Real Estate

Existing-home sales were down again, according to the latest report from the National Association of Realtors (NAR).

This is part of the “uneven recovery” that NAR chief economist Lawrence Yun reports. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers.” Tight credit has hit both sides of the real estate market, affecting both buyers and builders.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said buyers should look into loan availability as soon as they decide they want to buy. “Despite very affordable mortgage interest rates, credit remains a challenge – buyers should check their personal credit, and mortgage availability in their area,” he said.

“Realtors are an excellent resource to learn about all of the marketplace factors, but in this tight credit environment it’s important to learn up front what a lender might be willing to offer as well as specific programs that might be available in your location,” Phipps said.

There’s other good news on the horizon, as well. The economy is recovering, albeit slowly.

Even though it has been a busy week for markets, mortgage rates remain in holding pattern and still low enough to be attractive to borrowers. Freerateupdate.com’s survey of wholesale and direct lenders show that conforming 30 year fixed mortgage rates are at 4.625%, 15 year fixed mortgage rates are at 3.750% and 5/1 adjustable mortgage rates are at 3.000%, all remaining the same for the past week. Borrowers with good credit and the ability to meet lender guidelines can obtain these low mortgage rates with 0.7 to 1% origination fee. Conforming fixed rate mortgage loans continue to be popular with borrowers because of the security of having monthly mortgage payments that remain the same for the life of the loan.

Also remaining the same this week, FHA 30 year fixed mortgage rates are at 4.375%, FHA 15 year fixed mortgage rates are at 4.000% and FHA adjustable mortgage rates are at 3.750%. Even though some FHA mortgage rates are lower than conforming mortgage rates and may appear to be cheaper mortgages, borrowers must pay higher FHA closing costs (APR) because of various FHA fees and the upfront mortgage insurance premium. On the positive side, FHA offers down payment requirements as low as 3.5%.

For borrowers in need of mortgage financing above the conforming loan limit, which is $417,000 to $729,250 depending on location, jumbo mortgage rates have continued to stay low. Still unchanged, jumbo 30 year fixed mortgage rates are at 5.250%, jumbo 15 year fixed mortgage rates are at 5.000% and jumbo 5/1 adjustable mortgage rates are at 3.625%. Borrowers with excellent credit can obtain these jumbo mortgage rates with 0.7 to 1% origination fee.

Mortgage backed securities prices (MBS) have a direct affect on mortgage rates which move in the opposite direction. This past week, economic data was filled with both positive and negative reports. Increases in the Empire State index, import prices, consumer price index and a decrease in the unemployment rate were all positive results pointing to a steady economic recovery. On the other hand, home construction and existing home sales both were down last month indicating a housing market that is still struggling. MBS prices moved both up and down, but never enough to make an impact on mortgage rates. Overall, markets were reacting to the crisis in Japan and the Middle East.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1% point origination.

One of California’s largest real estate brokerages, Sacramento-based Lyon Real Estate, is moving forward under new leadership after its former CEO pleaded guilty to charges related to video recordings he made of encounters with four prostitutes without the women’s consent.

Michael Patrick Lyon, who stepped down as CEO of Lyon Real Estate in September, was sentenced to two years in prison Monday after pleading guilty to four felony counts of electronic eavesdropping. The sentence was suspended and he could serve a one-year jail term under house arrest or at the county jail, the Sacramento Bee reported.

Lyon, 55, took a leave of absence from Lyon Real Estate in September, amid allegations that he had made secret video recordings of guests at several properties he owns using hidden cameras in bedrooms and bathrooms.

Three weeks later, former Alain Pinel Realtors President Larry Knapp took over as CEO of the brokerage, and Lyon transferred his shares in the company to a trust benefiting his children.

Knapp, a veteran real estate industry executive and past president of the Sacramento Association of Realtors, said that Lyon hadn’t been involved in the company’s day-to-day affairs for some time when Lyon stepped down.

For the last several years, he said, Lyon Real Estate President and Chief Operating Officer Jean Li had been running the company. When Knapp stepped in as CEO, he said, he found he was taking charge of a well-organized and well-run organization.

“I have run large real estate companies for more than 25 years, and I was impressed what a great job Jean Li has done running this company for the last several years,” Knapp said. “That’s why (Lyon’s departure) had as little impact on the company as it has. We work beautifully together — we think a lot alike — and the transition has worked out beautifully.”

The intensity of media coverage that erupted when the allegations against Lyon became public had a greater impact than Lyon’s decision to step down as CEO, Knapp said.

Tree.com Inc. says it will close all of the field offices of its brokerage company — RealEstate.com, Realtors — by the end of the month, but will continue to operate RealEstate.com as a lead-generation network.

Tree.com announced last month that its real estate brokerage posted an $11.9 million fourth-quarter operating loss as revenue fell 67 percent from a year ago.

The company brought industry veteran Steve Ozonian on board as CEO of the RealEstate.com division in October. Ozonian is a former RE/MAX International Inc. executive who has held CEO positions at Prudential Real Estate Services, Realtor.com, and Help-U-Sell Real Estate.

But in a regulatory filing this week, Tree.com said results from the first two months of this year convinced management team that “the difficult mortgage and real estate market conditions are too weak to support our brick-and-mortar real estate brokerage business at this time.”

RealEstate.com, Realtors, operated in 20 markets from 2008 through 2010. In its most recent annual report to investors, Tree.com said it closed brokerage offices in five markets in January and February, leaving it with offices in 15 markets.

Century 21 Real Estate LLC, a subsidiary of global real estate brokerage company and franchisor Realogy Corp., has announced an agreement to launch a social media training program for real estate professionals throughout its franchise network.

Century 21 has contracted with YouReach Media, co-founded by Internet marketing and social media strategist Jim Marks and real estate coach Tom Ferry, to provide the 24-week online training program, which will make its debut in April.

Aerial view of damage to Sukuiso, Japan. Flickr image courtesy of Official U.S. Navy Imagery.Aerial view of damage to Sukuiso, Japan. Flickr image courtesy of Official U.S. Navy Imagery.

In the wake of a devastating 9.0 magnitude earthquake and resulting tsunami in Japan, some real estate groups are organizing relief efforts for the country’s short- and long-term needs.

Allen Okamoto, broker-owner of real estate and insurance agency T. Okamoto & Co. in San Francisco and founding chair of the Asian Real Estate Association of America (AREAA) has set up a relief fund through the association to assist people in the country’s Tohuku region rebuild their homes.

“I am currently involved with several relief efforts by different organizations. All of the other organizations are dealing with the immediate needs of the victims such as food, water and clothing. Since the Asian Real Estate Association of America is a real estate-related organization I felt it only proper that we help with the long-term needs (of) rebuilding homes,” Okamoto said.

“We hope that over the year we will generate a lot of donations as the people of Japan surely need it. The devastation is horrific, not to mention the loss of lives.”

The association is accepting donations by mail to: AREAA, 5963 La Place Court, Suite 312, Carlsbad, CA 92008-8823. Checks should be made payable to: AREAA Foundation Earthquake Relief Fund.

The death toll in Japan continues to mount, with the latest figures exceeding 9,000, and with more than 12,000 people still missing since the quake and subsequent tsunami hit on March 11. Whole coastal towns have been destroyed. Electricity access, roads and rail lines have been damaged, stranding more than 1 million people across the country, according to news reports.

Some electronics and auto plants have temporarily shut down due to breaks in their supply chains. A breakdown of reactor cooling systems at the country’s Fukushima nuclear plant triggered a massive evacuation in the area surrounding the plant and is not yet resolved.

Give your windows better treatment
• Replace heavy draperies, which can look outdated, with a more contemporary alternative. Faux wood, honeycomb blinds, roman or vertical shades—there are a lot of options to dress up your windows. Many online companies will send you samples so you can see how the different options will look in your particular space.

• Lighten things up with sheers. The soft folds of billowy sheers allow more light to come into the room, but still offer some privacy. Sheers in lighter colors also make the room appear larger and serve as a color-coordinated highlight at the same time.

Use mirrors to add visual interest
• Instead of the hanging a large mirror in a traditional space, such as above a couch or fireplace, modernize by hanging several smaller mirrors. Create a grouping of mirrors with frames that have the same color, but different sizes, shapes and textures.

• Hang a large mirror between two windows to give the illusion of having more windows in the room.

Replace an outdated furniture item

• Update your coffee table or entertainment center. These larger pieces are often the focal point of the room, so changing them out can put the entire room in a whole new light.

• Look for items that are both functional and easy to assemble. For example, Z-Line Designs furniture includes an instructional DVD with each item, so you can easily assemble pieces that are traditionally complicated to put together. Their ready-to-assemble mounts and stands for flat panel TVs can update any room in a flash. For more information, visit www.z-linedesigns.com.

Freshen up accessories
• There’s no need to re-upholster a sofa or its matching chairs. Swap the current accent pillows out for some new ones. Try a new, complementary color or add a pattern or fun texture to a solid background.

• Switch out your centerpieces. Replace a silk flower arrangement for a tray with pillar candles on it. Update the framed photos with new pictures and new frames. Look around the house for a few interesting pieces that can be put to new use—what can you do with a stack of interesting books or a grouping of pretty bowls?

Lawrence Yun, NAR chief economist, expects an uneven recovery. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” he says. “This tug and pull is causing a gradual but uneven recovery. Existing-home sales remain 26.4 percent above the cyclical low last July.”

A parallel NAR practitioner survey shows first-time buyers purchased 34 percent of homes in February, up from 29 percent in January; they were 42 percent in February 2010.

All-cash sales were a record 33 percent in February, up from 32 percent in January; they were 27 percent in February 2010. Investors accounted for 19 percent of sales activity in February, down from 23 percent in January; they were 19 percent in February 2010. The balance of sales were to repeat buyers.

The national median existing-home price for all housing types was $156,100 in February, which is 5.2 percent below February 2010. Distressed homes—sold at discount—accounted for a 39 percent market share in February, up from 37 percent in January and 35 percent in February 2010. “The decline in price corresponds to the record level of all-cash purchases where buyers—largely investors—are snapping up homes at bargain prices,” explains Yun. “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.”

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., says buyers should look into loan availability as soon as they decide they want to buy. “Despite very affordable mortgage interest rates, credit remains a challenge—buyers should check their personal credit, and mortgage availability in their area,” says Phipps.

“Realtors® are an excellent resource to learn about all of the marketplace factors, but in this tight credit environment it’s important to learn up-front what a lender might be willing to offer as well as specific programs that might be available in your location,” Phipps explains.

AIM-listed property services firm Colliers International made an £8.4m pretax loss in 2010, an improvement on 2009 when it made a £15.5m loss.

The company, which brought in Tony Horrell as chief executive last year, said that revenue increased by 14% to £66m. The loss was split between £5.1m in the first half of the year and £3.3m in the second half.

It also said that reported earnings before interest, tax, depreciation and amortisation were positive for the first time since the second half of 2007.

Horrell has completed a strategic review which will see Colliers’ Spanish and Irish businesses retained, and an increased focus on the London investment market and institutional clients.

Colliers chairman Sir John Ritblat said: “In the past year, the group has gone through a period of significant change with the arrival of Tony Horrell as chief executive and the completion of the re-branding to Colliers International.

“Looking ahead I am confident that we are in a good position to reap the benefit of re-activated markets as the key denominator for us is not so much the level of property values, but the liquidity and volume of transactions in a market where buyers and sellers, and landlords and tenants, can do business.”

Horrell said: “Overall, Colliers International UK has built a number of high quality core businesses but requires more strength and depth in the crucial, high margin, transactional markets, in particular in Central London, one of the largest real estate markets in the world. We currently provide relatively little advice in this market to certain key client sectors, notably institutional investors, REITS and overseas owners. Selective senior recruitment into these areas is a high priority although we do not envisage that this investment will materially impact the group’s operating cost base in the short term.

“There is much to do and the opportunity to take market share and grow our company is great. The market place will see and hear more of Colliers International going forward.”

Hammerson has bought six retail assets from the St Martins’ portfolio for £208m, as tipped by Property Week (15.12.10).

The portfolio acquired by Hammerson includes the 694,000 sq ft Centrale shopping centre in Croydon, which was bought for £98m, the 95,000 sq ft Monument Mall in Newcastle, which was acquired for £28m, and the 136,000sq ft Elliott’s Field retail park in Rugby, which was bought for £40m.

The 183,000 sq ft Three Spires shopping centre in Lichfield, the 65,000 sq ft Cathedral Lanes shopping centre in Coventry and the 43,000 sq ft Wickes retail unit in Folkestone were purchased for an aggregate £42m.

David Atkins, chief executive of Hammerson, said: “This transaction is a rare opportunity to secure a group of good properties in strong trading locations with significant asset management potential. We believe we can rejuvenate and transform Centrale, Monument Mall and Elliott’s Field, thereby improving retailer sales and increasing asset values.”

The acquisition will be accretive to earnings in 2011, and will be funded from existing bank facilities, increasing gearing by around 6%.

Completion of the acquisition of all assets is expected by the end of March, with the exception of Three Spires, which is expected to complete later this year.

Centrale comprises 80 units, let to tenants including Debenhams, H&M, House of Fraser and Next. The mall offers Hammerson the opportunity to improve circulation, introduce new tenants and provide a cinema and catering offer.

Monument Mall comprises 16 retail units and a food gallery over four trading levels. The complex is adjacent to Fenwick and tenants include Boots, Peacocks, TK Maxx and Wallis. Hammerson will look to exploit restructuring opportunities at the shopping centre through a comprehensive reconfiguration of existing units and bringing in new retailers.

Elliott’s Field Retail Park comprises 10 units in four terraces, a standalone restaurant and carwash. Despite the open A1 consent, the freehold scheme’s tenants are predominantly bulky goods retailers including Comet, Halfords, Homebase, and Wickes.

Hammerson believes there is scope to create additional space and capitalise on strong demand from fashion and catering tenants, therefore increasing the overall rents from the property.

Hammerson was advised on the transaction by CB Richard Ellis. Savills were the selling agents.