suggests the pace of business start-ups has increased lately, says Dane Stangler, research director for the Kauffman Foundation, which studies entrepreneurship. The International Franchise Association expects the number of U.S. franchise locations to rise 2 percent this year after dipping three years in a row.
Franchise company Driven Brands, which owns Meineke and Maaco, sold more franchise licenses in November than in the past five years combined, says CEO Ken Walker. ?We are beginning to get businesses financed,? he says.
Franchisee Stephen Keel, who owns a Maaco auto body outlet in Catonsville, Md., sought for a year to move it to nearby Randallstown and add a Meineke auto repair shop at the new site. But he couldn?t get a $1.7 million loan from seven banks despite a $2.2 million appraisal of his planned new land and building.
Recently, he snared a loan from Susquehanna Bank and plans to add four to seven workers to his 12-employee staff after he opens the new location in April.
?I was tickled to death,? Keel says. ?It was a very long, dreadful, painful process.?
Copyright ? 2012 USA TODAY, a division of Gannett Co. Inc., Paul Davidson and Barbara Hansen.
Mote, whose $2,000 weekly salary was cut to $360 in unemployment benefits before he lost even that 10 months ago, can again contemplate going out for dinner and taking in a weekend football game. ?It feels great,? says Mote, 52. ?I?ve got a job. I got my (health) insurance back.?
His employer, Batson-Cook of Atlanta, called Mote back to work amid a surge in health care and apartment construction as young adults who had doubled up with relatives find jobs and move into their own homes.
After losing 2.2 million jobs in the economic downturn, the construction industry is projected to add 113,000 this year, more than doubling last year?s pace and placing it among the fastest-growing sectors, according to a 2012 job market forecast by Moody?s Analytics. Even a moderate rejuvenation of the troubled sector ? thanks largely to a multifamily building boom ? helps the economy because of its ripple effects across industries such as furniture, steel and concrete.
The job outlook has brightened the past two months as higher consumer spending, improved business confidence and a stock market rally have somewhat eased concerns about further shocks from Europe?s financial turmoil.
Economists recently surveyed by the Associated Press expect employers to add 2.1 million jobs in 2012, an average of 175,000 a month. That would top the monthly pace of 136,000 last year and 78,000 in 2010, though still fall short of the 250,000 to 300,000 needed to cut unemployment quickly.
The USA has recovered just 2.6 million of the 8.8 million jobs lost in the recession.
?It?s not going to be a breakout year,? says Mark Zandi, chief economist of Moody?s Analytics. Moody?s projects job gains of about 130,000 a month ? about 1.6 million for the year ? in line with 2011.
Moody?s also predicts:
Three categories ? professional and business services, education and health care, and leisure and hospitality ? will lead job gains, collectively producing more than 1 million. The booming energy sector will also continue to hire.
Sun Belt states hammered by the recession ? Florida, Arizona, Georgia and Nevada ? will rebound some as an easing of the foreclosure crisis lets homeowners move more easily. All four are projected to be among the 10 fastest-growing job markets.
Rust Belt manufacturing bastions such as Illinois, Ohio and Indiana will generate jobs more slowly as the European financial crisis hampers exports.
Driving the improvement in overall job growth is a pickup in hiring and confidence among small businesses as banks modestly ease credit standards. Small firms, particularly start-ups, typically account for two-thirds of the new jobs created in a recovery. Also, productivity gains that have allowed companies to do more with fewer workers are slowing, government reports show.
?Small businesses are being more aggressive? than large ones, says consultant Harry Griendling of DoubleStar.
A wild card: The retirement of Baby Boomers could help trim the jobless rate even without blockbuster job growth, says Dean Maki, chief U.S. economist for Barclays Capital.
The optimism is heavily tinged by caution. Many experts expect payroll growth to slow the first half of the year amid an expected drop in exports and a pullback in consumer spending. With real income growth running at a tepid 1 percent annual rate, Americans had to dip into savings to fuel their holiday buying binge ? a trend that many analysts say can?t be sustained.
And many businesses are hesitant to ramp up hiring significantly amid lingering concerns about Europe?s debt crisis and a presidential election year that will leave battles over taxes and regulation unresolved.
A survey of 18,000 employers released last month by staffing giant Manpower underscores both buoyancy and prudence. Employers? hiring outlook for the first quarter was at its highest since 2008. At the same time, the level of employers unsure of their hiring plans was the most since 2005.
Big companies cautious
Many large companies, in turn, are holding off on permanent hiring and relying heavily on contractors and temporary workers to complete projects, says Janette Marx, senior vice president of staffing company Adecco. The good news: That?s fattening payrolls for third-party providers, such as engineering and accounting firms.
While big corporations are hiring cautiously, they?re sitting on record cash reserves and driving job growth more than consumers, who make up 70 percent of the economy but remain burdened by debt. Companies, for instance, are boosting travel budgets and shifting their computer software systems to remote, cloud-based networks.
The expenditures are forcing professional and business services to beef up staffing. Cleveland-based accounting firm Cohen & Co. is enlarging its 250-employee staff by about 10 percent this year as highly profitable corporations seek to reduce taxes, weigh mergers and navigate increasingly complex banking rules stemming from financial reform, says CEO Randall Myeroff.
Engineering firm Black & Veatch, of Kansas City, with about 6,000 U.S. employees, plans to add several hundred this year as utilities retrofit power plants to meet stricter pollution limits and smartphone carriers expand networks, says CEO Len Rodman. Yet that?s far less than the 1,000 U.S. employees the firm added last year. Rodman worries that electricity providers could rein in spending if the European crisis hurts their customers? exports. ?We have taken a conservative approach,? he says.
Health care providers are scrambling to meet the needs of an aging population. Philadelphia-based Genesis HealthCare, whose 40,000 employees provide rehab services in nursing homes in the Eastern U.S., is expanding to Arizona, New Mexico and Oklahoma, hiring 10,000 workers. ?The Baby Boomers are getting older,? says Vice President Mike Guglielmo.
Hotels, meanwhile, are looking for bellhops, front desk clerks and maids as companies replenish travel budgets slashed in the recession and tourism picks up moderately. That?s a boon for Texas, where a population boom and business growth feed off each other. Joseph DePalma, president of DePalma Hotel, says occupancy at his eight franchise hotels in Texas has risen to about 65 percent from 55 percent the past year. ?Companies are back to traveling again,? he says. DePalma plans to increase his Texas staff of 1,200 by more than 100 this year.
Texas is again projected to top the nation in total job gains, with more than 200,000.
Meanwhile, North Dakota, home to one of the nation?s biggest untapped oil reserves, is expected to lead in the pace of job growth, at 2.8 percent. Continental Resources is adding 50 to 75 workers to its existing base of about 160 in the Bakken oil field as it drills about 240 new wells, says Chief Financial Officer John Hart. Much of the activity has been fueled by benchmark crude oil prices that have hovered around $100 a barrel. ?I have a better return that enables me to take a risk,? Hart says.
The frenzy has turned North Dakota, with a population of 684,000, into a job hunter?s magnet that added 17,000 workers last year, a 4.5 percent gain. Continental?s recent advertisement for a computer specialist drew 518 applicants from as far away as South Africa.
Uneven job growth
Not every sector is expected to grow robustly. Retailers likely will pull back hiring as consumer spending moderates, according to the Moody?s study. State and local governments will continue to shed jobs amid budget constraints, though likely at a slower pace than last year. And factory payrolls could flatten or even contract slightly amid a slowdown in exports.
Some manufacturers plan to add workers because they can?t wring more output from existing ones. Paulson Manufacturing in Temecula, Calif., laid off more than half its 220 employees in the recession, though revenue fell just 25 percent. The company, which makes face shields for industrial and public safety use, installed automated technology to boost efficiency and got more out of each worker, helping it increase profits, says CEO Roy Paulson.
But with sales expected to rise about 15 percent this year, Paulson plans to hire 12 to 15 employees.
?We might have worn out some of these people a little bit,? he says. If he forced his workers to shoulder a still bigger burden, ?Worker compensation costs go up and your sick rate goes up.?
Even more encouraging: Small businesses ? which create an outsize share of jobs ? appear to be launching and expanding again. The number of establishments opening hit a record low of 1.1 million in 2011?s first quarter, the most recent data available, according to the Labor Department. But anecdotal evidence suggests the pace of business start-ups has increased lately, says Dane Stangler, research director for the Kauffman Foundation, which studies entrepreneurship. The International Franchise Association expects the number of U.S. franchise locations to rise 2 percent this year after dipping three years in a row.
Franchise company Driven Brands, which owns Meineke and Maaco, sold more franchise licenses in November than in the past five years combined, says CEO Ken Walker. ?We are beginning to get businesses financed,? he says.
Franchisee Stephen Keel, who owns a Maaco auto body outlet in Catonsville, Md., sought for a year to move it to nearby Randallstown and add a Meineke auto repair shop at the new site. But he couldn?t get a $1.7 million loan from seven banks despite a $2.2 million appraisal of his planned new land and building.
Recently, he snared a loan from Susquehanna Bank and plans to add four to seven workers to his 12-employee staff after he opens the new location in April.
?I was tickled to death,? Keel says. ?It was a very long, dreadful, painful process.?
Copyright ? 2012 USA TODAY, a division of Gannett Co. Inc., Paul Davidson and Barbara Hansen.
Dec 27, 2011
1. Once-in-a-generation time to buy. Who?s in?
Most renters want to buy a home: 72 percent consider homeownership a good financial decision, and 64 percent believe the time is right, according to the National Association of Realtors? 2011 Housing Pulse survey. Mortgage rates hit a record low of 3.94 percent this year, homes sold for a fraction of their value five years ago, and excess inventory provided every buyer with a range of options. In some cities, homeownership became cheaper than renting. But job insecurities made buyers nervous to commit. Those who did found it difficult to get financing despite stellar credit scores. As a result, 2011 saw a real estate market with great deals, yet fewer buyers than needed. In 10 years, however, many Americans may look back on 2011 as the best time in a generation to invest in real estate.
2. The economy rebounded, sorta, kinda, a little
The Florida economy remained sluggish as unemployment rates stayed uncomfortably high and home sales stayed uncomfortably low; but, across the board, the state showed signs of recovery, with almost every economic indicator suggesting brighter days ahead. Home sales edged higher most months; selling prices held their own and, in a few cases, median selling prices rose. Floridians? consumer confidence also rose toward the end of the year after bobbing around for most of the summer. Employment followed, and while the state has a long way to go to hit ?normal,? it reached a 2011 level of ?better than last year.?
3. Commercial market leaves ?dire? for ?not as bad?
Florida investors increasingly want to buy office, retail and industrial properties, says Cynthia Shelton, Florida Realtors? 2009 president and a director at Colliers International in Orlando. Vacancy rates, while high, have stabilized, along with rental rates. Core assets (essential to businesses) are selling and lenders ? including the life insurance companies ? are lending again. Banks are more realistic about prices for distressed properties, and 2012 should see the entry of more commercial tenants. ?With modest economic growth and job creation, the fundamentals for commercial real estate should gradually improve in the coming year,? adds Lawrence Yun, NAR chief economist.
4. Florida Legislature: We got Amendment 4 and scrapped the cap
Florida Realtors had a number of victories in the 2011 Florida Legislature, but none as important as a constitutional amendment voters will consider in November 2012, and none so hard-fought as a law to ?scrap the cap? on Florida?s affordable housing trust funds. Amendment 4, if approved by Florida voters, will create a property tax increase cap of 5 percent each year on non-homestead real estate, down from the current 10 percent cap. It will also give some first-time homebuyers a property tax break that decreases over time. In 2012, Florida Realtors will roll out its ?Yes on 4? campaign. In the ?scrap the cap? victory, the Florida Legislature agreed to allow all doc stamps earmarked for the affordable housing Sadowski Trust Fund to actually go into the fund.
5. Fasten your seatbelts. Property insurance is a bumpy ride.
Lawmakers wrestled with a question that has been around for years: Should property insurance be affordable or available? If affordable, a major storm could bankrupt the state. If widely available, the cost could drive buyers away and hurt current homeowners. Citizens Property Insurance, the state-owned insurer, sits squarely in the middle of the debate since it covers most of the high-risk properties and, should a major storm hit, would force all Floridians to help pay for damages. To attract private insurers to the state and cut down on the number of owners under Citizens, Gov. Scott and lawmakers made changes. Sinkhole coverage became optional and much more expensive. Citizens dropped about 7,500 coastal homes in early December, and policy costs and rules are set to become even stricter in 2012. The uneasy balance between affordable or available insurance shifted a bit closer to the ?available? side.
6. Facts at your fingertips: Florida Realtors adds research department
Florida Realtors Industry and Data Analysis Department (IDA) opened for business in June 2011. Designed to provide practical information for association members, Chief Economist Dr. John Tuccillo says the department will help Realtors in Florida deal more effectively with increasingly educated consumers. The services provided by IDA include current analyses of Florida?s real estate market and support for Florida Realtors? public policy efforts in Tallahassee. IDA products are available to all members and can be found on the Research page of floridarealtors.org. ?Members are free to pull down and use any information provided by IDA,? says Tuccillo.
7. HAMP, HARP, TARP do little for at-risk homeowners
Falling home values and risky mortgages caused more Florida owners to face foreclosure. The government created, and modified, a number of programs slated to help owners keep their homes, but most applied only to about half of those in trouble ? owners who had mortgages held by Fannie Mae or Freddie Mac. Even then, however the carrots held out by HAMP, HARP, TARP and others didn?t entice lenders that feared principal cuts and long-term changes. The issue led to some strategic defaults ? foreclosures where investors could afford to pay but walked away as a financial decision ? court backups, and a system that allowed some non-paying owners to live in a home for over two years before authorities finally foreclosed. Analysts expect the problem to improve but continue in 2012.
8. Should we slow the recovery to avoid another crisis?
U.S. regulators have conflicting goals: Speed the recovery but, at the same time, take steps to make sure it never happens again. Unfortunately, it hasn?t figured out how to do both. While the federal government has tried to spark home sales through a number of programs (see No. 7 above), it has also created obstacles to homeownership by boosting mortgage rules, tightening appraisal standards and restricting the amount homeowners can deduct from federal taxes. A key concern of Realtors heading into 2012 is the qualified residential mortgage (QRM) rule ? a minimum standard that mortgage loans must meet before Fannie Mae or Freddie Mac will consider buying them. Some lawmakers have suggested a 20 percent downpayment, a high standard that will force many buyers to wait years before they can afford homeownership. The discussion will continue in 2012.
9. Social networking goes from ?cutting edge? to ?must do?
New technology no longer surprises Realtors, who have been inundated with ?cutting edge solutions? that now allow them to post videos, track complete transactions stored in a ?cloud,? sign contracts without actually signing anything and politely ask their phone to look up information. Social networking was once the realm of early-adopters, and Realtors sold it to clients as ?look what I can do for you.? Now, Facebook, Twitter, YouTube, Goggle+ (new in 2011) and other social networking sites are standard in the real estate business. If you?re a Realtor, you have a Facebook page ? it?s that simple.
10. 2011 Realtors are different than 2005 Realtors
The skills needed to sell a house have changed. Realtors spend a lot more time talking to banks, trying to find out what?s happening with a client?s short sale; asking what paperwork they needed to file or re-file; and understanding new laws that oversee what they can do ? and can?t do ? when working with short-sale sellers. Realtors learned to accept disappointment ? sales that fell apart at the last minute; appraisals that came in lower than hoped; and clients who wanted a bargain below any reasonable expectations.
? 2011 Florida Realtors?
View On Blog »
Most renters want to buy a home: 72 percent consider homeownership a good financial decision, and 64 percent believe the time is right, according to the National Association of Realtors? 2011 Housing Pulse survey. Mortgage rates hit a record low of 3.94 percent this year, homes sold for a fraction of their value five years ago, and excess inventory provided every buyer with a range of options. In some cities, homeownership became cheaper than renting. But job insecurities made buyers nervous to commit. Those who did found it difficult to get financing despite stellar credit scores. As a result, 2011 saw a real estate market with great deals, yet fewer buyers than needed. In 10 years, however, many Americans may look back on 2011 as the best time in a generation to invest in real estate.
2. The economy rebounded, sorta, kinda, a little
The Florida economy remained sluggish as unemployment rates stayed uncomfortably high and home sales stayed uncomfortably low; but, across the board, the state showed signs of recovery, with almost every economic indicator suggesting brighter days ahead. Home sales edged higher most months; selling prices held their own and, in a few cases, median selling prices rose. Floridians? consumer confidence also rose toward the end of the year after bobbing around for most of the summer. Employment followed, and while the state has a long way to go to hit ?normal,? it reached a 2011 level of ?better than last year.?
3. Commercial market leaves ?dire? for ?not as bad?
Florida investors increasingly want to buy office, retail and industrial properties, says Cynthia Shelton, Florida Realtors? 2009 president and a director at Colliers International in Orlando. Vacancy rates, while high, have stabilized, along with rental rates. Core assets (essential to businesses) are selling and lenders ? including the life insurance companies ? are lending again. Banks are more realistic about prices for distressed properties, and 2012 should see the entry of more commercial tenants. ?With modest economic growth and job creation, the fundamentals for commercial real estate should gradually improve in the coming year,? adds Lawrence Yun, NAR chief economist.
4. Florida Legislature: We got Amendment 4 and scrapped the cap
Florida Realtors had a number of victories in the 2011 Florida Legislature, but none as important as a constitutional amendment voters will consider in November 2012, and none so hard-fought as a law to ?scrap the cap? on Florida?s affordable housing trust funds. Amendment 4, if approved by Florida voters, will create a property tax increase cap of 5 percent each year on non-homestead real estate, down from the current 10 percent cap. It will also give some first-time homebuyers a property tax break that decreases over time. In 2012, Florida Realtors will roll out its ?Yes on 4? campaign. In the ?scrap the cap? victory, the Florida Legislature agreed to allow all doc stamps earmarked for the affordable housing Sadowski Trust Fund to actually go into the fund.
5. Fasten your seatbelts. Property insurance is a bumpy ride.
Lawmakers wrestled with a question that has been around for years: Should property insurance be affordable or available? If affordable, a major storm could bankrupt the state. If widely available, the cost could drive buyers away and hurt current homeowners. Citizens Property Insurance, the state-owned insurer, sits squarely in the middle of the debate since it covers most of the high-risk properties and, should a major storm hit, would force all Floridians to help pay for damages. To attract private insurers to the state and cut down on the number of owners under Citizens, Gov. Scott and lawmakers made changes. Sinkhole coverage became optional and much more expensive. Citizens dropped about 7,500 coastal homes in early December, and policy costs and rules are set to become even stricter in 2012. The uneasy balance between affordable or available insurance shifted a bit closer to the ?available? side.
6. Facts at your fingertips: Florida Realtors adds research department
Florida Realtors Industry and Data Analysis Department (IDA) opened for business in June 2011. Designed to provide practical information for association members, Chief Economist Dr. John Tuccillo says the department will help Realtors in Florida deal more effectively with increasingly educated consumers. The services provided by IDA include current analyses of Florida?s real estate market and support for Florida Realtors? public policy efforts in Tallahassee. IDA products are available to all members and can be found on the Research page of floridarealtors.org. ?Members are free to pull down and use any information provided by IDA,? says Tuccillo.
7. HAMP, HARP, TARP do little for at-risk homeowners
Falling home values and risky mortgages caused more Florida owners to face foreclosure. The government created, and modified, a number of programs slated to help owners keep their homes, but most applied only to about half of those in trouble ? owners who had mortgages held by Fannie Mae or Freddie Mac. Even then, however the carrots held out by HAMP, HARP, TARP and others didn?t entice lenders that feared principal cuts and long-term changes. The issue led to some strategic defaults ? foreclosures where investors could afford to pay but walked away as a financial decision ? court backups, and a system that allowed some non-paying owners to live in a home for over two years before authorities finally foreclosed. Analysts expect the problem to improve but continue in 2012.
8. Should we slow the recovery to avoid another crisis?
U.S. regulators have conflicting goals: Speed the recovery but, at the same time, take steps to make sure it never happens again. Unfortunately, it hasn?t figured out how to do both. While the federal government has tried to spark home sales through a number of programs (see No. 7 above), it has also created obstacles to homeownership by boosting mortgage rules, tightening appraisal standards and restricting the amount homeowners can deduct from federal taxes. A key concern of Realtors heading into 2012 is the qualified residential mortgage (QRM) rule ? a minimum standard that mortgage loans must meet before Fannie Mae or Freddie Mac will consider buying them. Some lawmakers have suggested a 20 percent downpayment, a high standard that will force many buyers to wait years before they can afford homeownership. The discussion will continue in 2012.
9. Social networking goes from ?cutting edge? to ?must do?
New technology no longer surprises Realtors, who have been inundated with ?cutting edge solutions? that now allow them to post videos, track complete transactions stored in a ?cloud,? sign contracts without actually signing anything and politely ask their phone to look up information. Social networking was once the realm of early-adopters, and Realtors sold it to clients as ?look what I can do for you.? Now, Facebook, Twitter, YouTube, Goggle+ (new in 2011) and other social networking sites are standard in the real estate business. If you?re a Realtor, you have a Facebook page ? it?s that simple.
10. 2011 Realtors are different than 2005 Realtors
The skills needed to sell a house have changed. Realtors spend a lot more time talking to banks, trying to find out what?s happening with a client?s short sale; asking what paperwork they needed to file or re-file; and understanding new laws that oversee what they can do ? and can?t do ? when working with short-sale sellers. Realtors learned to accept disappointment ? sales that fell apart at the last minute; appraisals that came in lower than hoped; and clients who wanted a bargain below any reasonable expectations.
? 2011 Florida Realtors?
Nov 29, 2011
Lawrence Yun, NAR chief economist, says there is little change in most of the commercial market sectors. ?Vacancy rates are flat, leasing is soft and concessions continue to make it a tenant?s market,? he says. ?However, with modest economic growth and job creation, the fundamentals for commercial real estate should gradually improve in the coming year.?
The commercial real estate market is expected to follow the general economy.
?Vacancy rates are expected to trend lower and rents should rise modestly next year,? Yun says. ?In the multifamily market, which already has the tightest vacancy rates in any commercial sector, apartment rents will be rising at faster rates in most of the country next year. If new multifamily construction doesn?t ramp up, rent growth could potentially approach 7 percent over the next two years.
Looking at commercial vacancy rates from the fourth quarter of this year to the fourth quarter of 2012, NAR forecasts vacancies to decline 0.6 percentage point in the office sector, 0.4 point in industrial real estate, 0.8 point in the retail sector and 0.7 percentage point in the multifamily rental market.
The Society of Industrial and Office Realtors, in its SIOR Commercial Real Estate Index, an attitudinal survey of 231 local market experts, shows the broad industrial and office markets were relatively flat in the third quarter, in step with macroeconomic trends. The national economy continues to affect the sectors, with 92 percent of respondents reporting the economy is having a negative impact on their local market.
Even so, the SIOR index, measuring the impact of 10 variables, rose 0.6 percentage point to 55.5 in the third quarter, following a decline of 2.6 percentage points in the second quarter. In a split from the recent past, the industrial sector advanced while the office sector declined.
The SIOR index is notably below the level of 100 that represents a balanced marketplace, but it had six consecutive quarterly improvements before the last two quarters. The last time the index reached the 100 level was in the third quarter of 2007.
Construction activity remains low, with 96 percent of respondents indicating that it is lower than normal; 88 percent said it is a buyers? market in terms of development acquisitions. Prices are below construction costs in 83 percent of markets.
NAR?s latest Commercial Real Estate Outlook offers projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS Inc., a source of commercial real estate performance information.
Office Markets
Vacancy rates in the office sector are expected to fall from 16.7 percent in the current quarter to 16.1 percent in the fourth quarter of 2012.
The markets with the lowest office vacancy rates presently are Washington, D.C., with a vacancy rate of 9.3 percent; New York City, at 10.3 percent; and New Orleans, 12.8 percent.
After rising 1.4 percent in 2011, office rents are forecast to increase another 1.7 percent next year. Net absorption of office space in the U.S., which includes the leasing of new space coming on the market as well as space in existing properties, is projected to be 20.2 million square feet this year and 31.7 million in 2012.
Industrial Markets
Industrial vacancy rates are projected to decline from 12.3 percent in the fourth quarter of this year to 11.7 percent in the fourth quarter of 2012.
The areas with the lowest industrial vacancy rates currently are Los Angeles, with a vacancy rate of 5.2 percent; Orange County, Calif., 5.7 percent; and Miami at 8.4 percent.
Annual industrial rent should decline 0.5 percent this year before rising 1.8 percent in 2012. Net absorption of industrial space nationally should be 62.0 million square feet this year and 41.2 million in 2012.
Retail Markets
Retail vacancy rates are likely to decline from 12.6 percent in the current quarter to 11.8 percent in the fourth quarter of 2012.
Presently, markets with the lowest retail vacancy rates include San Francisco, 3.7 percent; Long Island, N.Y., and Northern New Jersey, each at 5.7 percent; and San Jose, Calif., at 6.0 percent.
Average retail rent is seen to decline 0.2 percent this year, and then rise 0.7 percent in 2012. Net absorption of retail space is seen at 1.2 million square feet this year and 13.5 million in 2012.
Multifamily Markets
The apartment rental market ? multifamily housing ? is expected to see vacancy rates drop from 5.0 percent in the fourth quarter to 4.3 percent in the fourth quarter of 2012; multifamily vacancy rates below 5 percent generally are considered a landlord?s market with demand justifying higher rents.
Areas with the lowest multifamily vacancy rates currently are Minneapolis, 2.4 percent; New York City, 2.7 percent; and Portland, Ore., at 2.8 percent.
Average apartment rent is projected to rise 2.5 percent this year and another 3.5 percent in 2012. Multifamily net absorption is likely to be 238,400 units this year and 126,600 in 2012.
? 2011 Florida Realtors?
Nov 10, 2011
With the daily advances in technology to make our lives simpler, comes new and clever ways to scam the system.
Recently, several banks have introduced systems to allow you to deposit your checks using an app on your smartphone to scan the check for instant deposit to your account. How cool.... well, not if your business involves issuing checks to Customers or Clients.
Businesses BEWARE! A new issue has arisen where the payee deposits the check immediately using smartphone technology, then returns the check asking for another form of payment. This way, the 'scammer' gets paid twice.
The best way to stop this scenario from happening to you is to always keep checks securely locked away while in your place of business, and refuse to exchange them for another form of payment once the check has been issued and left the premises.
View On Blog »
Recently, several banks have introduced systems to allow you to deposit your checks using an app on your smartphone to scan the check for instant deposit to your account. How cool.... well, not if your business involves issuing checks to Customers or Clients.
Businesses BEWARE! A new issue has arisen where the payee deposits the check immediately using smartphone technology, then returns the check asking for another form of payment. This way, the 'scammer' gets paid twice.
The best way to stop this scenario from happening to you is to always keep checks securely locked away while in your place of business, and refuse to exchange them for another form of payment once the check has been issued and left the premises.
Oct 24, 2011
In a market full of distressed properties, you'd think that the general market conditions and low balling investors are keeping prices stagnant. This is somewhat true, when it comes to homes in disrepair where cash or renovation loans are the only option for buyers, but what happens when a buyer uses a mortgage to acquire a move in ready home to be their primary residence?
Let me explain the scenario. I listed a short sale, single family home in north St. Petersburg for $80,000, fair market value from what I could see from the comps for a 3/2 1500sft block home. I was wrong. The International Valuation Standards defines market value as "the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm?s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion."
So this would mean that the fair market value would be whatever a willing buyer was prepared to pay for the house.
Within the 1st week of the house being on the MLS, we had 3 offers submitted, and all were owner occupants with FHA financing. Two of the offers were in excess of the asking price, and one offer was the clear successful offer at $88,000 plus seller paid closing costs at 3%, so an actual dollar amount offer of $85,360. As the sale was a short sale, we sent the offer over to the bank for their review and approval. The lender ordered their BPO (Broker Price Opinion), collated all of the sellers hardship package, and reviewed the file. On August 2nd 2011, we received the bank approval that they would accept the offer and collect $75k to satisfy the loan, rather than the approximately $190k that was owed on the house. At this stage, everyone is happy and we move forward to a successful closing. Or so you'd think.
The buyers lender ordered the appraisal for their underwriting and as the listing agent, I was to meet her at the property to grant her access. I was about 1 minute late as I pulled into the street and received a phone call from the appraiser asking where I was, at this point I realized that she is swamped with appraisal appointments and time was of the essence. I opened up the house and stepped aside so that she could do her job. As she was leaving she remembered that she needed to review the attic. I showed her the attic hatch, and as she didn't have a ladder, she stated that she'd just take a picture of the access hatch. 'No big deal' I thought.
About a week later, I received a phone call from the buyers Realtor with the news that the appraisal came in below value. In fact it came in $12,000 below contract value at $76,000.
We were both confused as to how it came in so low. Both of us agreed that it seemed to be a very low value, but we both knew that we must play the hand we're dealt and relay the full information to our clients for their decisions. I asked the buyers agent to send me a copy of the appraisal so that I could take a look at it - wondering how I was so far off with my valuation of the property.
Upon review of the appraisal I began to notice many inconsistencies and began to dig a little deeper.
Let me prequel this next part by saying that having been in the business for nearly 10 years, I understand that challenging an appraiser is pretty much impossible. You must provide 3 comps that they missed to justify your argument, and most appraisers don't miss substantial comparable properties. Most appraisals are accurate whether you like the result or not and are based upon facts; so you certainly can't challenge them based on your opinions.
Upon reviewing the appraisal on the subject property, I discovered a multitude of errors in the report. Not differences in opinion, actual errors based on facts. Facts that appraiser hang their reputations on.
So, now we have a neighborhood in north St. Petersburg FL, where most keep their yards nice and take pride in their homes; where one 'For Sale' sign generated about 30 calls in 2 weeks; where a home in move in condition procured multiple offers above listing price within a week of being on the market; that will show a large depreciation of value across the board. This sale of my listing sickens me. This sale will now be a comparable property for the next appraiser hired to value a home in the neighborhood, and will subsequently reduce its value.
Who actually determines the value of a home, and subsequently depreciates entire neighborhoods? You decide.
View On Blog »
Let me explain the scenario. I listed a short sale, single family home in north St. Petersburg for $80,000, fair market value from what I could see from the comps for a 3/2 1500sft block home. I was wrong. The International Valuation Standards defines market value as "the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm?s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion."
So this would mean that the fair market value would be whatever a willing buyer was prepared to pay for the house.
Within the 1st week of the house being on the MLS, we had 3 offers submitted, and all were owner occupants with FHA financing. Two of the offers were in excess of the asking price, and one offer was the clear successful offer at $88,000 plus seller paid closing costs at 3%, so an actual dollar amount offer of $85,360. As the sale was a short sale, we sent the offer over to the bank for their review and approval. The lender ordered their BPO (Broker Price Opinion), collated all of the sellers hardship package, and reviewed the file. On August 2nd 2011, we received the bank approval that they would accept the offer and collect $75k to satisfy the loan, rather than the approximately $190k that was owed on the house. At this stage, everyone is happy and we move forward to a successful closing. Or so you'd think.
The buyers lender ordered the appraisal for their underwriting and as the listing agent, I was to meet her at the property to grant her access. I was about 1 minute late as I pulled into the street and received a phone call from the appraiser asking where I was, at this point I realized that she is swamped with appraisal appointments and time was of the essence. I opened up the house and stepped aside so that she could do her job. As she was leaving she remembered that she needed to review the attic. I showed her the attic hatch, and as she didn't have a ladder, she stated that she'd just take a picture of the access hatch. 'No big deal' I thought.
About a week later, I received a phone call from the buyers Realtor with the news that the appraisal came in below value. In fact it came in $12,000 below contract value at $76,000.
We were both confused as to how it came in so low. Both of us agreed that it seemed to be a very low value, but we both knew that we must play the hand we're dealt and relay the full information to our clients for their decisions. I asked the buyers agent to send me a copy of the appraisal so that I could take a look at it - wondering how I was so far off with my valuation of the property.
Upon review of the appraisal I began to notice many inconsistencies and began to dig a little deeper.
Let me prequel this next part by saying that having been in the business for nearly 10 years, I understand that challenging an appraiser is pretty much impossible. You must provide 3 comps that they missed to justify your argument, and most appraisers don't miss substantial comparable properties. Most appraisals are accurate whether you like the result or not and are based upon facts; so you certainly can't challenge them based on your opinions.
Upon reviewing the appraisal on the subject property, I discovered a multitude of errors in the report. Not differences in opinion, actual errors based on facts. Facts that appraiser hang their reputations on.
- Two of the comps used were valued based on having equal bathrooms to the subject property, so no adjustments were made. In actual fact, they only had one bathroom and should have been adjusted accordingly.
- One of the comp properties was in disrepair, and had no heating or A/C. The home was to the point of disrepair that no financing options were available to a buyer. The sale was a cash sale. No adjustments were made by the appraiser.
- One comp listed that the seller had contributed $10,000 towards the buyers closing costs. Upon investigation, I discovered that the actual seller contribution was about half of that amount at $5100.
- Two of the comps had pools, the subject does not. One of these comps was adjusted by -$2,000, and the other by -$10,000. This is a large difference in the opinion of value of a pool.
Aside from these errors, and the failure to include a substantial comparable property that would easily have justified the contract price, there was one other major issue with the appraisal report. The appraiser included a photo of the inside of the attic of the subject property. Remember earlier I mentioned how the appraiser did not access the attic, and just took a picture of the access hatch? Well now we have fraudulent documentation in a formal appraisal for a Government backed loan. The photo of the attic interior was not of the subject property, and the appraiser clearly states in the report that it is.
I took extreme exception to this appraisal. The value is what the value is; I have no problem with that, but at least do the seller, the buyer, the bank losing money on the short sale, and the neighbors of the subject property the courtesy of basing the value on FACT.
I tried to contact the appraiser by phone - no response. I emailed her with my concerns - no response (I did get a read receipt though). I emailed her again as I had not received a response - no response. The appraiser works for herself, so no way to speak to her boss. I contacted the loan officer for the buyers new loan - nothing he could do. So what do I do? I did the only thing that I should do as a Realtor; I presented all of the facts and information I had to my clients for them to make the decision to either fight the appraisal issues, or to reduce the contract price and resubmit the file to the sellers lender for a new short sale approval. As this was a distressed sale, and my clients wanted to move on with their lives, they opted to reduce the contract price and resubmit for a new approval.
The sellers lender requested a copy of the appraisal and issued a new approval on the short sale. Escrow closed on Friday 14th October 2011, for $74,000.
The appraiser is yet to acknowledge my calls and emails.
So, now we have a neighborhood in north St. Petersburg FL, where most keep their yards nice and take pride in their homes; where one 'For Sale' sign generated about 30 calls in 2 weeks; where a home in move in condition procured multiple offers above listing price within a week of being on the market; that will show a large depreciation of value across the board. This sale of my listing sickens me. This sale will now be a comparable property for the next appraiser hired to value a home in the neighborhood, and will subsequently reduce its value.
Who actually determines the value of a home, and subsequently depreciates entire neighborhoods? You decide.
By Mark Puente, Times Staff Writer
Bank of America hopes the incentives will keep some homes out of foreclosure.
Bank of America is offering up to $20,000 to select Florida homeowners willing to agree to a short sale instead of entering foreclosure.
To sweeten the deal further, the nation's largest lender will consider waiving the deficiency on the loan, which allows homeowners to sell the house for less then they owe without having to make up the difference to the bank. It can save homeowners thousands of dollars.
Not every Bank of America customer in Florida will be eligible for the program, which pays a minimum cash incentive of $5,000. It's targeted toward home?owners who cannot afford their mortgages.
To quality, the short sales must be submitted for bank approval by Nov. 30 and must close by Aug. 31. Sales already under contract are not eligible; neither are properties outside of Florida.
This is a "test-and-learn" program being rolled out only in Florida because of the higher foreclosure rates than other parts of the country, said Christina Beyer Toth, a Tampa-based spokeswoman.
Florida is seen as a viable market to gauge short-sale response when presenting home?owners with relocation assistance, she said. If successful, the plan could expand to other states.
The bank notified select Florida real estate agents this week about the offer.
"It will get a lot of people off the fence about wanting to sell their home," said Steve Capen of Keller Williams Realty in St. Petersburg. "This makes sense."
What's in it for Bank of America? It saves attorney fees, court costs and property taxes by avoiding foreclosure. It also speeds the process of getting bad loans off its books and gets the properties back on the market faster.
Capen, who specializes in short sales, plans to heavily market the offer to clients. But he cautioned that homeowners shouldn't get overly excited because many of these plans have restrictions.
"It will only help a fraction of the people," he said.
Homeowners get the cash after the short-sale deal closes. A caveat: Homeowners might have to pay income taxes related to the deficiency waiver and the cash payout.
The cash payouts give home?owners a reason not to trash their homes or strip them bare before moving out. When houses enter foreclosure, home?owners can essentially live for free until banks take possession at the end of the court process, which takes an average of nearly two years in Florida.
Attorney Chris Boss of Yesner & Boss said the deficiency waiver will enable homeowners to buy a house without filing bankruptcy or waiting three years from when foreclosures become final.
"It's a chance to get away from the house with some money in your pocket," Boss said. "This is good for the economy."
Other national lenders started similar programs.
Late last year, JPMorgan Chase began giving homeowners $10,000 to $20,000 and waived losses on the mortgage. The bank still suffers a loss in the process, but generally speaking, sale prices on short-sale homes are higher than foreclosed homes.
Real estate experts and economists have said the housing market cannot fully recover until the millions of distressed mortgages are removed from the system.
Mark Puente can be reached at mpuente@sptimes.com or (727) 893-8459. Follow him at Twitter at twitter.com/markpuente.
.FAST FACTS
How it works
Here are details on Bank of America's "Short Sale Relocation Assistance" program:
. To determine eligibility, call a bank short-sale specialist at (877) 459-2852 between 8 a.m. and 10 p.m. Monday through Friday or Saturday from 9 a.m. to 5:30 p.m.
. The plan excludes loans backed by the Federal Housing Administration, Veterans Administration, U.S. Department of Agriculture and Ginnie Mae. Short sales initiated with offers are excluded.
. The specific amount of the payout will be based on the unpaid principal balance. The payoff assistance can be used to pay off other liens on the properties.
Source: Bank of America
To sweeten the deal further, the nation's largest lender will consider waiving the deficiency on the loan, which allows homeowners to sell the house for less then they owe without having to make up the difference to the bank. It can save homeowners thousands of dollars.
Not every Bank of America customer in Florida will be eligible for the program, which pays a minimum cash incentive of $5,000. It's targeted toward home?owners who cannot afford their mortgages.
To quality, the short sales must be submitted for bank approval by Nov. 30 and must close by Aug. 31. Sales already under contract are not eligible; neither are properties outside of Florida.
This is a "test-and-learn" program being rolled out only in Florida because of the higher foreclosure rates than other parts of the country, said Christina Beyer Toth, a Tampa-based spokeswoman.
Florida is seen as a viable market to gauge short-sale response when presenting home?owners with relocation assistance, she said. If successful, the plan could expand to other states.
The bank notified select Florida real estate agents this week about the offer.
"It will get a lot of people off the fence about wanting to sell their home," said Steve Capen of Keller Williams Realty in St. Petersburg. "This makes sense."
What's in it for Bank of America? It saves attorney fees, court costs and property taxes by avoiding foreclosure. It also speeds the process of getting bad loans off its books and gets the properties back on the market faster.
Capen, who specializes in short sales, plans to heavily market the offer to clients. But he cautioned that homeowners shouldn't get overly excited because many of these plans have restrictions.
"It will only help a fraction of the people," he said.
Homeowners get the cash after the short-sale deal closes. A caveat: Homeowners might have to pay income taxes related to the deficiency waiver and the cash payout.
The cash payouts give home?owners a reason not to trash their homes or strip them bare before moving out. When houses enter foreclosure, home?owners can essentially live for free until banks take possession at the end of the court process, which takes an average of nearly two years in Florida.
Attorney Chris Boss of Yesner & Boss said the deficiency waiver will enable homeowners to buy a house without filing bankruptcy or waiting three years from when foreclosures become final.
"It's a chance to get away from the house with some money in your pocket," Boss said. "This is good for the economy."
Other national lenders started similar programs.
Late last year, JPMorgan Chase began giving homeowners $10,000 to $20,000 and waived losses on the mortgage. The bank still suffers a loss in the process, but generally speaking, sale prices on short-sale homes are higher than foreclosed homes.
Real estate experts and economists have said the housing market cannot fully recover until the millions of distressed mortgages are removed from the system.
Mark Puente can be reached at mpuente@sptimes.com or (727) 893-8459. Follow him at Twitter at twitter.com/markpuente.
.FAST FACTS
How it works
Here are details on Bank of America's "Short Sale Relocation Assistance" program:
. To determine eligibility, call a bank short-sale specialist at (877) 459-2852 between 8 a.m. and 10 p.m. Monday through Friday or Saturday from 9 a.m. to 5:30 p.m.
. The plan excludes loans backed by the Federal Housing Administration, Veterans Administration, U.S. Department of Agriculture and Ginnie Mae. Short sales initiated with offers are excluded.
. The specific amount of the payout will be based on the unpaid principal balance. The payoff assistance can be used to pay off other liens on the properties.
Source: Bank of America
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