Joel Hall's Blog

Overall U.S. retail real estate market recovery remains modest

Joel Hall (RE/MAX Real Estate Services) — Mon, 21 May 2012 08:20:05 -0700

CHICAGO, May 21, 2012 /PRNewswire via COMTEX/ -- The U.S. retail real estate sector witnessed a moderate recovery in the first quarter of 2012 led by retail investment sales, as trades of significant retail properties increased nearly 90 percent over Q1 2011, according to Jones Lang LaSalle's Spring Retail Forecast.

"Improving economic fundamentals continue to drive a modest recovery. However, significant risks remain, with the most critical being the European crisis and uncertainty about fiscal policy," said Greg Maloney, President and CEO of Retail at Jones Lang LaSalle. "While retailers are faring better than we've seen in the past two years, we witnessed a greater number of underperforming store closings this year. In addition, there continues to be a gradual absorption of available space, but rental rates have still not bottomed out nor are they expected to do so for several quarters."

Retail Capital Markets Highlights "Retail real estate sales recorded a fantastic quarter with significant retail property sales totaling $12.5 billion, which represented an 87 percent increase over Q1 2011," said Margaret Caldwell, Managing Director of Capital Markets at Jones Lang LaSalle. "Interestingly, portfolio transactions accounted for more than half of the first quarter's volume, totaling $6.6 billion."

Additional retail real estate investment highlights include:

Average cap rates fell to 7.3 percent, with regional malls experiencing the sharpest decline.

Strip center cap rates rose slightly in Q1 2012, largely as a result of higher-yield buildings in secondary markets changing hands.

Cap rates fell significantly across most major metro areas, secondary and tertiary markets. Secondary markets in particular have seen a revival in transaction volume jumping 27 percent in the last six months. Major metros, on the other hand, only experienced a 16 percent jump in transaction volume while tertiary markets declined by 4 percent.

Distressed properties continue to be a major factor with new inflows totaling $1.9 billion in Q1 2012. Workout activity totaled $2.6 billion, resulting in a $700 million decrease in distress balances. Outstanding distress now stands at $28.3 billion.

The West region led retail property sales for Q1 2012 with $4.14 billion in transactions, followed by the Southeast with $2.4 billion, the Midwest at $1.83 billion, the Southwest with $1.62 billion, the Mid-Atlantic at $1.26 billion, and the Northeast with $1.25 billion.

Retail Leasing Highlights

Vacancy fell 20 basis points year over year, closing Q1 2012 at 6.9 percent. Net absorption was moderate compared to the previous quarter, totaling just over 12.3 million square feet, but consistent with the trend over the past year. Deliveries were relatively lower as well, coming in at 7.2 million square feet. Vacancy rates are approximately 50 basis points below their peak but still 60 basis points higher than their 10-year average, so it is still a tenant's market and should continue to be through 2013.

Additional retail leasing highlights include the following:

Retail properties serving national tenants (i.e., malls, power centers and outlet centers) are seeing the greatest compression in vacancy rates, as these tenants continue to expand their portfolios.

Centers serving "mom-and-pop" stores - such as community centers, neighborhood centers and strip centers - have yet to recover in earnest.

Rents are beginning to stabilize. While aggregate rents continue to fall, the rate of decline has flattened in recent quarters.

Power center rents in major markets fell the most over the year, declining some 5.5 percent.

Though demand levels had been flat initially after the 2011 holiday sales season, many retailers have been modestly increasing their expansion plans.

Retail Trends Affecting Real Estate

"Performance is critical as both retailers and landlords need to maximize ROI for the remainder of the year," said Lew Kornberg, Managing Director of Retail Tenant Solutions at Jones Lang LaSalle. "However, employment levels will remain the leading indicator of what we can expect to see next year in terms of growth in the retail sector."

Trends affecting retail leasing, marketing and performance include the following highlights:

Urban retail and outlet centers should take center stage as more consumers move back into cities and focus on value and off-price purchases.

Store-within-store build-outs should increase as big box retailers seek to more efficiently use excess space and diversify their merchandise to attract more consumers.

Grocery-anchored strip centers continue to perform relatively well compared to other retail property subtypes.

The grocery landscape will also shift as many mid-sized regional chains will close locations while high-end and niche grocers will expand. However, the trend will be toward smaller, less traditional space so the total footprint should contract.

Creative use of big box space may be another major trend as retailers vacate underperforming locations in response to increased competition from online retailers.

Some physical stores are already unintentionally functioning as living catalogs for online merchandise. The evolving trend of "showrooming" will affect how goods are showcased, priced and sold in stores.

The addition of retail health clinics within existing stores continues to gain traction.

Jones Lang LaSalle Retail successfully manages the largest third-party retail portfolio in the country. Our portfolio is comprised of unique clients and a broad range of retail properties including regional shopping centers, lifestyle centers, strip malls, power centers, transportation facilities and universities along with redevelopment and mixed-use projects. Jones Lang LaSalle offers a full array of retail services to our clients including property management, financial reporting, leasing, tenant coordination, specialty leasing, marketing, research, development and receivership. For more information on Jones Lang LaSalle Retail, visit www.jllretail.com .

About Jones Lang LaSalle

Jones Lang LaSalle /quotes/zigman/162927/quotes/nls/jll JLL +1.70% is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company's investment management business, is one of the world's largest and most diverse in real estate with $47.2 billion of assets under management. For further information, please visit www.joneslanglasalle.com .

SOURCE Jones Lang LaSalle

Awareness risen at real estate rally by realtors

Joel Hall (RE/MAX Real Estate Services) — Fri, 18 May 2012 07:52:56 -0700

(Source: NAR) – An estimated 15,000 Realtors® converged on the grounds of the Washington Monument today to make their voices heard on behalf of homeowners, real estate investors, and those who aspire to homeownership.

At the Rally to Protect the American Dream, Realtors® from every state in the country joined invited members of Congress to demonstrate their commitment to preserving access to homeownership and robust real estate investment.

“Realtors® know that homeownership is an investment in our collective futures, and we’re here today to protect the American Dream of homeownership,” said National Association of Realtors® President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “Homeownership and investment in real estate impacts families, communities, small businesses and the nation’s economy in a very meaningful way. Today, we’re proud to be showing the country that homeownership matters.”

In the current economic and political climate, Realtors® are working to ensure that people who want to own a home or invest in real estate and can responsibly afford to do so will continue to have the opportunity to do that. Toward that end, Realtors® are advocating better access to affordable financing, reform of the secondary mortgage market, improved liquidity in residential and commercial lending, and preservation of the tax benefits associated with homeownership.

Sen. Johnny Isakson (R-Ga.) and Rep. Steny Hoyer (D-Md.) addressed the crowd of Realtors® at the event.

“I commend the National Association of Realtors® for keeping the issue of homeownership at the forefront when we talk about our economic recovery,” said Rep. Hoyer. “Stabilizing the housing market remains a central issue for Democrats, who understand we will not have robust economic growth without a vibrant housing market and that access to homeownership remains a critical component of the American Dream.”

Sen. Isakson said, “Homeownership always has been, and remains to this day, a part of the American dream. It is the biggest and most important investment that the average American family makes, and that’s why we should remain focused on the value of the housing market and the important role it plays in our country. It is my hope that this rally encourages Congress and the president to move forward with policies that are supportive of housing, which is vital to job creation and the recovery of our economy.”

The rally was part of NAR’s week-long Midyear Legislative Meetings, during which Realtors® and guests meet with members of Congress, federal regulators and industry experts to address pressing real estate issues and public policies in support of private property rights, homeownership and housing issues.

Photos and videos from the rally are available at www.realtorrally.org.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Source: NAR

Chinese Real Estate Unravels

Joel Hall (RE/MAX Real Estate Services) — Wed, 16 May 2012 08:20:23 -0700

As a prelude to a broader analysis of China’s GDP, and the accuracy of its official GDP figures, I want to start by examining the national real estate statistics for the first four months of 2012. This discussion feeds into the broader GDP picture, but the property story that has been unfolding is important and interesting enough to be worth taking a close look at on its own.

Getting an accurate view of the property sector is complicated by the fact that neither the official price index, nor the Soufun price index, nor the average price/square meter that can be calculated from the investment numbers seem to track very well with each other or with point-of-sale impressions of steep developer discounts over the past eight months. Developers and local governments also enjoy a great deal of discretion in deciding what to count as a “start” or a “completion.” Monthly data releases are never revised, which often gives rise to huge corrections that are simply lumped into the end-year December data release, giving a distorted impression of how trends are unfolding (so, for instance, the 19% drop in property starts in December 2011 probably wasn’t as sudden as it appears, and more likely reflected an unreported decline spread over several preceding months).

All that being said, I’m seeing some rather striking patterns in the data that tell us two main things:

The market is not poised to recover, but will continue to see greater downward pressure on prices; and
Real estate investment is likely to flatten out or start falling, erasing several percentage points of GDP growth.

Last month, many observers took comfort from reports that overall real estate investment in Q1 rose 23.5% (in nominal terms) compared to the same period the previous year. To be sure, this was a comedown from 2011, when property investment rose 27.9%, or 2010, when it rose 33.2%. But it still seemed to reflect resilient growth: hardly a collapse in market, more like the kind of modest slowdown consistent with “soft landing.”

Very few people paused to ask where this investment growth was actually coming from. After all, the market was clearly struggling. Year-on-year sales in Q1, for all real estate, was down -14.6%. The decline was even steeper, -17.5%, in residential property, which accounts for about 80% of the market. Office sales were down -10.2%, while growth in “commercial” (i.e., retail) property sales, which saw a boom in 2011, decelerated to +10.5%. Although many people were touting a month-on-month sales recovery in March, compared to the Chinese New Year period, March sales were still down -7.8% from the year before, for the sector as a whole, and -9.7% for residential properties (by comparison, sales in January-February were a disaster, falling -20.9% overall, compared to the first two months of 2011, -24.7% for residential).

Given this consistent fall-off in sales, it’s not surprising that new property starts began to stall. I already mentioned that the 19% drop in new starts in December may have been a bit of a statistical aberration. Starts (measured in floor space) in Jan-Feb were up 5.1%, although the gains came entirely from office and retail — housing starts were flat. But overall starts fell by -4.2% in March, with housing starts down -9.8%, ensuring that overall starts for Q1 were flat (+0.3%) with residential starts down -5.2%. Land sales for Q1 were also flat, with sales proceeds rising 2.5% but land area sold down -3.9%. In March, they were negative (-3.6% sales revenue, -8.5% area sold).

So if sales were down, and starts were either flat or down, where was the 23.5% investment growth coming from? Developers, burdened by 70% leverage ratios and loans threatening to come due, were rushing to complete whatever projects were already in their pipeline, in order to put those units onto the market and raise cash. Completions (measured in floor space) were up 39.3% in Q1, compared to last year (residential completions were similarly up 40.0%). But, of course, those completed units weren’t selling like last year, so unsold inventories expanded. At the close of Q1, the total amount of floor space “for sale” was up 35.5%, compared to the same date last year, while the floor space of residential units “for sale” grew 47.4%.

(That’s just the floor space that developers admitted was for sale. There are plenty of tricks they can use to hold units off the market, in order to massage the official data and avoid spooking buyers. At the end of 2011, total floor space “under construction” was roughly 4.6 times the floor space sold that year. Assuming it typically takes three years to build a unit, from start to finish, that suggests about a year and a half worth of excess inventory hidden somewhere in the pipeline. The ratio for residential property was 4.0, which suggests that, while there may be about a year’s worth of unsold inventory in the housing market, the overhang in commercial real estate is even steeper. Although in absolute terms, it’s the housing overhang that matters).

China’s developers are playing out a kind of prisoner’s dilemma: rush to complete, in hopes of cashing out. But while supply keeps going up, demand is going down. In late March, a central bank (PBOC) survey reported that only 14.1% of Chinese consumers were looking to buy a house in Q2, the lowest level since 1999. Only 17.7% expected home prices to rise in Q2, and 62.9% said they still consider prices to be too high. So all those rushed completions only add to the glut already on the market, driving prices down further and giving buyers — investors and aspiring residents alike — all the more reason to hold off for a better deal. Perhaps this is why Qin Hong, deputy head of research for the Ministry of Housing and Urban-Rural Development (MOHURD), told the Oriental Morning Post in late March that she doesn’t expect housing prices to rebound significantly for the rest of the year. A strong rebound is impossible, she said, due to the continued property tightening policy and high housing inventory (my italics).

The second implication of the dynamic I’ve just described is that the “resilient” growth in real estate investment that seemed to promise a “soft landing” is not very resilient at all. It’s more like the last gasp of a market that’s running out of steam. Once the surge in completions plays out, the declining number of new starts will become the pipeline, and growth in property investment will flatten or go negative. Property investment accounts for roughly a quarter of gross Fixed Asset Investment (FAI), and net FAI accounts for over half of China’s GDP growth. As I noted in January, in a back-of-the-envelope thought exercise, if property investment plateaus (growth falls to zero), it could shave as much as 2.6 percentage points off of real GDP growth. If it fell 10% (in real, not nominal terms) it could bring GDP growth down to 5.3%.

At the time I first saw this dynamic in the data, when the Q1 numbers came out, I figured it would take several months to begin playing out. But the April numbers suggest it is already happening. In April, overall completions rose only 2.8% year-on-year (down from 39.3% in Q1), and housing completions flatlined at 0.8% (down from 40.0% in Q1). As completions petered out, growth in real estate investment decelerated markedly, to just 9.2%, with residential investment growing just 4.0%. Investment actually fell month-on-month, in absolute terms, by -10.7% overall and -9.5% in housing. It only grew year-on-year at all because of a low base set last April. If you plugged this year’s April versus last year’s May, you’d get a year-on-year drop of -9.1% for property investment overall, and -11.0% for housing. (In this context, it’s worth noting that, according to the Beijing Municipal Bureau of Statistics, overall property investment growth in the capital already went negative in January-February, for the first time in three years, dropping -4.6%).

If there’s one bright side to the plateau in completions, it was that unsold inventories advanced less rapidly over the year before. Floor space “for sale” did rise in April, in absolute terms, but not by much. It’s important to remember, though, all the unsold inventory that remains held back and hidden in the pipeline, as noted before.

Meanwhile, the contraction in sales, new starts, and land sales deepened even further in April. Although the decline in sales appeared to moderate slightly for the sector as a whole (-4.5%) and for housing (-2.9%), this was again largely due to a lower base effect from last April, when sales contracted month-on-month by nearly RMB 100 billion. This year’s April sales also registered a significant month-on-month decline, by -17.2% for all property and -15.5% for housing. The more striking news, perhaps, is that commercial property sales, which have been much more resilient until now, also plunged, with office sales falling -23.4% year-on-year and -34.4% compared to March, and retail property sales falling -9.5% year-on-year and -22.7% month-on-month. April was the first month in which all three categories were in year-on-year decline.

New starts in April fell -14.6% year-on-year and -27.0% month-on-month, for property as a whole. Housing starts fell -14.4% year-on-year and -23.4% month-on-month. Office and retail starts, which had remained quite strong through Q1, also plunged. Office starts fell -21.0% year-on-year in April, and -45.1% compared to March. Retail property starts fell -18.7% year-on-year, and -36.8% compared to March. (The year-on-year April comparisons for office and retail rely on a reverse calculation to isolate April 2011 figures, which NBS did not provide in its earlier releases). In short, the trendline in starts has dipped into negative double digits across all categories.

Land sales, meanwhile, fell off a cliff. Land sale revenues in April (RMB 27 billion) were down -54.7% compared to April last year (RMB 60 billion), and -47.0% compared to March (RMB 51 billion). Total area sold was down -52.5% compared to last April, and -43.4% compared to March (the year-on-year comparison here relies on a similar reverse calculation as before).

It should be no surprise, then, that foreign investors are pulling back from China’s property sector. Foreign funding for property development was down -91.4% in March and -80.8% in April, compared to the same months last year.

I think most readers will agree, this is pretty powerful stuff. At least one major sector of the Chinese economy (10-13% of GDP), which had been a leading growth driver, is undoubtedly in contraction. More importantly, the dynamics behind these numbers suggest that the market has not bottomed out, but is still in the process of unraveling. That is why I told CNN, in late April:

“No one has hit the panic button yet,” Chovanec said. “Everyone is holding out hope that at some point it turns around somehow. But I also think that’s a triumph of hope over reason.”

Survey of perceptions of homeownership

Joel Hall (RE/MAX Real Estate Services) — Tue, 15 May 2012 08:14:17 -0700

U.S. Adults Feel That Americans Have Greater Respect for Homeownership Now -- Taken for Granted Before the Recession; Overwhelming Majority of Parents Think It Is Important for Their Children to Own a Home One Day

PARSIPPANY, NJ, May 15, 2012 (MARKETWIRE via COMTEX) -- With the recession technically over, many questions have circulated about the future of housing and whether the concept of homeownership will forever be changed in the United States. Well-known psychotherapist, Dr. Robi Ludwig partnered with Coldwell Banker Real Estate to explore the feelings Americans have on the value of the home and homeownership now, compared to before the economic downturn. On behalf of Coldwell Banker Real Estate, an online survey conducted in April by Harris Interactive among more than 2,100 U.S. adults aged 18 and older found a clear consensus: the economic downturn has had a distinct effect on the way people view homeownership, but owning a home is still the foundation of the American Dream.

The Psychology of the "Home," Post-Recession

"After any major fallout like a financial downturn, it's natural to examine and sometimes alter the way we think about fundamental issues in our lives," said Dr. Robi Ludwig "So it makes sense that this survey shows we are re-thinking what passed for conventional wisdom during the 'boom years.' Instead of taking things for granted, people are protective of their jobs, homes and futures," she explained. "And now that we're picking up the pieces, we're seeing a psychological shift. Instead of looking at homes through the eyes of an economist, we're realizing that a home doesn't solely equate to financial return or measure only to a mortgage amount. Instead the home is the emotional center of our lives, and it remains a critical component of who we are."

 -- A majority of U.S. adults (79 percent) indicate the recession has caused society to rethink the concept of homeownership. -- In fact, 84 percent of U.S. adults agree more people took owning a home for granted before the recession, and nearly three-quarters (72 percent) said they feel like Americans have a greater respect for it now than they did before the recession. -- Seventy-five (75) percent of U.S. adults agree that due to changes in the housing market and/or economy there has been an overemphasis on the financial value of a home rather than the emotional value of a home.

How the Recession Has Caused Americans to Re-examine the Value of Their Home

"There's no doubt that housing has been in the eye of the economic storm," said Jim Gillespie, chief executive officer, Coldwell Banker Real Estate LLC. "However, our work with Dr. Ludwig underscores that Americans remain bullish on homeownership and have not forgotten the inherent, emotional reasons that make our homes precious to us -- in tough times or not. People are simply and rightly being more mindful about what they need and what they can afford, and are more carefully considering when to become homeowners."

The survey strongly indicates that people are re-evaluating their needs vs. wants when purchasing a home. Ninety (90) percent of U.S. adults agree that some people purchased more expensive homes than they should have before the recession. Meanwhile, 86 percent of Americans agreed that people are more closely evaluating how much home they can truly afford now, compared to before the recession.

Home Renting vs. Buying a Home: It's Far More than a Financial Decision

"Renting offers many people a suitable temporary solution, but in the long run, owning a home appeals to our innate desire for having things we can call our own, while providing a connection to the community around us," said Dr. Ludwig. "Homeownership is a commitment; it's about being rooted, which is one of our human instincts. I was encouraged to see that so many respondents recognize that commitment to a home, just like in a relationship, can often bring immense satisfaction."

The survey found homeownership is part of the American Dream and that the United States becoming a "rent-based" society does not appear plausible:

 -- Ninety-one (91) percent of Americans agreed that owning a home is part of the American Dream (93 percent of homeowners, and 89 percent of renters). -- Eighty-three (83) percent of renters said that they want to own a home someday. -- Despite the economic challenges so many have faced, 94 percent of homeowners agreed that they are glad they own a home.

Why Homeownership is a Pillar of Success for So Many Americans

"Homeownership provides a stable environment that is not dictated by the whims and rules of a landlord," Dr. Ludwig said. "We and our children flourish in secure environments. The feeling you get when you step through your front door or pull into your driveway is indescribable and priceless and the same holds true for our children who crave stability. While I know that financial hardships during the recession clearly have impacted many households, it is clear that the emotional value of a home is still strongly recognized."

The survey found a high percentage (95) of parents / legal guardians agreed that it is important for their children to own a home someday; and 74 percent feel it's absolutely essential / very important.

Additionally, more than three-quarters of homeowners (78 percent) said that owning a home is one of their greatest achievements, and 85 percent of U.S. adults (which includes both homeowners and renters) agreed that they always dreamed of owning a home.

How Our Homes Play a Role in Our Personal Identity

"People universally understand what it feels like to 'be at home,' and homeownership is an intrinsic element in our society," said Dr. Ludwig. "The ability to alter colors, make minor cosmetic alterations and structural changes are so important to showcasing our personalities. And one of the reasons people feel so strongly connected to the home is because it is in many ways a reflection of who they are."

Seventy-one (71) percent of U.S. adults agree that their home is a reflection of their identity, with homeowners being significantly more likely to agree with this statement than renters (74 percent, compared to 67 percent of renters).

A video of Dr. Robi Ludwig discussing this topic more in-depth can be found at http://youtu.be/c9wwQuJY4mg . For more information please visit ColdwellBanker.com.

Real estate continues positive trends

Joel Hall (RE/MAX Real Estate Services) — Mon, 14 May 2012 08:26:50 -0700

RALEIGH, N.C., May 14, 2012 (BUSINESS WIRE) -- The Triangle Multiple Listing Service (TMLS) reports the following information pertaining to the housing industry in the greater Triangle region during April of 2012. The data shown reflects information on properties located in the 16 counties of the greater Triangle Region. The percentage changes are comparisons with the prior year's month unless otherwise noted.

TMLS President, Ray Larcher said, "Closed sales continued a ten-month positive trend through April. Sales in April were up 4.6 percent over April of 2011 and the ten months prior (July 2011 through April 2012) showed an 11.5 percent increase over the same time period last year. The three leading counties with closed sales for April were Chatham County with sales up 18.2 percent (52 units sold), Durham County with sales up 13.5 percent (278 units sold) over last April and Wake County sales were up 11.5 percent (1069 units sold) for the same time period. Several local municipalities/areas with the largest increases over last April were Durham South up 30.5 percent; Durham East up 22.6 percent; and Cary/Apex/Morrisville up 21.0 percent. In addition, the pending sales (homes under contract, but not yet closed) also exceeded last April by 20.4 percent, another positive trend that continued for the past twelve months."

Inventory levels of homes for sale shrank 27.3 percent in April to 14,111 units from 2011 and new listings in the Triangle region increased 1.3 percent. For the second month housing prices enjoyed a boost and increased in April with Median Sales Price up 3.9 percent to $190,000 and Average Sales Prices up 1.7 percent to $223,658 over last April. The Days on Market were down 2.1 percent to 125 days over last April which showed the first decrease in the past 12 months. Absorption rates improved as the Month's supply of Inventory was down 29.0 percent to 8.3 months.

The Housing Affordability Index was 6.6 percent higher than last April at 193. This index measures housing affordability for the region. An index of 120 means the median household income was 120 percent of what is necessary to qualify for the median-priced home under prevailing interest rates. A higher number means greater affordability.

"When measuring residential real estate activity we have to compare it to the overall economy and job growth. The first quarter GDP was up 2.2 percent, which is not great and slower than the fourth quarter of 2011, but expanding. Expedited bank processing and easing lending standards are also encouraging development," Larcher concluded.

SOURCE: Raleigh Regional Association of REALTORS(R)

A real estate app when you're buying or just nosy

Joel Hall (RE/MAX Real Estate Services) — Wed, 09 May 2012 07:55:56 -0700

Let's say you're walking around your neighborhood, or a neighborhood you'd like to make yours, and you spy a house you find interesting. Even if it isn't for sale, you can just whip out your iPhone, take a picture of the home and in less than a minute, you'll have an estimate of its price, plus details on its square footage, number of rooms, similar homes for sale and other facts.

A new iPhone app called HomeSnap can tell you the estimated value of any home just by pointing the phone at it and taking a picture. It even gives you the ratings of local schools or info on similar homes for sale. WSJ's Walt Mossberg gives it a try.

This feat of digital magic, which works all over the country, is performed by a new, free app called HomeSnap, from a Washington, D.C., online real-estate firm, Sawbuck Realty. Despite its parentage, the company says that using the app doesn't send any data to a Realtor, or invite any calls or emails from one—unless you explicitly ask for such a connection. It's just a cool way to investigate houses and if you like, to share your "Snaps"—photo profiles of houses—with HomeSnap users and friends via email, text or social networks.

Why would you want to use it? Maybe you're interested in buying the house if it ever comes on the market, or helping a friend do so. Or, maybe you're just curious, or nosy. Of course, you could be in real house-hunting mode, and HomeSnap gives you even more information if the house you took a picture of is for sale, including interior photos and bid history. There's even the option of contacting a buyer's agent, asking a question or requesting a tour—right from the phone.

You can use the app to flip through Snaps taken by others, either in nearby areas or around the nation. (HomeSnap allows you to keep your own Snaps out of this "stream," if you'd rather your neighbors don't know you've been investigating their homes or you'd rather not tip off potential competing buyers.)

With a picture you take of a home, HomeSnap offers data like the bedrooms and baths it has.

There are many real-estate apps and websites, such as Zillow, that allow you to get similar information. Some real-estate firms have their own. But these typically require you to type in an address, or troll through a list, or study a map and tap on a marker that represents a house of interest. All HomeSnap requires is that you snap the shutter on your iPhone. (Android and iPad versions are in the works.)

I've been testing HomeSnap for a few weeks in two states: Maryland and Rhode Island. In my 17 attempts, the app almost always correctly identified the house I was shooting. In two cases, both in town-house complexes, it wasn't sure and presented me with an aerial photo displaying a few guesses from which I could pick. In two other cases, it couldn't identify the house at all for some reason.

The app doesn't actually perform photo recognition on the house. Instead, it uses the iPhone's GPS capability and its sensors to identify the house and then fetches the details from a server in the cloud.

HomeSnap includes a Stealth mode that lets you take a picture when you aren't right in front of a house—even when you're inside another nearby house—and get an aerial view of homes in the area from which you can choose a property as your Snap. This proved accurate for me. In one test, it worked perfectly when I was only able to shoot the rear of a house.

Sawbuck says it built the app partly because it hopes that if a user likes it, he or she will one day use one of its agents. But it says so far only about 10% of the 150,000 Snaps taken with the app have been of homes that are actually for sale.

You can flip through Snaps by others, either nearby or around the nation.

If a home isn't for sale, HomeSnap draws its information from public information like tax records, school boundaries, and census data. If a home is for sale, it provides much more detailed information drawn from local listing databases.

I found HomeSnap fun and impressive. It's a good tool for investigating possible purchases, learning the estimated value of a house and getting other important information. For example, each Snap includes scores from third-party data vendors that rate the quality of nearby schools and rate the relative appreciation and investment value of a home, over 10 years, compared with the average. Some Snaps reveal previous sale dates and prices.

But its information wasn't always complete or accurate. For instance, in the case of my own home, which isn't on the market, it got the number of bathrooms wrong, and didn't know the number of bedrooms—an omission the company blames on a quirk in the public records available for my area. (My tests elsewhere did include the number of bedrooms.) The app has a feature that allows you to report such errors.

In addition, the app currently doesn't have extra information drawn from listings of homes for rent and can't pinpoint units inside large buildings. The company says it's working on both capabilities.

It marks photos of certain homes with a color-coded banner—green if the home is for sale; orange if it's under contract; and purple if there's an coming open house for the property. If there's a major change in the information on a Snap in your history, the app updates it.

The Digital Solution

When the Devices Are Done

The app keeps a history of your Snaps and the company retains them on its servers, whether or not you choose to make them public. In its licensing terms, the company reserves the right to reuse, or modify, the photos you take, though it promises not to "materially" change them, or to distribute or reproduce photos taken by those who opt to keep them private.

If you're looking for a house or just curious about one and you own an iPhone, HomeSnap is a clever, useful and entertaining tool.

Write to Walter S. Mossberg at walt.mossberg@wsj.com

Utah leads in commercial real estate construction

Joel Hall (RE/MAX Real Estate Services) — Mon, 07 May 2012 08:52:17 -0700

SALT LAKE CITY -- Reflecting a national trend, Utah is seeing a rebound in the development and construction of commercial real estate, according to a national group.

Utah ranked sixth in the U.S. in 2011 for direct spending across all categories of commercial real estate, the Commercial Real Estate Development Association reported.

That's up from Utah's 2010 ranking of No. 26. Only West Virginia saw a bigger jump, from No. 48 to No. 3.

According to the study, $3.6 billion was spent in Utah last year on the development and construction of office, industrial and retail buildings, which supported 77,550 jobs.

"It's not just one thing, it's a bunch of things," said Craig Thomas, senior vice president for the national association, which represents commercial real estate developers, owners and investors. "We have been able to come out of this economic downturn faster."

He attributed the surge in part to the migration of businesses from California to Utah, citing multimillion dollar facilities built here by companies such as eBay, EMCCorp and Adobe.

"(They) can't afford to do business there," Thomas said, adding Utah also offers a young, educated workforce.

Utah is not facing the same problems as other states, he added.

"A lot of cities ... built way too many office buildings," he told KSL. "The developers (in Utah) are a lot like the state. We pay our bills as we go."

The $1.5 billion City Creek development, a mixed-use project in downtown Salt Lake City, also played a major role in the state's commercial growth last year.

Thomas predicted the commercial real estate market would continue to be strong in the state.

"The next 10 years in Utah will be its best ever," he said.

Texas led the survey with $7.9 billion in spending, followed by New York, West Virginia, California and Arizona.

Trulia mobile ads offers first advertising platform for real estate professionals

Joel Hall (RE/MAX Real Estate Services) — Thu, 03 May 2012 08:09:22 -0700

Agents Can Own Exclusive Ad Spots and Generate Phone Leads From Trulia's Most Engaged Home Buyers

SAN FRANCISCO, CA, May 03, 2012 (MARKETWIRE via COMTEX) -- Trulia.com, a leading site for home buyers, sellers, renters and real estate professionals, today announced Trulia Mobile Ads, the first mobile advertising platform designed to help real estate professionals reach transaction-ready buyers who are using mobile devices for their home search. Trulia Mobile Ads allow agents to purchase a share of display advertising space and generate phone leads from consumers using Trulia's top rated mobile applications and mobile website. Currently, Trulia Mobile Ads are available only to existing Trulia Local Ads and Trulia Pro customers. Click here for more information about Trulia Mobile Ads.

Trulia Mobile Ads use local targeting to reach buyers as they use their mobile phones devices to explore neighborhoods and visit listings. In every ZIP code, real estate agents may purchase up to five advertising spots that include a banner ad on the map page, a personalized full screen ad with lead form and the guaranteed top spot in Trulia's mobile lead generator. With Trulia Mobile Ads, consumers can directly call or email agents from the banner or full screen ad. Trulia Mobile Ads are currently displayed in Trulia's top rated iPhone and Android apps, as well as Trulia's mobile website.

"Mobile is clearly the future of the real estate shopping experience and we're excited to help agents connect with our highly engaged audience through the Trulia Mobile Ads platform," said Pete Flint, CEO and co-founder of Trulia. "Consumers using mobile devices for their home search will continue to be a major area of growth, and as a company we will continue to invest heavily in our mobile offerings. We are committed to rolling out first-of-a-kind, innovative products for agents and consumers to make the mobile home search experience amazing for everyone."

Trulia Mobile Ads Include:

 -- Branded Banner Ads: The banner ad includes the agent's photo, name and phone number and appears at the top of map search page as consumers browse homes in local neighborhoods. -- Full Screen Ad: When clicking on a banner ad, the full screen takeover ad appears, including the agent's contact info, brokerage, a "Call Now" button and lead form. -- Phone Lead Generation: All ad templates include large buttons and links allowing consumers to call agents from Trulia Mobile Ads with just one touch. -- Premium Ad Placement: Trulia Mobile Ads give agents access to the most exclusive ad spot on Trulia, in front of the most transaction-ready buyer audience. Only 5 ad spots are available per ZIP and agents can own all 5 to block out their competition.

"Our research has shown that consumers using mobile devices are 60 percent more likely to contact a real estate professional," said Georg Gerstenfeld, VP of Business Services at Trulia. "It's our goal to connect agents with buyers who are deeply engaged in their home search and we're excited to know that agents can now use Trulia Mobile Ads to connect with buyers while they are standing in front of a listing."

Additional Assets To obtain screenshots of Trulia Mobile Ads, click here To get more information about Trulia Mobile Ads, click here To access Trulia Pro on Facebook, click here

About Trulia, Inc. Trulia gives home buyers, sellers, owners and renters the inside scoop on properties, places and real estate professionals. Trulia has unique info on the areas people want to live that can't be found anywhere else: users can learn about agents, neighborhoods, schools, crime and even ask the local community questions. Real estate professionals use Trulia to connect with millions of transaction-ready buyers and sellers each month via our hyper local advertising services, social recommendations and top-rated mobile apps. Trulia is headquartered in downtown San Francisco and is backed by Accel Partners and Sequoia Capital. Trulia and the Trulia logo are registered trademarks of Trulia, Inc.

Best U.S. Real Estate With Self Storage: Riskless Return

Joel Hall (RE/MAX Real Estate Services) — Wed, 02 May 2012 10:08:41 -0700

The best real estate investment in the past decade was found at the opposite end from trophy resorts and office towers, in 5-foot-by-5-foot lockers.

Self-storage companies, which rent units to small businesses and consumers under names such as “Uncle Bob’s Self Storage (SSS),” produced the best risk-adjusted return among 10 U.S. real estate investment trust indexes in the past decade, according to the BLOOMBERG RISKLESS RETURN RANKING. They had the highest total return and the third-lowest volatility, for a risk-adjusted gain of 10.6 percent. Owners of offices, hotels and warehouses fared among the worst, hurt by price swings.

Enlarge image

Best U.S. Real Estate Located With Self-Storage

Andrew Harrer/Bloomberg

A Public Storage rental office is seen in the Bronx borough of New York, U.S.

A Public Storage rental office is seen in the Bronx borough of New York, U.S. Photographer: Andrew Harrer/Bloomberg

Public Storage, CubeSmart, Extra Space Storage Inc. (EXR) and Sovran Self Storage Inc. attracted investors with low debt ratios and steady cash-flow growth in a decade that saw commercial-property values soar to records along with sales of mortgage-backed bonds to finance a wave of takeovers. The debt-to-assets ratio for Public Storage, the largest in the group, is 22.5 percent, half the average 45 percent for REITs, saidMichael Knott, managing director of real estate research firmGreen Street Advisors Inc., making the stock less susceptible to large price swings if the economy worsens.

“Public Storage (PSA) has incredibly low leverage compared to the average REIT,” Knott, whose firm is based in Newport Beach, California, said in an interview. “It’s typically not as volatile.”

Warehouses Trail

The Bloomberg REIT Public/Self-Storage Index (BBREPBST) topped gauges tracking healthcare REITs and regional mall REITs, which returned a risk-adjusted 8.4 percent and 7.5 percent, respectively, in the 10 years through April. Warehouse REITs (BBREINDW), which had the highest volatility and the lowest total return during the period, joined hotels at the bottom, with a risk-adjusted gain of 0.8 percent.

Storage REITs release first-quarter earnings this week. Extra Space Storage said April 30 that first-quarter funds from operations rose 41 percent on higher revenue and cost controls. Sovran is scheduled to release earnings after the market closes today, and the other two companies in the group report tomorrow.

The risk-adjusted return, which isn’t annualized, is calculated by dividing total return by volatility, or the degree of daily price variation, giving a measure of income per unit of risk. A higher volatility means the price of an asset can swing dramatically in a short period of time, increasing the potential for unexpected losses.

Basic Units

The ranking compares 10 of the 11 property index types within the Bloomberg REIT index. It excludes single-tenant REITsbecause that index contains just four mostly smaller members whose business of retail leasing is reflected in broader indexes.

Storage REITs had twice the cash-flow growth of REITs in main property types from 2001 to 2011, according to Green Street. Net operating income for storage facilities open at least one year rose an average 3 percent a year during that period, compared with 1.5 percent on average for other REITs.

Companies such as Public Storage of Glendale, California; Salt Lake City-based Extra Space; and CubeSmart (CUBE), of Wayne,Pennsylvania, rent storage space by the month. The facilities can range from basic 5-foot-by-5-foot (1.5-meter-by-1.5-meter) units to climate-controlled rooms of 25 feet by 25 feet where people can stash goods such as furniture, tools and skis, a salesperson can store product samples, or a small business can keep items as in a mini-warehouse. Demand tends to be driven by life changes, which often entail moving, such as college graduation, job changes, divorce or death.

Cleaning Out

“If you get married, you don’t necessarily throw your couch away, you don’t necessarily throw away the buffalo head, what have you,” said Clemente Teng, vice president of investor relations for Public Storage. “You put it in storage.”

Public Storage has about 1 million tenants at any given point in time, with the average lease of existing tenants running about 36 months, Teng said. More than half its tenants have rented their units for more than one year, he said.

“People always think, ‘I’ll just house it for a couple of months and then get it all out, but the problem is once you get all your stuff in, the last thing you want to do is spend a Saturday cleaning it out,” Teng said.

Rents Rise

Occupancy and rents in the storage business probably will increase over the coming year amid rising demand and virtually no new construction, said Chris Sonne, executive managing director of the self-storage industry group at Cushman & Wakefield Inc. The commercial real estate services firm expects occupancy will increase by 1 to 3 percentage points and rents will rise 3 to 3.5 percent, said Sonne, whose group conducts a quarterly survey of about 7,000 facilities in the 50 largest metropolitan areas.

“Physical occupancy is inching back up so they’re able to really raise rents,” Sonne said.

Median occupancy rose to 81.1 percent in the first quarter from 80 percent a year earlier. The median asking rent for a unit of 10 feet by 10 feet at ground level and not climate-controlled climbed to $90 a month in the first quarter from $88 a year earlier, according to Cushman & Wakefield. Public REITs saw stronger rent growth because their revenue-management tools enable them to increase rents to match demand, said Sonne.

‘Not Cheap’

Public Storage, with a market value of $26 billion, accounts for 81 percent of the BBREIT Public/Self Storage Index. Its shares closed at $145.04 yesterday, for a dividend yield of 3 percent. The company operates in 38 states, with Californiaaccounting for about 25 percent of revenue.

“It’s not a cheap stock,” Knott said. “It should be an outperformer over a long time period, but over the next three, six or nine months, it’s hard to say it’s going to outperform.”

Two-thirds of the 25 analysts who follow Public Storage have “hold” or “sell” recommendations on the stock, which has returned 58 percent since April 2010, according to data compiled by Bloomberg.

Storage wasn’t always so attractive to investors. In the five years through 2006, when the Bloomberg REIT index more than doubled, regional malls and shopping centers topped the ranking. Storage, while second by total return in that period, fell to third when adjusted for risk, because it had the second-highest volatility, after hotels.

‘Low Barriers’

Those price swings coincided with a period where the supply of storage units increased in the U.S. New construction of facilities rose by more than half in the 2000s, with the fastest growth in the beginning and middle of the decade. The U.S. had an estimated 50,048 self-storage facilities last year, up from 29,955 in 1999, according to the Self-Storage Almanac, published by Phoenix-based MiniCo Insurance Agency LLC, which provides insurance and publications for the industry. Storage facilities also got larger, growing to an average of 566 units each in 2011, from an average 243 units in 2000, according to the Self-Storage Almanac.

“During 2001 to 2007, there was a great amount of new supply built because of low barriers to entry and cheap financing,” said Teng of Public Storage. “All that has virtually come to a halt.”

The relatively low capital needs of the storage business became more attractive after the financial crisis, as investors shunned companies with large debt burdens. Storage REITs topped the riskless return ranking since the end of 2009, with the second-lowest volatility and the second-highest total return.Regional malls, No. 2 over that period, had the best total return and the third-highest volatility.

‘No Carpeting’

Storage units are relatively cheap to build and “when we re-rent a space, all we have to do is sweep it out,” said Teng.“We don’t have to change the carpeting, paint the walls” or otherwise make improvements to get a new tenant.

High leverage remains a concern for some hotel REITs, which have trailed in returns because recreational travel hasn’t fully rebounded from the slump caused by the recession in 2008 and 2009. Hotel operators tend to see bigger swings in net operating income than other REITs, reflecting their lower operating margins, according to Green Street.

Hotel REITs returned just 0.8 percent over the past 10 years when adjusting for risk. They had the second-highest volatility and the second-lowest return. Office REITs (BBREOFPY), whose assets include well-known “trophy” properties such as the General Motors Building in Manhattan and Embarcadero Center inSan Francisco, had the fourth-worst risk-adjusted return in the period.

Appealing Exteriors

Increased usage of Internet marketing has helped storage REITs attract more customers from smaller operators during the sluggish economic recovery, said John Murphy, a vice president at Cohen & Steers Inc. (CNS), a New York-based investor in real estate shares that manages almost $45 billion. The storage business is fragmented, with the publicly traded REITs accounting for just 10 percent of the U.S. market, he said.

“They’re able to steal market share in a time like today, when demand is growing but at a slow pace,” said Murphy. “With revenue management, they know which facilities they can increase rents on” week by week.

The geographic diversification and large base of tenants gives the publicly traded storage REITs some protection from economic swings, offsetting the short-term nature of storage leases, said Murphy.

Sovran, which operates under the Uncle Bob’s Self Storage name, has been reducing concessions, or landlord incentives, as the economy came out of recession starting in 2009, said Diane Piegza, a spokeswoman for Sovran Self Storage, based in the Buffalo, New York, suburb of Williamsville. During the recession, Sovran offered as much as six weeks free rent and ran a “name-your-price” promotion to attract renters.

“We’re not recession-proof by any means but we’re a little more resistant than other types of real estate,” Piegza said.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net

Real estate: it's not just about the economy

Joel Hall (RE/MAX Real Estate Services) — Tue, 01 May 2012 07:58:54 -0700

Home sales are affected by many things. The economy is indeed the guiding factor for a slowdown, but other problems exist that contribute to the frustration felt by both buyers and sellers. Most of these issues could be eliminated and would bring a level of confidence into the housing market.

Flood insurance: For the past several years, Congress has been approving short-term extensions of the National Flood Insurance Program's (NFIP) authority to issue insurance policies. Without the ability to get insurance the sale of homes and the growth that has been projected in those areas will be severely limited. About 42,000 people that live in a flood plain here in Washington would not be able to sell their homes. Builders are hesitant about constructing in these areas for fear that their homes could not sell. Congress needs to agree to long term extensions.

Short sale process: Owners of non-distressed properties are often challenged by the number of short sales in their neighborhoods which contribute to a longer market time for a lower price. Buyers were originally drawn to distressed properties because of possible “deals.” But, with long delays and uncertainty coupled with banks unwillingness to take deep cuts, buyers are assessing the value of purchasing such properties. Short sales must be expedited. New legislation has been introduced to require servicers to decide whether to approve a short sale within 45 days of completion of the file. Buyers are in limbo for months waiting for a lender reply, forcing some to walk away from a sale.

Loan approvals: Lenders could approve applications quickly based on the new qualifying guidelines. But, many buyers do not get formal approval until a few days before the closing date. This puts contracts at risk of not closing based on change of interest rates or new requirements imposed by the lenders.

Mortgage interest deductions: Looking for ways to cut the national debt, Congress has been debating the elimination of the mortgage interest deduction. One of the advantages of home ownership, this deduction has often been the deciding factor for purchasing instead of renting. The uncertainty of the deduction continuing has led many to re-evaluate proceeding with a purchase. The value of the amount that would be saved would be questioned by the harm it would do to the housing industry.

Tax on loan forgiveness: In a short sale, the difference between the price a home sales for and the actual mortgage amount is considered “income” to the seller and is therefore taxable. Burdening a seller with a large tax bill after going through the pain of a short sale will be problematic. The law that forgives this “income” will expire on December 31, 2012. Extending forgiveness of this portion of the loan amount will unburden sellers and increase the possibility of returning to the market in a few years. It will also eliminate the prospect of a bankruptcy instead of the short sale.

Appraisals: At the height of the market, appraisers sometimes worked with the banks to adjust the true value of the home. In an effort to create an arms-length relationship, laws were enacted to keep a distance between the banks and the appraisers. Unfortunately, this resulted in appraisers working in areas that they were not familiar with. This has resulted in appraisals that were below market value which have stopped many transactions from closing, added additional expense or lost value for the seller.

QRM (qualified residential mortgage): Over the last many months, banks have established new rules and qualifications for obtaining a loan. With those protections in place, the requirement for a 20 percent down payment only results in qualified borrowers, who have the resources to pay a mortgage, unable to obtain one. Statistics show that it would take a borrower up to 14 years to save the necessary 20 percent down payment. Historically, a very high percentage of new home loans were dramatically under that amount. This would have a negative effect on any market rebound.

Addressing these issues will do much to stimulate the housing market. Not fixing these problems will add to the delay of any real recovery.

Joan Probala is the managing broker for Issaquah Windermere (Windermere Real Estate/East Inc.). She has 30 years of experience in real estate, construction and sales and is president of the Seattle King County Association of Realtors.

Sell your house online, where buyers search

Joel Hall (RE/MAX Real Estate Services) — Fri, 27 Apr 2012 08:30:34 -0700

When selling your home, you must market it online because that's where the buyers are, says Scott FladHammer, a Fort Wayne, Ind., real estate investor and president of the Real Estate Investors Association.

"The Web is the best way for sellers to reach buyers," says FladHammer. "It's not shocking to see real estate newcomers harnessing the power of online marketing and even outperforming industry veterans."

Indeed, many sellers have had success using sites such as Trulia, Craigslist and eBay (EBAY) to put their homes in front of buyers. And increasingly, according to FladHammer, some sellers are even choosing to use online platforms in lieu of an agent. But whether you choose to sell solo or work with a pro, marketing your property online takes some work and know-how.

When you're selling a home, it's usually not a question of which site you want to list on, says Rich Urban, a real estate investor in Miami Beach, Fla.

"You're marketing the property, so you want to get in front of as many potential buyers as possible," Urban says.

These days, there are a lot of sites to choose from. Urban prefers Craigslist because it's free and well-targeted to a local area. But other sites have their advantages, too.

No matter where you list, Urban says it's important to consider

price and presentation. Write a succinct ad that addresses the kinds of details buyers want to see. High-quality photos that showcase the property's best features are also a good idea.

When it comes to marketing a property, some sellers might be inclined to do it alone. That's their prerogative, says Tupper Briggs, a broker who heads the Re/Max office in Evergreen, Colo. But he points out that many clients self-list online first before hiring him because they didn't price or market the property as well as they could have.

The more experience you have with pricing and marketing, the less likely you are to need a broker. If the broker offers online marketing and not much else, Urban says he's not sure that's a bargain.

"Online listings are really inexpensive, and on some sites they're free, so it's not a major selling point for a broker to offer an Internet marketing package," Urban says.

As for pricing, use all the tools, but take the data with a grain of salt. Each platform uses its own methodology for computing comparable listings.

Before you forgo the broker altogether, remember that brokers are likely to be the only people who have firsthand knowledge of the area's listing, according to Briggs.

If you choose to list your property for sale by owner, don't expect to bypass real estate agents entirely.

"You're going to hear from a lot of agents who want the listing," says Hunter Phoenix, a Los Angeles life coach and actress who bought and sold property on Craigslist without an agent.

Sellers can cut off cold calls from agents by including language in their ad that discourages that kind of solicitation. But there's a good chance you'll work with agents anyway, because many buyers bring their own, Phoenix says. Sellers shouldn't avoid buyers who hire agents, Phoenix says, but the buyers should pay the commission.

Listing the property on multiple platforms and creating good marketing materials are the easy part. What comes next is something most sellers don't see their brokers do, and for some people, it can be enough of a hassle to hire a professional.

"Sellers need to be able to sort through the looky-loos to find real, qualified buyers," says Urban. "That's always part of selling a home, and online is no different. But without an agent, the seller needs to field and filter those requests."

Depending on the area and the price that can mean a lot of calls and emails.

Sellers who work without an agent will also need to stage and show their property, says Phoenix. There are a lot of free, online resources that offer tips on doing that.

Many sellers list and market their homes on their own, and then hire a professional to handle the transaction. The reason is simple, says Joshua Marks, a real estate lawyer with JM Law Group in Philadelphia: "There are a number of legal issues that can come up that laymen just aren't equipped to handle."

Often, sellers will push back on the price after an inspection turns up needed repairs. Deciding who should pay, how much, and what kind of warranties come with that work raises issues beyond the reach of most laymen, Marks says. Then there sometimes are questions of easements and other property issues. Sellers who choose to go it alone may unknowingly expose themselves to liability years after the sale, Marks says.

Is the real estate bubble in China about to pop?

Joel Hall (RE/MAX Real Estate Services) — Tue, 24 Apr 2012 11:31:24 -0700

NEW YORK (CNNMoney) -- The real estate market was on fire.

Buyers were snapping up sparkling new condos faster than developers could build them. Investors were grabbing two, three, four apartments each, hoping to cash in on skyrocketing prices.

But then the music ended. Prices started to slide. Developers were stuck with empty buildings. Homeowners saw their wealth begin to slip away.

Sound like the United States in 2007? Nope. It's China in 2012.

After experiencing a red-hot growth in recent years, China's real estate market is starting to falter. Developers are offering discounts to unload their unsold inventory. Spooked by falling prices, would-be buyers are staying on the sidelines, while investors mourn the decline in value.

But will a housing downturn plunge China into its own Great Recession, as it did in America? Experts say it will certainly hurt, but it's not likely to spark the same kind of crisis it did in the U.S.

Buying frenzy

The Chinese, who have only been able to own homes since the late 1990s, have never experienced a sustained slide in real estate before. They have been pouring money into housing over the past decade since they had few other investments to park their savings in.

Also, in response to the global financial meltdown, China's government loosened restrictions on lending to keep the economy growing at a nearly 10% clip. This prompted home prices to rise by 50% over the three years ending in 2010, said Nicholas Consonery, analyst at Eurasia Group, a political risk research and consulting firm.

Just like their American counterparts, the Chinese wanted a piece of the real estate riches. So they bought apartment after apartment, never intending to rent them out, said Patrick Chovanec, associate professor at Tsinghua University in Beijing. Instead, they just wanted to stash their cash and capture the appreciation.

China's economic growing pains

Accurate statistics are hard to come by in China, but various estimates say there are between 10 and 65 million vacant units held for investment.

"Every city in China has a new development district with row upon row of condos that are sold, but empty," Chovanec said.

The Chinese government, concerned by the steep run-up in prices and residents' frustration with the lack of affordable housing, stepped in in 2010 with measures to rein in speculators. These included higher downpayments, tough qualifications for mortgages, residency requirements and limits on investment purchases, Chovanec said.

But developers continued to borrow and build, thinking the government would back down to maintain economic growth. The bubble expanded to new markets in second-tier and third-tier cities.

China's hottest companies

When officials didn't budge, developers finally had to concede. Last summer, they started liquidating their inventories and slashing prices. That prompted recent homebuyers to protest and even riot in Shanghai, Chovanec said.

Sales collapsed, dropping close to 20% in the first quarter compared to the year prior, said Nicholas Lardy, senior fellow at the Peter G. Peterson Institute. And there is virtually no growth in housing starts these days.

Prices have also fallen, though the estimates vary widely. Official statistics show a drop of only a few percentage points in major cities, but experts have heard developers offering discounts of up to 40%.

Ripple effects

There's little debate that China's real estate boom is fizzling, but experts are somewhat divided on how badly it will rock the country and the world.

There are several important differences between the U.S. and Chinese real estate markets that could cushion the blow for the Chinese. A primary one is that homebuyers in China always had to provide down payments of at least 20%. Owners have 40% to 50% equity in their homes, on average, Lardy said. Default rates are very low.

So they won't be hurt as badly by falling prices as Americans were, though they will see their wealth diminish. Some 40% of wealth in China is in housing, compared to 32% in the United States at its peak a few years ago.

Developers, however, are hurting because they are overleveraged. A handful of small ones have already declared bankruptcy -- a rare occurrence in China -- and others are on life support.

"This is a classic real estate bubble," said Susan Wachter, real estate professor at the University of Pennsylvania's Wharton School, noting it's more similar to America's real estate problems of the early 1990s, which were due to overbuilding. "It will take time for absorption."

Asia's 25 hottest people in business

Banks could also be in trouble because much of their collateral is real estate. And local governments are suffering because they rely on land sales to repay debt and cover up to 40% of their operating budgets.

The Chinese economy, however, may feel more of the sting as the housing market slows. Around 10% of economic growth in China last year was directly related to real estate development, so it will be hard for the country to keep up its blistering pace if housing investment cools. By comparison, residential real estate construction in the United States peaked at 6.1% of the economy in 2005.

"There's a correction starting and if nothing else happens to offset that, economic growth could slow quite substantially," Lardy said.

And if housing development stumbles, other sectors of the Chinese economy will feel the pinch. Companies that provide building materials, including steel, cement and copper, will experience diminished demand.

A slowdown in China's economy will also be felt around the world. Manufacturers in Ohio, for instance, have been prospering recently as they try to supply China's infrastructure needs.

And Chinese consumers have been spending money on traveling and buying products from America, Europe and elsewhere -- boosting the economies of countries around the world.

Still, the future of China's real estate market remains unclear.

"No one has hit the panic button yet," Chovanec said. "Everyone is holding out hope that at some point it turns around somehow. But I also think that's a triumph of hope over reason."

Think twice before selling real estate at a loss

Joel Hall (RE/MAX Real Estate Services) — Fri, 20 Apr 2012 10:53:40 -0700

By Benny L. Kass, Inman News

April 20, 2012

market for approximately two years. One is our primary home, and one is a second home on the lake. Due to personal issues, we want to sell. Should we take a loss and sell, or hang tight?

A: If you really must sell for personal reasons, then why ask the question? Get the best possible price that you can.

However, if you are still in doubt and uncertain about selling now, then I can try to provide you with some guidance. But this is your decision to make. All that the pundits and the fortunetellers can do is make suggestions; we cannot see into the future.

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The economy is moving forward, albeit slowly. Mortgage interest rates remain extremely low, which means people can buy or refinance as long as they can qualify for loans under the current strict mortgage lending policies.

Why do you want to sell? If you sell your primary house, where will you live? Have you considered the alternatives? Will you have a profit on either or both houses or are both underwater? That makes a big difference.

Can you afford to hang in there for perhaps another year, or is the cost of the two properties (mortgage, taxes, insurance and upkeep) hurting you financially?

All these are questions you should consider before taking the plunge. I cannot guarantee anything, but I really believe that within the next year or two, the real estate market will rebound.

I have been telling my clients and my readers for years that buying a house should not be considered an investment but rather a place to live and call your home. Obviously, if you make money by appreciation, more power to you.

Q: I own a single-family rental house in suburban Chicago. I have long-term tenants, and the house needs quite a bit of updates and improvements.

Because of the high taxes, the cost of upkeep and maintenance and in general, the climate of the real estate industry, I'd like to dispose of the property. Unfortunately, selling the house is not a realistic option because houses in the area remain on the market for many months and even years, and I figure that I'd have to dump a ton of money into the property in order to make it presentable and pass the rigid home inspection policies of the city, prior to selling.

Therefore, I'd like to entertain the ideas of either demolishing the property and donating the land to the city or just giving or deeding the property to the current tenants and walking away (there is no mortgage on the property). I've offered to sell the property to the tenants, but they have bad credit and no money.

Are these viable options? What are the legal implications of each option?

A: You have a house free and clear, and it is an investment property. Before you do anything drastic, I would discuss your situation with a tax professional.

There are many options. You can sell it for whatever you can get and take a loss (confirm this with your accountant). I suspect that despite the city requirements, you still have the right to sell your property "as is."

You can donate it to a charity and again take a tax deduction. You can do a Starker (Section 1031) exchange and end up with a better property. And despite the bad credit of your tenants, you can arrange for a land-sales contract, whereby they start making monthly payments toward the purchase and at some point in time you give them the deed to the property. If they don't make the payments, they are in default and you still have the property. This will require your attorney to assist you with the concept and its implementation.

I cannot see any benefit of spending the money to tear it down when there are plenty of other options.

Investing in real estate saves money for families of stair-step college students

Joel Hall (RE/MAX Real Estate Services) — Thu, 19 Apr 2012 08:28:37 -0700

LUBBOCK, Texas, April 19, 2012 /PRNewswire via COMTEX/ -- Strapping back for college as you look at one child and scratching your head as you look to your second and third coming right behind?

Maybe it's time to consider buying a house.

Pardon the whiplash on that last one, but the fact is, many parents are investing in real estate close to campus for their college-bound offspring. Oftentimes, it's preferable to shelling out dormitory fees or apartment rent.

"In Lubbock, that's definitely true. We're right in our peak season for families whose children will be attending Texas Tech University in the fall," said Debora Perez-Ruiz of MoVaDe Realty and president of the Lubbock Association of Realtors. "And, the majority of parents who purchase homes have stair-step children, meaning that once one is in college, future kids from the same family will be attending college within the next few years. The cost savings over the long run - especially for this type of family - are exponential."

And the timing is right, Perez-Ruiz added. Lubbock's real estate market has been continuously in better shape than the rest of the state and nation - but even locally, the last three months have outshined the last year.

"Parents of kids who plan to come to Tech next year have every reason to consider home ownership," Perez-Ruiz said. "The market's stable, homes are available and the cost is good."

As the owner of a campus house, Perez-Ruiz explained, the goals are similar to those of any landlord. You want a property that you can keep fully occupied and that will produce rental income to at least cover your costs (mortgage, taxes, insurance). You also want to be sure you have signed leases and security deposits from every renter.

What scares many parents - and keeps the dorms full - are the unknowns. What if I can't rent it? What if my kid drops out? What if the housing market suddenly flatlines? What if? What if?

"The question should be, how much growth is there in the community?" Perez-Ruiz said. "The ideal situation is a town like Lubbock, where we're not too big and not too small - yet the student population is growing."

Additionally, a house you own and can keep full still beats paying thousands each year for student housing. And, Perez-Ruiz said, don't forget the tax breaks on mortgage interest, property taxes and a percentage of utilities and maintenance (if you collect rents).

Canadian real estate market a tale of two cities -

Joel Hall (RE/MAX Real Estate Services) — Tue, 17 Apr 2012 07:55:38 -0700

It’s a title Vancouver is more than happy to relinquish.

Canada’s hottest realestate market is finally cooling off, new sales figures show, much to the relief of those who have grown weary of talk of a West Coast property bubble.

At more than $761,000, the average cost of a Vancouver home is still higher than anywhere, but was 3.1 per cent lower in March than in the same month last year. Sales activity is slower, too, down 22.3 per cent through the first three months of 2012.

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But the data from the Canadian Real Estate Association indicate that Toronto’s sizzling market is still gaining momentum, with average prices in the country’s largest city soaring more than 10 per cent last month, to about $504,000.

The diverging fortunes of the country’s two most important real-estate markets adds to the complexity of the policy decisions facing Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney. Both have issued repeated warnings about the high level of personaldebt that Canadians are taking on to buy increasingly expensive houses.

But Mr. Flaherty has said he is reluctant to tighten the rules on mortgages again, believing that the market will correct itself, while Mr. Carney is unlikely to raise interest rates any time soon for fear of driving up the currency and hurting other parts of the Canadian economy.

Toronto and Vancouver together account for about one-quarter of all real estate activity in Canada.

The opposing directions of the two cities have resulted in a country-wide average price that’s edging lower, easing economists’ concerns of a U.S.-style crash. And should the trend continue, it may also ease the worries of officials in Ottawa.

“When it comes to housing, Toronto is not Canada, nor is Vancouver,” Douglas Porter, an economist in Toronto at BMO Nesbitt Burns, said in a report.

“For most cities, the market looks well balanced, and is broadly moderating on its own accord.”

Nationally, the average price of a home fell 0.5 per cent to $369,677 in March from last year while sales rose 1.6 per cent.

“The slight decline in the national average price points to a tug of war between Toronto and Vancouver,” Gregory Klump, chief economist for the Canadian Real Estate Association, said in a statement. “The decline in average price reflects the change in Vancouver’s sales mix, not housing price deflation.”

Despite the price drop, few in Vancouver are calling this a correction. The spring of 2011 saw a spike in sales of expensive luxury homes in Vancouver that is now skewing the data for 2012, some argue.

Real estate agent Steve Di Fruscia, who specializes in selling high-end homes, said the Vancouver market, particularly in pricey areas such West Vancouver, are in the midst of a “typical cooling-off period,” after the frenzied activity of a year ago

“We’re still on a very optimistic, greedy part of the year where people are trying to cash in on extra high prices, believing that we will have the same spring as we did last year and prices will continue to skyrocket another 10 to 15 per cent,” he said.

Mr. Di Fruscia markets his clients’ properties in both Canada and mainland China. Some have blamed Vancouver’s high prices on an influx of so-called “foreign” and “speculative” money from foreign investors. However, Mr. Di Fruscia said 95 per cent of his sales of Vancouver homes are to Chinese buyers who are immigrating to Canada as citizens or permanent residents.

There are no statistics on what, if any, impact foreign investors are having on the real estate market in Vancouver, Toronto nor the rest of Canada. Cameron Muir, chief economist of the B.C. Real Estate Association, suggested that in Vancouver, the number of foreign buyers are “much lower” than many people think, accounting for between 1 per cent and 3 per cent of the market.

In Toronto, a low supply of properties is leading to bidding wars that drove up the average price of Toronto homes to $504,117 in March. Toronto’s average home prices have set a new record high in every year since 2000 and 2012 should be no different.

“We’d love to have more inventory to sell because there’s no shortage of buyers looking for good inventory,” said Kevin Somers, the broker area manager for Royal LePage Real Estate Services Ltd. in central Toronto.

“As long as the basic economic indicators and interest-rate outlook remain positive, people will always need a place to live and would rather own than rent in most cases.”

6 Worst Home Fixes for the Money

Joel Hall (RE/MAX Real Estate Services) — Mon, 16 Apr 2012 07:26:55 -0700

It's the magic phrase uttered by almost anyone who's ever considered the cost of home remodeling: "We'll get it back when we sell."

Unless you keep those projects practical, though, you might just be kidding yourself.

For example:

Steel front door: Good.
Master suite addition costing more than the average American home: Bad.

Every year, Remodeling magazine looks at the hottest home upgrades and renovations and calculates just how much owners get back with they sell.

[Related: 10 home maintenance tips for spring]

Upkeep is more popular than upgrades these days, says Sal Alfano, editorial director for Remodeling. These are the projects that often recoup the biggest slice of expenses at resale. But prices and returns do vary regionally, he says.

Ever wonder what brings the lowest return when you plant that "for sale" sign? Think high-dollar, high-end and highly personalized add-ons that make you drool. Like a totally tricked-out garage built from the ground up. Or a super luxe master suite addition. Or the home office redo designed just for you.

Here are the six improvements that, in their 2010 report, ranked dead last nationally when it comes to getting those renovation dollars back at resale.

[Click here to check home loan rates in your area.]

Home office remodel

Want to get an idea what today's office-away-from-the-office looks like? Walk into Starbucks.

These days, a home office consists of a multiple-choice combination of wireless laptops, smartphones, PDAs and touch-screen tablets. And that worker bee might be toiling anywhere from a home patio or a favorite restaurant to a park bench.

The standard home office renovation, meanwhile -- complete with plenty of built-in storage and high-tech wiring -- is this year's biggest loser in the resale value sweepstakes. Nationally, homeowners spent an average of $28,888 and can expect to recoup about 45.8 percent at resale, according to the report.

Return on investment doesn't reflect your enjoyment of the space, Alfano says.

He offers two tips for home-office remodelers when they sell. First, opt for something that can be easily converted back into a bedroom or den for (or by) the next buyer.

Second, when you're selling, call it a study, den or hobby room. "There's lots of call for multipurpose space. Don't lock yourself into that one use," Alfano says. Don't use words that invoke images of actual work. Or the office.

Backup power generator

You see a backup generator and imagine all of the comforts no matter what the weather.

But potential buyers hailing from outside your local area may not share that vision. (And a handful of those who do might have watched too many zombie movies.)

On average, when homeowners have a heavy-duty backup power generator installed, they spend about $14,718, according to the report. Going with a slightly less expensive model or having a less complicated installation could cut the costs significantly, Alfano says.

Average amount of the price recovered at resale time: 48.5 percent.

Sunroom addition

Real estate agents will tell you that potential buyers want square footage, pristine condition and lots of light. So a brand-new room that has the word "sun" in it, it has to be great for resale value, right?

Not necessarily.

Your first clue: The word "addition" -- which means expanding the footprint of your home -- indicates that this is not a renovation for the faint of heart (or wallet). "It's one of the more expensive projects," Alfano says.

While it seems simple enough, the national average for a sunroom addition is $75,224, according to the report. Homeowners can expect to recoup about 48.6 percent when they sell.

That doesn't mean that adding a sunroom is always a bad move.

If your home needs another common area, a sunroom could be the answer, says Katie Severance, co-author of "The Complete Idiot's Guide to Selling Your Home." An addition is best considered in the context of the whole home, she says. "The doctor has to treat the whole patient. You have to look at the house and say 'What's out of balance?'"

Upscale master suite addition

Who doesn't want to wake up in a five-star-hotel-quality suite with an attached spa bathroom and a kitchenette that affords you coffee and pastries before facing the world?

Once you see the price tag, it won't just be the coffee keeping you up at night.

For a super-deluxe master suite addition -- which adds square footage and uses only top-dollar materials -- the average cost is about $232,062, according to the report.

That's 460 nights at a posh resort with enough left over to raid the minibar.

[Related: Best way to pay for home improvements?]

In years past, this project was "sort of a trend in vacation homes" that migrated to primary dwellings, Alfano says. Sellers can expect to recover about 52.7 percent at resale.

Your buyer can purchase a newer house with the same features as part of the original floor plan that "probably lays out better anyway," says Loren Keim, author of "How to Sell Your Home in Any Market."

So while the next buyer may appreciate your luxury accommodations (which could even tip their decision in your home's favor), chances are they won't want to pay the full tab for your remodel.

Bathroom addition

Unless you're a hermit who never entertains, you've probably wished for an extra bathroom now and then.

But bathroom additions require serious coin. For a moderately outfitted addition with synthetic stone or plastic laminate surfaces, figure parting with about $21,695, according to the Remodeling report. Go upscale, with finishes like premium marble or fine tile, and you can easily spend in the neighborhood of $40,710.

Either way, you get about the same return: 53 cents on the dollar. "In the buyer's mind, the additional bathroom isn't worth that additional $20,000 to $40,000," Keim says.

Investigate a less-expensive way to get the same result without flushing quite as much cash. While additions usually cost more, pros might be able to reconfigure your existing space to add a bathroom for less, Alfano says.

Upscale garage addition

Instead of cleaning out the garage, how much would you pay to have a new one built from scratch?

This time, it would have all the organizational built-ins, and a durable, easy-to-clean floor to ensure it would never be messy again. And windows for natural light.

Oh yeah, and you could store a couple of cars in there, too.

The price tag for a top-of-the-line detached two-car with all the trimmings is about $90,053, according to the report. You can expect to recover about 53.6 percent of that when you sell.

"This one is completely decked out on the inside," says Alfano. "It's a dream garage."

And that's likely some of the problem with recovering the value at resale. Says Keim, "You've got a very small target audience out there that wants an upscale garage."

What you need to know about real estate now

Joel Hall (RE/MAX Real Estate Services) — Wed, 11 Apr 2012 07:51:37 -0700

(MoneyWatch) After weeks of mixed housing news, many Main Street Americans are wondering just what's going on with the housing market. The federal government has stepped in on a number of occasions, but despite all the financial help, the housing recovery has been slow and painful. It leaves many people wondering where we are so many years after the housing bubble burst.

There's no definitive answer - after all, real estate is all about what's happening locally, not nationally. But I want to address some of the most common questions.

Q. What's going on with home prices?

A. As with everything in real estate, home prices are highly dependent on location, location, location. Select markets have seen home values improve, but the overwhelming national trend is a decline in prices. According to the latest S&P/Case-Shiller home price index, prices fell 4 percent year-over-year in the fourth quarter of 2011. (In Atlanta, home prices fell nearly 13 percent last year.)

Prices will probably continue to fall through 2012, due to big banks clearing out their foreclosure inventories. But as the year wears on and the number of REO homes dwindles, I believe prices will begin to rise - modestly - again.

Don't expect anything to happen quickly, though. It took us years to get into this mess and will take us just as long to get out.

Buying or selling your home? Local real estate markets

Q. Are foreclosures still happening at a rapid rate?

A. Foreclosure activity recently increased due to the big settlement between banks and states, but it's still down from one year ago. According to RealtyTrac's last foreclosure report, foreclosure filings were reported on 210,941 U.S. properties in January. That's a 3 percent increase from the previous month, but still down 19 percent from January 2011.

So, while banks are still foreclosing on homeowners, the velocity has slowed. Foreclosures are not happening at the rapid pace they were a few years ago. We should expect to see foreclosure activity increase a little in the coming months, which is not good news. But it needs to happen. Foreclosures keep home prices down and buyers from jumping into the market. Until we get through them, we can't begin a true housing recovery.

Q. What is the government doing today to help the housing market?

A. The government is actually doing a number of things in hopes of further stimulating the housing market. Many haven't worked (like the original loan modification programs), and others - like the Independent Foreclosure Review - have been poorly publicized. Those which have been touted as the cure for what ails the housing market have mostly failed. The programs I've received the most questions on are:

HAMP/HARP programs

The Home Affordable Modification Program (HAMP) is geared toward helping homeowners who have fallen on hard times. Borrowers must meet certain criteria and complete a trial loan modification of about three months. Ultimately, it's up to the lender whether or not you receive any help; as you might imagine, many borrowers receive nothing.

The Home Affordable Refinance Program (HARP) is designed to help underwater homeowners who are not in financial trouble. In other words, the value of their home has gone down but they can still make payments on time. The loan must be owned or guaranteed by Fannie Mae or Freddie Mac to be eligible for the HARP program.

By most accounts, these programs have been unsuccessful in doing what they set out to do: Keep people in their homes.

Independent Foreclosure Review

The Independent Foreclosure Review has been poorly publicized, and many consumers don't realize it's an option. The review is conducted by an independent agency and gives homeowners the opportunity to request a review of how their lender conducted the foreclosure of their primary residence.

The Office of the Comptroller of the Currency (OCC) recently extended the deadline for submissions until July 31, 2012. More information, including eligibility criteria, is available in my Independent Foreclosure Review post.

Foreclosure Settlement

The nation's largest lenders recently agreed to pay out billions to the states and drastically overhaul their industry after deceptive foreclosure practices and robo-signing caused many homeowners to lose their homes. But what does the foreclosure settlement mean for consumers?

Unfortunately, not much. Only 750,000 Americans, or roughly half of those eligible to receive assistance under the deal, will receive $1,800 checks. That's not enough when you've lost years' worth of mortgage payments.

It's hard to be optimistic about the terms of the settlement. It doesn't offer much to those who have already lost everything, and it's not clear if lenders will actually make significant changes to their practices. And, it's probable the cost of the banks' payouts to the government will somehow be passed onto the consumer.

Q. Is there an end in sight?

A. The housing market will rebound at some point, but it's unlikely we'll see the prices we saw during the housing bubble in the near future. In fact, some would argue we may never see them again.

It's possible there's been a fundamental shift in the way we view housing. James Bullard, president and CEO of the Federal Reserve Bank of St. Louis, makes the argument that current would-be homebuyers see homeownership as not worth the risk.

At a speech in New York, Bloomberg reports, Bullard said:

"My sense is that the housing debacle of the past five years may have scared off a generation of potential homeowners. New home buyers likely see homeownership as a fundamentally riskier proposition than earlier cohorts and therefore may be far more likely to rent rather than own."

With recent reports showing drops in home values and acceleration in foreclosures, it's unlikely we'll see "the end" any time soon. But I want to know what's happening with you. Email me with your questions or concerns about today's real estate market.

Real estate buyers should rely on investigation, rather than emotion

Joel Hall (RE/MAX Real Estate Services) — Mon, 09 Apr 2012 08:08:41 -0700

Whether shopping for a home or apartment, real estate buyers should rely on more than just their gut-level feelings. NY1's Real Estate reporter Jill Urban filed the following report.

Buying a home is a very emotional process. When buyers attend a showing or an open house, they often look for a gut feeling that the property could "be the one." Teri Rogers, the founder of BrickUnderground, says buyers need to take the emotion out of it and for not-too-obvious clues as to whether the property is a good investment.

"People go to look at a home at an open house and tend to really look at the surface of it, as opposed to peeling back the layers and seeing what kind of story that apartment is telling," says Rogers.

She has some advice on how to get the full story about a listing. First, buyers should judge the building. Checking the condition of the lobby, the elevators and the hallways could give insight into the how well the building is maintained and if one can expect any surprise assessments after purchase.

Once inside the home, look behind anything that may be in the way. Peek behind furniture and wall coverings, lift up rugs and look inside cabinets, anything to get a full picture of what’s for sale.

"Look in places you might not think to look. Look under the sinks for signs of water damage or pests problems. Look at the electrical outlets and if you see a two-pronged outlet instead of a three-pronged outlet. You may need to be upgrading the electric in the apartment," says Rogers. "Also, just to double check on when that renovation was really completed, open the microwave or refrigerator and find the manufacturer date stamp and that will give you an idea when that kitchen was overhauled."

She says buyers should rely on their senses. Do they smell smoke or food from a neighbor? Can they hear noise from the street? Also, they should not always rely on a broker says.

"Be skeptical. Don’t take the broker's word for anything, whether you can install a washer-dryer, or whether dogs are allowed or when that renovation was completed," says Rogers. "Ask for documentation. You may not get the documentation you want at that moment, but the broker’s reaction could give you a good clue as to the answer."

She also suggests chatting up a doorman or neighbors, because they can usually tell more about the building than the broker can.

Don’t forget to look at the amenity spaces, as they can share a lot about the upkeep of the building and maybe even offer some clues to its demographic breakdown.

To see more tips like these, visit www.brickunderground.com.

How to own property without fixing leaky sinks

Joel Hall (RE/MAX Real Estate Services) — Wed, 04 Apr 2012 08:19:26 -0700

By Mitch Tuchman

PALO ALTO, Calif. (MarketWatch) — Nearly every retirement portfolio should contain real estate, but most investors can’t buy a building. Fortunately, it’s easy to own property without ever fixing a toilet, or worrying about a roof caving in during a storm.

Click to Play

How to sell a multi-million dollar apartment

Even really nice apartments need a little love when it is time to sell. Kelsey Hubbard investigates the art of "staging" an apartment for sale. As it turns out, a few design tweaks here and there can be both cheap and effective.

But first, it’s important to understand real estate as an asset class and its contribution to a portfolio. A property that is well located and leased gives you debt-like cash flow with the opportunity for appreciation like stocks. Leased buildings are valued based upon the stability of cash flow from rents and the cost to replace the building.

Real estate also protects you against inflation, as its value tends to move closely with the costs required to replace it. Think land, bricks, concrete, steel, labor, and fixtures. These costs rise with inflation, and landlords raise rents over time as inflation grows.

Why REITs make sense

You can get a well-diversified real estate portfolio by owning real estate in the form of real estate investment trusts (REITs). These are unique public securities because they pay no taxes and pass through 90% of their income to investors in dividends. From 1970-2009, public REITs returned an average of 9.1% per year. That means money invested in REITs doubled every eight years.

That doesn’t mean real estate won’t have ups and downs. The fair value of the real estate held in the REIT compared to the stock price can easily range between a 20% discount to a 20% premium. Between 2000 and 2009 REITs have been up or down by more than 35%. But while the stocks may swing, you can sleep at night knowing that you own hard, rent-paying assets.

Indexing purists claim that REITs are included in broad-market index funds and if you add REITs to your portfolio, you are guilty of playing sectors. But because so much real estate is still privately held, the economic activity related to the real estate asset class is not adequately reflected in the publicly traded REITs. To truly index global real estate activity requires “boosting” your real-estate holdings by adding REITs.

The best way to own REITs is through an exchange traded fund. The costs are low and you’d be hard-pressed to find an active fund manager with the expertise to consistently pick REITs over many years that will beat a REIT index. In fact, owning REITs through a mutual fund can cost you almost 50% of the yearly dividend you receive, in manager fees.

Instead of paying high fees, buy an ETF that holds all of the REITs that matter. We recommend two SPDR Dow Jones ETFs for REIT exposure: SPDR Dow Jones REIT /quotes/zigman/477654/quotes/nls/rwr RWR -1.44% , which indexes U.S. real estate, and the SPDR Dow Jones International Real Estate ETF /quotes/zigman/477875/quotes/nls/rwx RWX -2.09% , which indexes international real estate.

For investors interested in low-cost ETF portfolios and more. Visit MarketRiders.

/conga/story/misc/market-riders.html 195092

For an annual fee of just 0.2%, RWR gives you the largest 81 REITs in the U.S., including the largest American malls through Simon Property Group Inc. /quotes/zigman/235182/quotes/nls/spg SPG -1.46% , self-storage units at Public Storage /quotes/zigman/131415/quotes/nls/psa PSA -1.32% , apartments, office buildings, and strip centers. Last year, investors received dividends of 2.9%.

For a fee of 0.59%, RWX allows you to own a piece of companies including Westfield Group /quotes/zigman/441943 WFGPY -2.00% with shopping centers worldwide, and apartments and hotels held outside of the United States by Mitsui Fudosan Co. Ltd. /quotes/zigman/201224 MTSFF +1.39% . Last year, investors received dividends of 3.8%.

Zillow and Yahoo renew advertising deal

Joel Hall (RE/MAX Real Estate Services) — Tue, 03 Apr 2012 08:34:57 -0700

SEATTLE, April 3, 2012 /PRNewswire via COMTEX/ -- Zillow, Inc. /quotes/zigman/5930210/quotes/nls/z Z +2.64% , the leading real estate information marketplace, today announced a renewal of its exclusive advertising agreement with Yahoo!, which creates the Yahoo!-Zillow® Real Estate Network, the largest real estate network on the Web.[i] The companies entered into an advertising agreement in 2011, creating the Yahoo!-Zillow Real Estate Network to give real estate agents and brokers the ability to buy local advertisements on both sites with just one phone transaction.

"We are very proud of our strong relationship with Yahoo! and I'm extremely pleased to extend our advertising partnership," said Spencer Rascoff, Zillow CEO. "We strongly believe that home sellers and real estate agents benefit when they expose their listings to the broadest possible audience of potential home buyers, and with the extension of this partnership the Yahoo!-Zillow Real Estate Network remains the largest real estate network on the Web."

"Yahoo!'s relationship with Zillow has been essential in the Yahoo!-Zillow Real Estate Network's place as the premier advertising space for agents," said Brandon Huff, VP of Yahoo! Commerce. "We look forward to continuing our relationship with Zillow, maintaining our place as the most trusted source for real estate listings online and working together on opportunities to provide additional tools and features for our users in the future."

The Yahoo! and Zillow relationship began in 2006 when Yahoo! Real Estate incorporated Zillow's Zestimate® home valuations of now more than 100 million U.S. homes into its user experience. Zillow also became Yahoo! Real Estate's exclusive provider of for-sale listings. Any for-sale listing that appears on Zillow, including many listings not found on other sites such as for-sale-by-owner listings, automatically appears on Yahoo! Real Estate.

The Yahoo!-Zillow Real Estate Network has been the No. 1 or 2 real estate brand in all of the top 20 local markets in the United States. The network also allows advertisers to reach more U.S. Internet users than the next two largest competitors combined.[ii]

Tens of thousands of industry professionals have reached Zillow's more than 30 million monthly unique users[iii] with advertising programs like Zillow's Premier Agent, which allows agents to target specific ZIP code searches, and with Showcase Ads and Featured Listings, which allow agents and brokers to increase traffic to individual listings. In addition to selling local ads, Zillow sells national display advertising across both sites to new home builders, real estate agents and brokers.

About Zillow, Inc.Zillow /quotes/zigman/5930210/quotes/nls/z Z +2.64% is the leading real estate information marketplace, providing vital information about homes, real estate listings and mortgages through its website and mobile applications, enabling homeowners, buyers, sellers and renters to connect with real estate and mortgage professionals best suited to meet their needs. More than 30 million unique users visited Zillow's websites and mobile applications in February 2012. Zillow, Inc. operates Zillow.com®, Zillow Mortgage Marketplace, Zillow Mobile, Postlets® and Diverse Solutions(TM). The company is headquartered in Seattle.

The Zillow logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10012

Zillow.com, Zillow and Postlets are registered trademarks of Zillow, Inc. Diverse Solutions is a trademark of Zillow, Inc.

About Yahoo!Yahoo! /quotes/zigman/59898/quotes/nls/yhoo YHOO -1.20% is the premier digital media company, creating deeply personal digital experiences that keep more than half a billion people connected to what matters most to them, across devices and around the globe. That's how we deliver your world, your way. And Yahoo!'s unique combination of Science + Art + Scale connects advertisers to the consumers who build their businesses. For more information, visit the pressroom (pressroom.yahoo.com) or the company's blog, Yodel Anecdotal (yodel.yahoo.com).

Yahoo! is the trademark and/or registered trademark of Yahoo! Inc. All other names are trademarks and/or registered trademarks of their respective owners.

(ZFIN)

[i] comScore Media Metrix Real Estate Category Ranking by Unique Visitors, U.S. Data, February 2012.[ii] comScore Media Metrix Real Estate Category Ranking by Unique Visitors, U.S. Data, February 2012.[iii] Internal tracking via Google Analytics.

SOURCE Zillow, Inc.

Goldman Sachs eyes $3 billion property debt fund

Joel Hall (RE/MAX Real Estate Services) — Mon, 02 Apr 2012 08:07:07 -0700

LONDON (Reuters) - A private equity arm of Goldman Sachs is looking to launch a $3 billion property debt fund in a bid to take advantage of a growing shortage of real estate financing across the UK and Europe, British newspaper the Times said on Monday.

Real Estate Principal Investment Area (REPIA) is exploring options to create a fund that would provide senior and mezzanine loans to property investors, and will target property lending that is riskier but which would offer higher potential returns, the Times said without citing sources.

Mezzanine debt is commonly used to plug the gap between equity and senior debt, usually in the 60-80 percent loan-to-value band. The fund's structure and make up would be similar to another $2.6 billion property debt fund that REPIA set up in 2009 to target U.S. property investors, the newspaper said.

Europe's property industry is grappling with a widening debt funding gap, the shortfall between debt needing refinancing and the money available do so, as more banks slash lending to the sector in a bid to comply with incoming solvency regulations.

Property consultancy CBRE Group estimates that there is about 960 billion euros ($1.3 trillion) of outstanding debt secured across Europe, of which 575 billion must be repaid within the next three years.

Non-bank financiers that have recently launched funds targeting the financing gap include the property units of insurers Prudential Financial and AXA Group while fund manager BlackRock said it was considering making a foray into real estate debt.

Goldman Sachs was not immediately available for comment. ($1 = 0.7509 euros)

Real estate market signs of a rebound?

Joel Hall (RE/MAX Real Estate Services) — Fri, 30 Mar 2012 09:09:58 -0700

Home resales have climbed to their highest levels in nearly five years. In an unusual twist, activity might get a further boost from a recent rise in mortgage rates.

Q. I would like to buy my first home this year, but I’m worried that prices are going to keep dropping. Should I buy now or keep waiting?

A. There’s certainly no reason to rush out and make a purchase today, but you should at least start getting ready by getting preapproved for a loan to see how much you can borrow as the prime spring home-buying season approaches.

Although sales and prices have dropped in most parts of the country in the past several years, there are recent signs that the nationwide market might be coming back to life. Resales in January and February hit their highest levels since 2007, according to the National Association of Realtors, while permits for new construction — a barometer of future activity and a bellwether of developers’ confidence in the economy — rose to their highest point in more than three years. Average prices for both new and resale homes have climbed modestly.

It’s also worth noting that mortgage-interest rates recently have been climbing as the economy shows signs of improvement. The average rate on 30-year, fixed-payment loans in late March rose above 4 percent for the first time in six months, according to economists at the Federal Home Loan Mortgage Corp.

Traditionally, rising rates tend to push sales lower. But some experts say the recent increase could actually boost activity and prices by prompting more people to jump off the home-buying fence and finally make a purchase.

Q. My wife and I are both 60 years old, and we hope to retire in about three years. We visited a retirement community in another state last month and really liked it, and with prices so low, we are thinking about buying a place there now, then renting it to tenants until we are ready to move into it ourselves. What do you think of our plan?

A. Frankly, not much.

Owning an out-of-state rental property is rarely a good idea, regardless of a person’s age. Managing a faraway rental home can be difficult, but few small investors have the financial wherewithal to pay the stiff fees that professional management companies charge while still turning a profit.

Equally important, your letter states you and your wife plan to retire “in about three years.” That’s a pretty fuzzy time frame, and a lot can happen between now and then. Your retirement-housing choices might change dramatically if you or your spouse become ill, decide to work longer than expected or one of you passes away.

Coping with such issues would only be more difficult if the two of you had purchased a retirement home that you no longer needed. It’s true that house values are low today, but you shouldn’t purchase a property — especially in another state — with plans to lease it out until both you and your spouse pick a firm retirement date that’s only six months or a year away.

Q. We purchased a home last year and had to pay for a private mortgage insurance policy because our down payment was very small. Can we deduct the monthly cost of the insurance on the tax return that we are completing now?

A. Yes, provided you don’t have an above-average income.

Private mortgage insurance, commonly referred to as PMI, is usually required when a borrower makes a down payment that’s smaller than 20 percent of the home’s purchase price. Although the buyer must pay for the coverage, the policy essentially benefits the lender because it will reimburse the bank for some or all of its losses if the loan eventually goes into default.

The deduction was created through the federal Tax Relief and Health Care Act of 2006. It’s gradually phased out for married joint tax filers whose adjusted gross income tops $100,000, and disappears for those who earn more than $109,000.

There are a handful of other minor requirements. For details, get a copy of Internal Revenue Service Publication 936, Home Mortgage Insurance, by calling the agency at (800) 829-3676 or by downloading the document from the www.irs.gov website.

The deduction will expire this year, unless our bickering Congress extends it.

Real Estate Closing Attorneys And Their Importance

Joel Hall (RE/MAX Real Estate Services) — Thu, 29 Mar 2012 07:57:03 -0700

A few weeks back during our series on “The Five Steps to Home Buying,” we discussed in Step 5 the details of the closing process. Probably the most important player at the closing is the closing attorney, sometimes referred to as the closer or title attorney. The slight variation in description is of relative importance, although for our purposes here we will refer to this person as the closing attorney. The main points of consideration are the actual function of the closing attorney and which party to the transaction is represented by the attorney.

The most important point to remember is, in Georgia, the buyer always has the right to choose the closing attorney. The chosen closing attorney represents the lender in cases where a new loan will be written for the purchase. In cash transactions or cases where a traditional or institutional lender is not involved, the closing attorney represents the parties as stated in the terms of the contract for purchase. Some lenders may also provide a list of approved attorneys from which the buyer can choose. Regardless of the details, you can choose an attorney to represent you even in the case where an attorney is representing the lender and a different attorney is representing the seller.

In most cases of foreclosure or distressed property, the seller—typically a bank—retains their own representation throughout the transaction. That attorney will be the party responsible for reviewing the contracts and closing documents on behalf of the seller. That party will typically cooperate with the buyer’s choice of closing attorney either representing the buyer’s lender or the buyer directly in cases of non-traditional financing. Sometimes you might encounter a situation described above where the seller will insist on using their closing attorney. They may do so as long as all parties agree. As real estate professionals, this is not a practice we recommend. We recommend that our buyers seek their own representation, and of course we can and do offer referrals upon request.

Why is the choice of attorney so important for the buyer? Let’s look at a real life situation:

The buyer has identified a property, written an offer and the offer terms have been accepted. The normal course of action is for the real estate professional to forward the binding agreement to the buyer’s lender and the chosen closing attorney. The lender will order the appraisal and begin drafting the borrower’s loan documentation that will be signed at closing. The attorney will typically order title to the property. This is perhaps the most important fact check that will be conducted during the entire process. The property title is essentially the same as a car title or any other instrument granting a party the right of unencumbered use and enjoyment of property. The difference with property title is, because the land is considered indestructible, the chain of title can be traced back for decades. A property cannot and should not be conveyed by an attorney unless a clear chain of title can be traced—meaning no encumbrances, liens, etc. are attached to the property. There are several methods for searching chain of title. The vast majority of attorneys today use an electronic database of records. Of course, an attorney may choose to research the title by physically visiting the courthouse records room in the county where the property is located. The online search method is sufficient; however, the time period searched is of specific importance. Amee Davis, managing attorney at Davis & Associates in Marietta, says, “Attorneys should search title history for a period dating back a minimum of 30 to 50 years.” A 50-year title search is our preference as real estate professionals. We have experience in situations where the attorney only performed a 10-year title history search or even only go back in the chain of title to the two most recent conveyances. Many attorneys rely only on the issuance of a prior title policy to re-insure a property. While the title insurance policy will protect the new lender and the buyer’s interest in the property, the title insurance company may require a title matter to be resolved prior to a subsequent closing. If this were to occur, the current owner would not be able to convey title to the property until the matter is resolved. This could result in a delayed closing while the situation is corrected.

Exercise your right as a buyer to choose the closing attorney. Make sure you understand who actually clears the title for closing. Is it a paralegal working on behalf of the attorney or is it the attorney herself? Does your attorney come as a recommendation of your real estate professional, or is he the “preferred” attorney of the seller? These are important questions that, left unanswered, could have a negative result for the buyer after closing.

More stable real estate market?

Joel Hall (RE/MAX Real Estate Services) — Wed, 28 Mar 2012 08:00:04 -0700

Home prices in 20 U.S. cities dropped at a slower pace in January, pointing to stabilization in the real estate market.

The S&P/Case-Shiller index of property values in 20 cities fell 3.8 percent from a year earlier, matching the median forecast of 32 economists surveyed by Bloomberg News, after decreasing 4.1 percent in December, a report from the group showed today in New York. Prices were little changed in January from the prior month, the best performance since July.

Property values are steadying as a strengthening labor market underpins housing demand, which may allow the industry that precipitated the recession to contribute to growth this year. Nonetheless, the recovery in sales may be restrained by foreclosures that are putting more properties onto the market.

“We are starting to see a slightly less-negative picture,” said Sean Incremona, a senior economist at 4Cast Inc. in New York, who correctly projected the decline. “We have seen some slight progress from very depressed levels, but there’s still a long, long way to go.”

Stocks were little changed. The Standard & Poor 500 Index rose 0.1 percent to 1,417.66 at 9:42 a.m. in New York, after yesterday reaching the highest level since 2008.

Home prices adjusted for seasonal variations were little changed in January from the prior month, following a decrease of 0.5 percent in December. Unadjusted prices fell 0.8 percent from the prior month.

Survey Results

Economists’ estimates for the year-over-year change in the home price index for December ranged from declines of 4.5 percent to 3.3 percent, according to the survey. The Case- Shiller index is based on a three-month average, which means the January data were influenced by transactions in November and December.

The December reading was previously reported as a year- over-year drop of 4 percent.

The year-over-year gauge, begun in 2001, provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.

Sixteen of the 20 cities in the index showed a year-over- year decline, led by a 15 percent drop in Atlanta. Detroit showed the biggest increase, with prices rising 1.7 percent in January. There were no data available for Charlotte, North Carolina, due to delays in reporting, according to the release.

Eight cities made new post-slump lows, the report said, including Atlanta, Chicago, Cleveland, Las Vegas, New York, Portland, Seattle and Tampa.

Confidence Improving

Recent reports indicate builder confidence is improving even as sales stabilize. The National Association of Home Builders/Wells Fargo sentiment index in March held at the highest level since June 2007 as the sales outlook climbed for a sixth straight month.

Sales of previously owned houses held in February near an almost two-year high, the real-estate agents’ group reported last week. Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January that was faster than previously estimated and the highest since May 2010.
Even with the decline last month, January and February sales of existing homes marked the strongest start to a year since 2007.

The number of Americans signing contracts to buy previously owned homes fell 0.5 percent in February to 96.5 after a 2 percent increase the prior month, the National Association of Realtors said yesterday in Washington. January’s reading of 97 was the highest since April 2010.

Bernanke’s View

Federal Reserve Chairman Ben S. Bernanke yesterday said that while he’s encouraged by the decline in unemployment, the central bank still needs to keep interest rates low to make further progress.

Recent “better news” on the economy has also included a “slight bit of encouraging news here and there in the housing market” and strength in manufacturing, Bernanke said in response to audience questions following a speech in Arlington, Virginia.

Home foreclosures remain a concern for builders. Filings fell 8 percent in February, the smallest year-over-year decrease since October 2010, as lenders began working through a backlog of seized properties, RealtyTrac Inc. said this month.

More Foreclosures

“February’s numbers point to a gradually rising foreclosure tide,” Brandon Moore, RealtyTrac’s chief executive officer, said in a statement. “That should result in more states posting annual increases in the coming months.”

Delinquencies are hurting sellers of both new and existing homes.

KB Home, the Los Angeles-based homebuilder that targets first-time buyers, fell the most in almost nine months after it reported a decline in orders and government data showed new-home sales dropped in February.

“We are seeing signs that the overall housing market is stabilizing and beginning to recover,” Jeffrey Mezger, president and chief executive officer of KB Home, said in a March 23 statement. “The pace of the recovery is uneven, however. We expect that the housing market in general will gradually strengthen as the economy continues to advance.”

How To Pick A Real Estate Agent

Joel Hall (RE/MAX Real Estate Services) — Tue, 27 Mar 2012 08:18:00 -0700

Many factors contribute to the experience and success of buying and selling homes, but even in the digital age of a more transparent real estate market, working with a good real estate agentcontinues to be one of biggest impacts on either side of the transaction.

But how do you pick the right person to represent you or your home?

Before you just start asking your friends or digging through the fliers in your mailbox or hunting online, here are a few dos and don'ts you should seriously consider when selecting an agent.

Do:

Ask people you trust for agent recommendations, but take what they say with a grain of salt. Did they recently buy a home in your same price range? Have they had a successful time selling their home? Just because this agent worked out well for them does not guarantee the same experience for you.

Research. Most real estate websites, including Zillow, have online agent reviews. This can be a good starting place.

Find an agent that specializes in what you're trying to do. Don't select an agent who sells $2 million homes to help you find a $200,000 home. Check out current home listings. Do you like the photos, the description? Try contacting the agent to see if they're available for you.

Interview the

agent. What is their specific marketing plan for your home? How will they negotiate so that you can be the winning bidder on your dream home? Why are they the best option for you? Can you call some of their past clients?

Set up expectations. What do you want from them? Outline your needs from the get-go so there won't be any surprises down the road.

Make sure you get along with the agent. You don't need to be best friends, but ultimately there should be some sort of rapport that allows for a successful business relationship.

Don't:

Pick friends or family. You don't want to jeopardize a friendship if the buying or selling process gets difficult. Also, be wary of hiring even a friend of a friend, or someone recommended. If you're serious about real estate, find someone that you can be honest and professional with. Unfortunately, that may not include your cousin or your best friend's spouse.

Pick someone who dually represents the buyer and the seller of the property you're looking at. They may not be able to fully transparent with you.

Be afraid to break up with your agent. Be honest and simply tell the agent it's not working out. List your reasons and be respectful.

If you're not quite ready to be tied down to a particular agent, it's better not to engage one until you've made a formal decision. You can communicate with an agent and ask for advice, but be clear upfront where you stand.