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Real Estate Foreclosures Forecast to Worsen

The storm of real estate foreclosures will worsen reaching new record highs in 2008 surpassing the Great Depression, according to a new report by Housing Predictor, which forecasts housing markets in all 50 U.S. states.

Foreclosures have already hit record highs in the majority of the U.S. and they are beginning to impact the overall economy. But the epidemic of foreclosures will also provide the best buyers real estate market in years for many new home buyers and investors.

The CEO of RealtyStore.com says the epidemic is developing into “the perfect storm” of foreclosure activity. “With 2 million subprime loans resetting over the next 12 months, higher gas prices and with banks tightening mortgage standards the foreclosure activity sweeping across the nation will grow,” said Tim Chin, Realty Store President and CEO.

The tightening of lending standards will further depress home sales, creating a wave of

foreclosures that will bring down home prices as bank owned properties generate downward pressure on prices. As a result of higher gas prices consumers are spending more on gas and less on other products, slowing consumer spending. Housing Predictor analysts forecast the national economy is moving into a recession, which will become apparent at the latest in the third quarter of 2008.

In Detroit, where real estate foreclosures are the highest in the nation the U.S. Conference of Mayors held a meeting of big city mayors to deal with the crisis. It included talks on the state of the mortgage industry and ways home owners can avoid foreclosure. Mayors are hopeful to find strategies to keep foreclosed properties from dragging the quality of life down in their communities.

Detroit Mayor Kwame Kilpatrick is hosting the forum. “We’re talking about finding a local solution to a national problem, “ said Kilpatrick, who added that mayors will not be considering legislation to solve the national epidemic. “We’ll start with conversation here.”

Cities hardest hit by foreclosures in Arizona, California, Florida, Indiana, Michigan, Nevada and Ohio will be a focus of the conference.

Housing Predictor forecast early this year that 3 million foreclosures will occur through 2009. More than one million homes have already been foreclosed, most of which have been subprime mortgages. But defaulting mortgages are also growing in exotic conventional loans, also known as Alternative A mortgages.

Real Estate in Chandigarh

The curtains are down on the 2008. The year, which began on a good note for real estate sector in Chandigarh brought anxiety for builders in the last quarter as demand fell sharply.

Due to the global economic meltdown, demand slowdown coupled with liquidity crisis, mega projects coming up in the state moved at snail pace.

Evaluating the performance of Real Estate sector in the Chandigarh the president of Punjab Colonisers and Builders Association said 2008 was worst for the sector. “The demand for housing fell sharply and due to the liquidity crunch, most of the builders had harrowing time in executing their plans. Despite the rising construction and labour costs, which were discouraging the builders to reduce the property costs, price came down. It is expected that inflated land prices will come down further to some extent. However, with banks lowering interest rates on home loans, the situation may become conducive for the industry”.

However, most of the major real estate group of including DLF, Unitech, Parsvnath and Omaxe and Ansal who have various residential and commercial projects in Chandigarh maintained that the market of Chandigarh was favorable to them due to high consumer spending of people.

Talking to FE, D S Sachdev, Ansal API said, “Chandigarh has a good appetite and carries an immense potential for the real estate sector.Theyear2008 was not excellent for this sec tor and the last quarter of the year was terrible as there was no demand at all. But by mid 2009, things will brighten up for this sector.” “However, Chandigarh has always been a favourable market for us unlike other” city of the country. We witnessed demand for all three categories mid-segment, upper and premium segment. We registered 70% bookings for commercial projects and 70% demand for built-up houses. The banks should lend support in increasing the consumer demand by lowering their rate of interesthe added.

Supporting his comments, vice president of Omaxe said Chandigarh has been consuming more than other states and despite, various challenges posed by the economic meltdown, the state market proved fruitful. He also claimed there was no delay in carrying out the plans and hoped to expand further in Punjab.

First Time Buyers: Bright Side of Slumping Real Estate Prices

Part of the reason for the current foreclosure situation is that people were buying homes they just couldn’t afford. This was due in no small part to the fact that home prices were increasing at unprecedented rates, and salaries could in no way keep up with these inflated prices.

If the real estate market becomes more realistically priced, is that really a bad thing?

NAR’s Housing Affordability Index (which measures the relationship between home prices, mortgage interest rates and family income) rose 10.9% in December 2008 to its highest level since tracking began in 1970.

In other words, more people can afford to buy homes now than in the last 39 years!

First-time buyers currently make up a full 41% of all buyers in the United States, and with the rising Housing Affordability Index, this percentage will probably grow. These first-time home buyers often have the strongest emotional response to homes that have been staged because they’ve never had the experience of buying a home before. Stagers help them see the home in its best light and help them imagine themselves living there.

Canada, with a total population of just over 33 million, is a much smaller real estate market. It has not experienced the same turmoil as the United States because of much stricter banking and lending laws. However, the Canadian real estate market has declined both in the total number of home sales and in average prices.

According to The Canadian Real Estate Association (CREA), national MLS home sales fell 17% in 2008 and are expected to fall an additional 16.9% to 360,900 units in 2009. They project a rebound in 2010 with total national home sales increasing 10% to 396,600 units. CREA President Calvin Lindberg says, “The essential selling ingredients in today’s market are realistic pricing, marketing, and preparation.”

Preparation = Home Staging!

South Florida and Miami Residential Real Estate Outlook 2009

South Florida’s commercial and residential real estate markets suffered in 2008, and the New Year doesn’t figure to offer much relief. Continued foreclosures and weak economy will continue having an impact on prices and number of properties available with only aggressive sellers disposing of properties.

Although home sales started picking up this summer, the beleaguered housing market has been hammered by foreclosures and falling prices. Meanwhile, the sputtering economy has local businesses retrenching and cutting jobs, dealing a blow to the retail, office and industrial sectors. All this carnage creates an opportunity for those positioned to take advantage of the adjustment in prices, and higher expected returns.

What follows is an outlook of the region’s residential markets as 2009 approaches:

Residential Real Estate

The three-year housing slump may ease by this time next year, but the real estate market in Florida, particularly the Miami real estate market almost certainly will still be in decline. After a five-year boom, South Florida’s housing market began to tumble in 2006.

People who stretched to buy properties they couldn’t afford have been forced into foreclosure over the last two years. Homes have lingered on the market for months as prices are driven down and as tightening credit makes it difficult for buyers to get financing.

But, although it might seem that we must be almost finished, there’s still a lot of pain to come in terms of write-downs and losses that have yet to be recognized.

The trouble now is that the insanity didn’t end with sub-prime mortgages. There were two other kinds of exotic mortgages that became popular, called “Alt-A” and “option ARM.” The option ARMs, in particular, lured borrowers in with low initial interest rates – so-called teaser rates – sometimes as low as one percent. But after two, three or five years those rates “reset.” They went up. And so did the monthly payment. Now the Alt-A and option ARM loans made back in the heyday are starting to reset, causing the mortgage payments to go up and homeowners to default.

With defaults at unprecedented levels and no evidence that the default rate is tapering off, it will lead to further foreclosures, homes being auctioned, and home prices continuing to fall.

Analysts that have looked back at what was written in ‘05 and ‘07, the reset dates and the current default rates, predict the beginning of a second wave. Billions of dollars in sub-prime mortgages reset last year and this year, but what hasn’t hit yet are Alt-A and option ARM resets, when homeowners will pay higher interest rates in the next three years. The damage is substantial if one considers that the sub-prime is approaching $1 trillion, the Alt-A is about $1 trillion and then option ARMs are probably another $500 billion to $600 billion on top of that.

To get a sense from where we have come Broward County median price for existing homes declined by 35 percent from November 2005, Dade County by 33%. The overbuilt South Florida and Miami condo market has taken an even bigger hit. Median prices on existing condos have fallen more than 40 percent in the two counties since 2006.

Home sales in South Florida started increasing in July, bringing a hint of optimism, but the upswing was caused by months of falling prices in a market still flooded with homes for sale. Rates on 30-year, fixed-rate mortgages have been low and last week hit 5.19 percent, a 37-year low, contributing only slightly to the uptick at best.

However there is a sense that the opportunity may be arriving for some. First, individual buyers that have been on the sidelines renting property suddenly feel that foreclosures are closer to what their incomes allow them to purchase. Also, corporations such as Lennar, a large South Florida multifamily developer that like all others has been hurting is positioning itself to take advantage of the market. First, Lennar’s strategy includes hoarding cash — it had $1.09 billion in reserves as of Nov. 30 — and second, it is establishing a fund aimed at buying distressed residential properties.

Hawaii Real Estate: Opportunities in Paradise

Hawaii. Just the name brings thoughts of tropical subsets, warm, ocean breezes, surfing, basking, just relaxing. Makes you wish you were going there tomorrow, ready for a week or two . . . or three of vacation time.

Obviously, a few weeks in Hawaii on vacation would be nice, but what if you could live in Hawaii year ?round? Hawaii real estate is slowing rapidly. Hundreds of homes, condos, land, even vacation homes, are available today in Hawaii. Wouldn?t you like to live, work raise a family, and enjoy the good life in the Hawaiian Islands?

In January of 2009, a single family home in Hawaii was selling for a median price of $539,500. That?s a drop of 10.1 percent as compared with January of 2008. For a condo, the average selling price is down 5.8 percent since January of ?08, to $305,000. For all the Hawaiian Islands, the total sales dollars generated in the Hawaii real estate market during January of 2009 was $145.6 million. This is a decrease of $199.9 million, or 57.9 percent since January of 2008.

There has never been a better time to consider Hawaii homes. The price is right, the market is loaded, and the sun, sand, and surf are waiting for you. There is a home for you in Hawaii, be it a traditional single family home tucked away among the palm trees in gorgeous Diamond Head area, or a beachfront condo near Waikiki beach on Oahu, or maybe a luxury property on the water in Lanikai, Kailua overlooking two small beautiful islands.

If you would, instead, like to build your own Hawaii home, acres of land are now available throughout the islands. Waterfront property, beachfront or oceanfront property, property in the rolling hills, wherever you?d enjoy Hawaiian living, there?s land available for building.

Perhaps, you?re not yet ready to move to Hawaii. Consider, in that case, investing in a beachfront or inland property in Hawaii, and watch your investment prosper. Hawaii real estate, though admittedly sagging, is not nearly as depressed as the housing market on the mainland. An investment in a Hawaiian home, condo, vacation property, or lot is a lucrative opportunity to take advantage of both the strength of the Hawaii property market, and the favorable opportunities that are, assuredly out there, as well.

Foreclosures, though less prevalent on the islands, are nonetheless available, and ought to be considered. However, timely action is needed to take advantage of these foreclosed properties, as they generally don?t last long, especially in those most desirable locations. Oceanfront and beachfront property in the most desirable areas of the islands will, however, be more expensive, and a bit more difficult to locate and to negotiate.

The Real Estate Market in Auckland New Zealand

Some bought property because they feared that they wouldn’t be able to enter the market otherwise. Others bought properties that did not suit their needs simply because they could afford it.The real estate market was booming. Property values were doubling every 2-3 years rather than the usual 7-10, the trend that has persisted for the past 150 years.

These conditions continued until the end of 2007 and into 2008. It was during the early months of 2008 when New Zealand and international financial institutions began to collapse. Along with the collapse of these major institutions came the collapse in the market for property in Auckland, New Zealand as well as in the world abroad.

How did this happen?

Immediately upon receiving news of the collapse of these major institutions, purchasers reacted. However, vendors did not. They were reluctant to believe that their property’s value had been negatively affected in any way. Because of this discrepancy, during the first six months of 2008, purchasers were prepared to offer far less than the inflated expectations that vendors were still clinging to. The volume of real estate sales dropped dramatically.

By the second half of 2008 vendors had finally realized the seriousness of the financial situation and accepted that their real estate / property values had decreased. With this realization, vendors and buyers were again in agreement (roughly) with regards to the price of properties. The volume of sales of property in Auckland, New Zealand increased. As we entered 2009 a change occurred yet again as expectations of sharply declining mortgage interest rates developed. With summer coming around and expectations of 3-4% mortgages, buyer optimism increased. The volume and the total value of sales in March was greater than it had been in the preceding 18 months.

And now, here we are in April. Interest rates are showing upward movements, winter is coming and daylight savings is about to end. Early trends appear to indicate, for these reasons, that buyer confidence has taken a hit. Due to the fragile nature of the market, it is reasonable to expect there will be a future decline in the volume and the value of property in Auckland, New Zealand in the winter months to come. Prepare for the worst but lets hope for the best.