REITs post gains from Multifamily and Self Storage Sectors

REITS Stage Comeback Amid Housing Bust

By Kris Hudson
From The Wall Street Journal Online

Stocks of real-estate investment trusts staged a modest rally in the first quarter, driven by strong gains in two industries benefiting from the housing bust: operators of apartment buildings and self-storage space...

Pockets of Prosperity Shine Amidst Real-Estate Gloom - REJ

Pockets of Prosperity Shine Amidst Real-Estate Gloom

By Lauren Baier Kim

Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)

Worst yet to come in Michigan

Hit by a double-whammy of an ailing auto-entrenched economy and a sagging housing market, many Michigan homeowners are finding themselves unable to afford their homes, according to an article by the Muskegon Chronicle. "Their only option may be to leave their house and turn it over to a mortgage company with the hope they can become a homeowner again in the future, when things are better," one local housing expert quoted by the paper says. The state was the only in the U.S. to see home prices drop in 2006, the article says. Michigan's housing market, which was skipped over by the U.S. housing boom, hasn't bit bottom yet, the Chronicle says...

Rent Now, Buy Later, Economists Say | WSJ

Rent Now, Buy Later, Economists Say

From The Wall Street Journal Online


With which statement do you agree most?
• This is a good time to rent rather than buy a home. 59 %
• This is a good time to buy rather than rent a home. 41

Selection of comments:
• Low financing costs, buyer incentive make now an attractive time to buy
• House prices are likely to see more weakness
• Building equity and enjoying tax preferences is always a good idea
• Getting close to time to buy but not yet
• Depends on the local market


More...

Portfolio issues face banks big and small | Charlotte Business Journal

Portfolio issues face banks big and small

Opinions differ over looming troubles with credit quality for the region's biggest banks

Charlotte Business Journal - December 29, 2006by Will BoyeStaff writer


For the past few years, credit quality has essentially been a nonissue at large U.S. banks. The percentage of loans that have soured has fallen, and that welcome trend continued in 2006.

But industry analysts and some bank executives are saying troubled credit may appear in greater numbers among loan portfolios in 2007.

"We've been saying for two or three years that credit can't get any better, and we were wrong," Dick Kovacevich, chief executive at Wells Fargo & Co., said at an investor conference in New York earlier this month. "Credit did get better. But I'm now telling you that credit can't get any better, and I'm going to be right this time, unfortunately."

For the first three quarters of 2006, net charge-offs -- the total of loans and leases removed from balance sheets because they can't be collected -- dropped to 0.36% at all banks, according to the Federal Deposit Insurance Corp. During the same period in 2005, the figure was 0.47%, and in 2004 it was 0.55%.

Bank analysts and industry watchers believe the industry is due for a more "normal" rate of uncollectible or bad loans, but opinions vary on how that correction might play out in 2007...

Soaring Property Values, Record CMBS Volume Feeding Off Each Other

Soaring Property Values, Record CMBS Volume Feeding Off Each Other

CMBS Outlook for 2007 Calls for More Record Issuance, Keep Markets Awash in Liquidity

Costar Group - December 13, 2006 Written by Mark Heschmeyer



Total issuance for U.S. CMBS is expected to top $240 billion next year -- a $40 billion increase over the record amount Fitch Ratings expects to have been issued for all of 2006. All of which tells us a lot about Wall Street's expectations for commercial real estate next year: Another banner year.

The record activity is being driven by the increasingly popular use of CMBS as a vehicle for packaging and reselling the debt used to finance commercial real estate acquisitions and the continued influx of capital being allocated to commercial real estate products. Indeed the two are fuelling each other...

Economists Say the Worst Of Housing Bust Is Over | REJ

Economists Say the Worst Of Housing Bust Is Over

The worst of the housing bust is over, economists said by nearly 2-to-1 in the latest WSJ.com economic forecasting survey. But they still predict that the average selling price of a house will fall next year.

After several years of double-digit percentage increase, housing prices stopped soaring this year. The 49 economists responding to the WSJ.com forecasting survey expect home prices, measured by the government's Office of Federal Housing Enterprise Oversight index, to rise 2.8% this year and to fall by 0.5% next year. That contrasts with a 13.4% increase in 2005.

"We're nearing the end of the slowdown for most markets," said Ethan S. Harris at Lehman Brothers. Prices still have some ways to fall before they'll stabilize, but there are signs that most drastic parts of the downturn - marked by a sharp pullback in demand and new construction - have run their course...

What to Do in a Market That Is Headed for a Falloff | WSJ

What to Do in a Market That Is Headed for a Falloff

By Matthew Heimer
From The Wall Street Journal Online

After hurtling along for years, the nationwide real-estate boom has come to a screeching halt. In 2005, home prices in the U.S. rose more than 12%; this year, the National Association of Realtors expects appreciation to reach just 1.9% -- the lowest gain since 1992.

Rising mortgage rates and selloffs by skittish real-estate investors have helped depress housing prices in many metropolitan areas. But there's another factor that many observers miss: the relationship between home prices and incomes.

When the cost of housing in a given area grows far faster than local wages and salaries, the pool of potential buyers shrinks, and prices are much more likely to sink.

For the past five years, SmartMoney magazine has worked with Ingo Winzer, president of the consulting firm Local Market Monitor, evaluating home-sale prices against local income to determine whether a given market is overvalued, undervalued or fairly valued. Mr. Winzer relies on more than 15 years of housing and income statistics to find out where prices are headed.

According to Mr. Winzer, any market that's more than 30% overvalued...

Track home inventories in 18 major metropolitan areas. | WSJ

Rising Home Inventories | WSJ

Track home inventories in 18 major metropolitan areas.


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Home Prices Keep Sliding; While Hesitant Buyers Sit Tight

Home Prices Keep Sliding; While Hesitant Buyers Sit Tight

By James R. Hagerty
From The Wall Street Journal Online

The air continues to seep out of the U.S. housing market, according to the latest data, and some economists are warning that prices will keep declining through much of 2007.

The National Association of Realtors yesterday reported the biggest drop in home prices since the trade group began compiling price data in 1968. Specifically, the association said the median price for home sales completed in September was $220,000, down 2.2% from a year earlier. That matched a revised 2.2% decline in August. In addition to being the largest price drops in at least 38 years, the back-to-back declines are the first time median home prices have fallen since 1995...

Housing Decline Sparks A Construction Slowdown | WSJ

Housing Decline Sparks A Construction Slowdown

By Alex Frangos From The Wall Street Journal Online

The unexpectedly rapid decline of the nation's housing market will mean an overall drop in construction spending next year, with spillover effects in areas such as job growth and real-estate development.

In a closely watched report expected to be released today, McGraw-Hill Construction will forecast the first decline in overall construction spending since 1991. The company says the value of new construction will decline 1% in 2007 to $668 billion, compared with an expected rise of 1% for 2006 and a 12% increase in 2005. McGraw-Hill said the anticipated decline was due mostly to a 5% fall in construction of single-family homes. But the overall drop also reflects a 3% slide in construction of stores and shopping centers, a component closely tied to population growth and home-building trends.

"Single-family housing has fallen more steeply than what we had anticipated and the correction is taking place faster," says Robert Murray, vice president at McGraw-Hill Construction, a unit of McGraw-Hill Cos. The industry "no longer has single-family housing to bolster total construction."

Pending Home Sales Fall By 1.1% in September | Market Watch

Pending Home Sales Fall By 1.1% in September

By Rex Nutting
From MarketWatch

A gauge of future home buying fell 1.1% in September, a signal that sales will be roughly flat for the next few months, the National Association of Realtors said Wednesday.

The pending home sales index fell 1.1% in September after a 4.7% increase in August. The index is down 13.6% in the past year. Home sales are also down about 14% in the past year, while building permits have plunged 27%.

The pending home sales index is based on contracts to buy existing homes signed in September. Sales typically close a month or two later, when they would be recorded in the industry trade group's existing home sales index...

www.REHPI.com

Our primary indicator of where prices are going in a particular market…

At Adamsworth LLC we make money buying apartments. We buy them in emerging markets - areas of the country that are starting to grow.

We have researched more than 275 metropolitan areas to find the next emerging market. One of the six primary indicators we use is the weighted resale housing price index (HPI).

The weighted index is considered very accurate because it eliminates inconsistencies between the types of houses that sell in up markets and the kinds that sell in down markets. In an up market, expensive houses sell more quickly, pushing the average price higher and making the market look as if it appreciated more than it did. The weighted index compares the price changes on two sales of the same house.

We take the HPI and graph it for each metro area with price on the Y axis and time on the X axis. We then show the market momentum by graphing a two-year moving average. When the market momentum moves from positive to negative, it signals a reversal in the direction of market.prices.

Recently, someone started selling this information to real estate investors and real estate professionals for $500, plus $50 a month for access and updated data. So we decided to put our version out on the web for free. You’ll have access to the graphs for all 275 metropolitan statistical areas, updated quarterly, and we’ll email you a link when they are revised. What’s the catch? We’ll occasionally e-mail you information about opportunities to do business with us.

Are you an investor, real estate professional, data junkie or just someone who is curious about where your market is? You can sign up at www.rehpi.com. Enjoy!

300 million and the changing demographics of the United States

Straining the stork with 300 millionth

By Joyce Howard Price
THE WASHINGTON TIMES
Published October 15, 2006

The U.S. Census Bureau says it expects the nation's population to reach 300 million on Tuesday, 39 years after the 200 million mark was reached and 91 years after the county's population hit 100 million.

The 300 millionth person will enter a country that's much different than it was in 1967, when Life magazine designated the birth of Robert "Bobby" Ken Woo Jr. as a population milestone, naming him the nation's 200-millionth resident.

"In 1970, immigrants constituted less than 5 percent of the U.S. population," said William Frey, a demographer at the University of Michigan and the Brookings Institution, adding that today, they are 12.1 percent...

As Housing Market Slows, Rental Market Heats Up | WSJ

As Housing Market Slows, Rental Market Heats Up

By Christine Haughney From The Wall Street Journal Online

Bidding wars, once waged by prospective home buyers in a red-hot housing market, may be moving to a new front: rental apartments.

As rising interest rates and flattening home values have made renting more attractive, renters are beginning to resort to the same one-upmanship tactics to secure a choice apartment.

In Washington, D.C., the owner of the Ellington, a 190-unit rental building on U Street, has a 12-person waiting list, and nearly a half dozen renters are paying rent two to three months before their move-in dates. San Francisco renters are showing up early to open houses and racing to fill out applications before other applicants. In Manhattan, some renters are offering landlords more money than asking rents, while others are paying the equivalent of the entire year's rent upfront in cash...

Popularity of 1031 Exchanges Surges With Market Decline | WSJ

Popularity of 1031 Exchanges Surges With Market Decline

By Tara Siegel Bernard
From The Wall Street Journal Online

Investors who want to cash in their chips on real estate bought as an investment -- but defer the tax bill, in some cases forever -- can do so by trading into another piece of property.

This strategy isn't new, but it's enjoying a resurgence in popularity now because many investors believe that real-estate values have peaked in some markets. They want to lock in their gains and shift into other holdings without a big payment to Uncle Sam.

The stratagem is called a 1031 exchange, but it doesn't actually require you to swap property with another real-estate investor. You sell one property and buy another, carefully abiding by certain restrictions and time limits.

A section of the tax code known as 1031 allows investors to make a "like kind" exchange of investment properties and thereby defer, and in some cases avoid, capital-gains taxes. (The maximum federal long-term capital-gains rate is currently 15%, while some states impose an additional tax.)

You can swap just about any kind of investment property for another -- such as an apartment house for land, or a house for a store. Investors can keep exchanging into new properties of equal or greater value, while deferring the tax hit. If you hold property until death, the capital gain is erased altogether because your heirs inherit the property at its market value, making this a popular estate-planning technique as well.

'Best-Kept Tax Secret'

"It's the best-kept tax secret," says Stephen A. Wayner, first vice president at Bayview Financial Exchange Services LLC, a unit of Bayview Financial, a Miami real-estate investment, development and mortgage-finance company. "There are so many people that should be doing it. They just don't know about it."

The tax savings can be substantial...

Housing starts tumble, core producer prices dip | Reuters

Housing starts tumble, core producer prices dip

WASHINGTON (Reuters) - U.S. housing starts plunged to a more than three-year low in August, while falling new vehicle costs kept producer prices unexpectedly weak, the government said on Tuesday, bolstering views the economy is cooling.

The data comes one day before the Federal Reserve's policy-setting committee meets to consider interest rates, and strengthens the case that borrowing costs will remain steady through the end of the year.

OFHEO House Price Index Shows Largest Deceleration in Three Decades

HOUSE PRICE APPRECIATION SLOWS

OFHEO House Price Index Shows Largest Deceleration in Three Decades

WASHINGTON, D.C. – U.S. home prices continued to rise in the second quarter of this year but the rate of increase fell sharply. Home prices were 10.06 percent higher in the second quarter of 2006 than they were one year earlier. Appreciation for the most recent quarter was 1.17 percent, or an annualized rate of 4.68 percent. The quarterly rate reflects a sharp decline of more than one percentage point from the previous quarter and is the lowest rate of appreciation since the fourth quarter of 1999. The decline in the quarterly rate over the past year is the sharpest since the beginning of OFHEO’s House Price Index (HPI) in 1975. The figures were released today by OFHEO Director James B. Lockhart, as part of the HPI, a quarterly report analyzing housing price appreciation trends.

“These data are a strong indication that the housing market is cooling in a very significant way,” said Lockhart. “Indeed, the deceleration appears in almost every region of the country.” Possible causes of the decrease in appreciation rates include higher interest rates, a drop in speculative activity, and rising inventories of homes. “The very high appreciation rates we’ve seen in
recent years spurred increased construction,” said OFHEO Chief Economist Patrick Lawler. “That coupled with slower sales has led to higher inventories and these inventories will continue to constrain future appreciation rates,” Lawler said.
House prices grew faster over the past year than did prices of non-housing goods and services reflected in the Consumer Price Index. While house prices rose 10.06 percent, prices of other goods and services rose only 4.41 percent. The pace of house price appreciation in the most recent quarter more closely resembles the non-housing inflation rate.

Significant findings in the HPI...