The U.S. House of Representatives today voted 403 to 12 to extend and expand the home buyer tax credit.  The bill passed the U.S. Senate late yesterday and now will go to President Obama for his signature, where it is expected to be signed this week.

 The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline.  First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a credit of up to $6,500.  Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years.  The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively.  The purchase price of the home is capped at $800,000.

 Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit, provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

 For weeks, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R and its members have urged Congress and the U.S. Senate to extend and expand this crucial piece of legislation.

 Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers.  According to C.A.R. research, nearly 40 percent of first-time home buyers surveyed said they would not have purchased a home without the federal tax credit, and approximately 70 percent said the tax credit was “the most important” or a “very important” factor in their decision to buy a home.

If you haven’t seen Breeza downtown, what are you waiting for?  It just doesn’t get any better than this.  Located on the waterfront of peerless San Diego California, Breeza has everything you could want in a new home or home away from home. 

The location is one of a kind.  Perched on the edge of San Diego bay, overlooking the iconic Star of India, Breeza not only has eye-dazzling views but also offers the undeniable lifestyle only found in San Diego California.  Sure, it’s beautiful, sunny and warm but you also have world-class dining, shopping and that California Dreamin’ state of mind in which to relax and enjoy. No GIGANTIC BUGS AND STIFLING HUMIDITY HERE! (Sorry Florida).

 State of the art amenities like gourmet kitchens boasting granite counter tops, cool-contemporary cabinets, stainless steel appliances and luxury interior appointments are a major selling point at Breeza. 

Enhance your life with contemporary style and good taste while getting a once in a lifetime deal on a pristine piece of Real Estate.  Our market has made these homes much more affordable than you would imagine- much more affordable than ever anticipated…

Entertain your friends and family at cocktail hour on the breath-taking roof top viewing deck.  Relax in the comfortable surroundings and plush furniture enticing you to stay long after the incredible sunset. 

Sun bathe on the pool deck and unwind in the therapeutic spa- letting all your cares just float away. 

I’m not making this stuff up- it’s really this good.  If you don’t believe me, just swing by the sales center and chat with Nikole, Kelly or Augustine and they will give you the grand tour.  Homes are selling quickly so don’t wait until it’s too late for you to get your place in the sun- at Breeza.

Sellers also continued to cut prices on unsold homes. One quarter (24.7 percent) of all homes listed for sale on Zillow had at least one listing price reduction as of Oct. 1, 2009. For the U.S. as a whole, the median U.S. price reduction was 6.6 percent off the original listing price.

Several Metropolitan Statistical Areas (MSAs) in Florida made the top 25 list of markets nationwide with the greatest gap in list price to sale price; no MSA in California made the list. In two California markets, buyers paid more than asking price during August, according to the report: In the El Centro MSA, buyers paid 2.2 percent, or a median $2,479, more than asking price; in the Stockton MSA, buyers paid 1.3 percent, or $2,515, more.

“Negotiating power is a clear reflection of inventory levels, which dropped nationally in August. Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow Chief Economist Dr. Stan Humphries. “Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August.”

In what will undoubtedly become a milestone of local developer chutzpa, a progeny of the venerable urban developer Olson has started a business to build homes.

Really. Despite the fact that virtually no one else is.

While the target of the newly formed City Ventures is remnants of unfinished subdivisions, the developer has targeted more urban projects. “Our business plan is to focus on infill developments in the coastal counties of California,” said San Diego point man Tony Pauker, who expressed a strong belief in the state’s prospects for economic growth and long-term potential.

To start up a building company right now, necessarily means to initially focus on projects like the two City Ventures is starting at Scripps Ranch: 19 lots that was the last half of Viscaya, formerly a Warmington Homes project. The other project is in Stonebridge Estates.

The business model for these projects is simple. The developer intends to complete unfinished projects, but at a lower price. “We see a near-term opportunity to acquire well located finished lots at appealing pricing and be able to offer homes at very attractive pricing that will allow us to deliver 50 homes next year,” said Pauker, who expects to offer finished homes in the $700,000 to $800,000 range on sites that would have sold in the low millions four years ago.

City Ventures is planning the same strategy on a 34-lot deal in North County. That land purchase will close this month, and it will immediately start construction of homes to be offered in the $600,000 price range.

But this seems like just a warm-up act for this opportunistic company, which was co-founded by Mark Buckland of Olson and Craig Adkins, a well respected Orange County land broker. The initial capitalization comes from Imperial Capital in Los Angeles.

Business Plan

While Buckland and Adkins are the firm’s principals, they have hired five former Olson executives. Their business plan is to focus on infill developments up and down the California coast, including San Diego, Orange, Los Angeles, Ventura and Santa Barbara. City Ventures already has sites tied up in each locale, even though it has only been in business since June. It’s also searching along the Northern California Peninsula, including San Francisco’s East Bay.

It has committed to a 12-lot entitlement deal in Encinitas, a 6-acre site in Yorba Linda, a 48-unit site in Santa Barbara and a site in Santa Ana that is designated for “affordable housing” as part of a larger mixed-use project.

That is important, because in short order, City Ventures has placed itself at the cutting edge of what is undoubtedly a new wave of small-business real estate developers that will be focused on coastal California’s many “infill” opportunities. These will mostly concentrate on sites in existing communities that will require a new set of development skills oriented to high barrier-to-entry locations. These sites usually have issues of assembly, and will be subject to the complexities of entitlement, environment, redevelopment, adaptive reuse, mixed use and entrenched neighborhood resistance.

But like their former employer, Olson, which made its mark in Southern California by constructing two- to four-story residential condominium projects in infill and redevelopment districts, the principals have a long-term plan for City Ventures to build to this “sweet spot in the market,” as Pauker describes it.

Washed Up Car Dealership

What are they seeing and watching? One hint, says Pauker, is to look at the commercial downturn. He observes that the recent Roger Penske walk-away from purchasing Saturn from General Motors is a precursor. Apparently, Saturn will shut down, the latest of a compression of scale in the auto business. “What do you do with a vacant car dealership? Nobody in the commercial area is going to come in and back-fill these sites.”

In other words, they view a washed-up car dealership as a mixed-use development waiting to happen. City Ventures intends to work with cities and property owners on similar “gray field” opportunities.

It’s positioning itself early in the cycle. It is way too premature for most new residential construction to start. But in a way, this is exactly the right strategy. Each of the targeted coastal California markets has been virtually dormant of housing starts during the past four years. New and resale inventory has to be absorbed. Demand has to outstrip supply. Prices have to rise. Only then can new housing development take hold.

But it is also an anticipatory process. To get to the “sticks and bricks” stage, you have to start early. The best case scenario is to find properties with some sort of preliminary entitlement, or the potential for approval. The ideal is a property with a tentative map. “You pull the trigger (on a purchase of land) today and it will not produce a home until Thanksgiving of next year, or more realistically not until the end of 2010 or 2011,” cautioned Pauker.

The successful players will be working with cities, in effect forming public-private partnerships to accomplish such things as rezoning, better use of city-owned property to raise capital, or just to help these projects reform a tax base decimated with the closure of car dealerships and big box malls.

Many in the housing industry see an impending turnaround in the housing market, now having witnessed several months of price increases.

If developers do not start today, with an up to 24-month lead time, there will inevitably be competitors. We do not yet know who will be building housing once the market does revive. Undoubtedly, other ventures like this one will be formed from experienced people coming out of large companies. The point is that it will be difficult for the larger developers to find the economy of scale to build infill.

So City Ventures is attempting to establish a foothold with an urban land pipeline. To be the “go-to guys,” as Pauker puts it, “we needed to start now.”

By BRETT ARENDS

Falling real estate prices are becoming as much a feature of high-end neighborhoods as ocean views, infinity pools and four-car garages.

While the latest data suggests prices for mainstream homes may be stabilizing after several years of pain, the news for luxury homes isn’t looking as good.

That’s bad news for sellers, naturally, but anyone in the market for a home listed for $2 million or more will find deeply discounted asking prices—and may be able to command even lower prices.

On Tuesday, data from the Federal Housing Finance Agency showed that average home prices ticked up 0.3% nationwide between June and July, including a 1.6% bounce on the west coast. The gains are modest, and they are partly influenced by the season—higher-end homes tend to sell better in late spring and early summer, as families try to move before the school year. Analysts are disappointed the rise was not higher.

Nonetheless, prices have now risen three months in a row. And compared with the disastrous events of the past few years, anything other than Armageddon is apt to raise spirits.

But these numbers only relate to homes purchased with conforming loans backed by the FHFA—in most areas, that describes mortgages of up to $417,000, or up to $713,000 in the country’s most expensive regions.

Bloomberg NewsA stone patio surrounds the pool outside a spec home at 38 French Road in Greenwich, Conn. The city is seeing the worst home-sales market—and deepest discounts—in decades.

That overlooks luxury and high-end homes, where the outlook remains bleak.

“I would say we’re 40% off 2007 prices for everything,” says broker Chad Rogers, who covers the area from Malibu to Hollywood Hills for Hilton & Hyland, a Beverly Hills real-estate firm. “We’re now seeing prices consistent with where we were back in 2003.”

“The $10 million to $30 million properties are on the market for a very long time,” says Cathy Wood, a real estate broker covering Beverly Hills and surrounding areas for realty firm Gibson International. “They’re seeing a lot of price reductions.”

Realtors, she says, “are now selling $500,000 condos, when they used to sell $5 million homes.”

Across the country in hedge-fund haven Greenwich, Conn., local broker Eric Bjork at Prudential Real Estate finds a similar effect. “There’s a new level of value being set,” he says. “The $8 million [homes] are selling for $6 million, and the $10 millions are selling for $8 million. When you do the math, it looks like an adjustment of 20% to 30%.”

You’ll find similar anecdotal data in several high-end markets. But real estate Web site Trulia.com, which tracks listing prices on multiple listing services across the country, took a look at what’s happening to listing prices for homes over the $2 million mark.

Such homes only account for about 2% of the properties listed on the site, but represent 25% of the total price reductions by value. Overall, sellers listing homes for more than $2 million have dropped their asking prices by a total of $7 billion, with an average price reduction of 14%. The average for all properties tracked by Trulia is only 10%.

Data for individual Zip codes is intriguing, whether you’re in the market or you just like to rubberneck. According to Trulia data, 28% of the homes currently for sale in Beverly Hills (Zip code 90210) have dropped their price, with an average discount of 11%. In Aspen, Colo., (81611), 39% of the homes have cut their price, by an average of 16%.

On New York’s Upper East Side (10065), no less than 40% of the homes have slashed prices—and by an average of 18%. In California, some of the most exclusive areas in Newport Beach, Big Sur and Monterey have seen a third of the sellers reduct prices, by an average of about 15%. Malibu? More than half have cut prices.

Chip Case, economics professor at Wellesley College and one half of the Case-Shiller index duo, says that some of these markets may be finally catching up to the wider housing market crash. “That level was more in the hold-out category,” Mr. Case says. “Up until recently the foreclosures weren’t hitting that level .But they are now. There’s no question about that. You’re seeing some contagion from the prime level to the luxury end.”

Bottom line: At the high end, it’s a good time to be shopping for that dream home.

During—and after—a bubble, investors often hope that “quality assets” will hold value. It’s usually a vain hope. Just ask people who owned luxury condos in Tokyo after 1990, or investors in Cisco Systems (CSCO) after the tech-stock bubble popped. Real estate is not that different.

Sooner or later, even rich homeowners need to sell. They get divorced. Their company collapses. They relocate or retire. And, when they get tired of waiting, they cut their price. Factoring in taxes, upkeep and the opportunity cost of keeping money in a non-performing asset, an empty luxury home may be costing owners a lot just by sitting there. That gives them a powerful incentive to make a deal.

 

Write to Brett Arends at brett.arends@wsj.com

Wednesday, September 9, 2009

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The “Making Home Affordable” plan was launched with great fanfare in March. As of last month, lenders had sent out more than 571,000 offers to reduce borrowers’ monthly payments, the Treasury Department said Wednesday. That’s 19 percent of the nearly 3 million homeowners eligible for a loan modification under the plan, up from 15 percent at the end of July. “There are signs the plan is working,” said Michael Barr, assistant Treasury secretary for financial institutions. “But we can do better.” Much better, lawmakers and housing counselors say. “We think that you’re missing the mark,” Rep. Maxine Waters, D-Calif., told a panel of mortgage industry executives at a House hearing Wednesday. Of the modifications offered, about 360,000 borrowers, or 12 percent, have signed up for three-month trial modifications, which are supposed to be extended for five years if the homeowners make their payments on time. To increase pressure on the industry, Waters and other lawmakers threatened to revive a failed proposal, opposed by banking lobbyists, to let bankruptcy judges rewrite the terms of a mortgage. That change is necessary, consumer groups say, because getting a lender to do so voluntarily is still a time-consuming, bureaucratic nightmare. Many lenders are still scheduling foreclosure sales, and charging borrowers fees for participating in the Obama plan. “The administration has got to put some teeth in this and really get some consequences for the lenders and servicers who are not cooperating,” said Bonnie Mathias, a board member of the Association of Community Organizations for Reform Now, or ACORN. But mortgage executives say they are racing to implement the program, hiring thousands of workers to handle an unprecedented flood of calls. “We fully understand the urgency,” Jack Shackett, Bank of America’s head of credit loss prevention, told lawmakers. “We understand that we have a long way to go under very challenging circumstances.” Bank of America has doubled its number of trial modifications in two months to nearly 60,000. But it still lags its competitors, having enrolled about 7 percent of its 836,000 eligible loans, compared with 25 percent for JPMorgan Chase & Co. The Treasury Department’s decision to publish those numbers has clearly provided a powerful inventive for many in the industry. Lenders are “concerned about the report card showing them in a worse light than their peers,” said David Stevens, an assistant secretary at the Department of Housing and Urban Development. “Nobody wants to be a low performer on that score card.” Industry executives also say they are planning to work with Obama administration officials on a possible extension of the program to unemployed homeowners. Also under consideration is finding a way to help borrowers with “pick-a-payment” or option ARM loans, which gave borrowers the ability to defer some of their interest payments and add them to the principal. Treasury says 48 mortgage companies are now involved in the program, up from 38 in July. The companies have requested financial information from almost two-thirds of eligible borrowers and say they are on track to have 500,000 loan modifications in place by Nov. 1. The program is voluntary, relying on subsidies to encourage mortgage companies to participate. Lenders must agree to reduce the loan payments to 38 percent of a borrower’s monthly pretax income. After that, the government and lender split the cost of bringing the payment down to 31 percent. Borrowers can receive rates as low as 2 percent for five years. Eligible borrowers have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify. But some borrowers are in such dire financial shape that they don’t know if getting a modification will be the magic bullet. Steve Rudolf, 62, a talent agent in Tampa, Fla., has managed to get a modification on his $124,000 home equity line, but has had no luck with his primary mortgage. While he has yet to miss a payment, his savings have nearly run out. “Some of this I brought on myself,” through bad investments, Rudolf said. “But I didn’t know that the world’s worst economic crisis for housing was going to happen.” Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/09/09/financial/f073010D13.DTL&type=business#ixzz0QwC3VGHe

Consumer Confidence Survey^®
Press Release

 The Conference Board Consumer Confidence Index ®, which had retreated in July, rebounded in August. The Index now stands at 54.1 (1985=100), up from 47.4 in July. The Present Situation Index increased slightly to 24.9 from 23.3 last month. The Expectations Index improved to 73.5 from 63.4 in July.

The Consumer Confidence Survey ® is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS. TNS is the world’s largest custom research company. The cutoff date for August’s preliminary results was August 18th.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer confidence, which had posted back-to-back monthly declines, appears to be back on the mend. The Present Situation Index increased slightly, mainly the result of an improvement in consumers’ assessment of the job market. The Expectations Index improved considerably and is now at its highest level since December 2007 (Index, 75.8). Consumers were more upbeat in their short-term outlook for both the economy and the job market in August, but only slightly more upbeat in their income expectations. And, as long as earnings continue to weigh heavily on consumers’ minds, spending is likely to remain constrained.”

Consumers’ assessment of current conditions improved slightly in August. Those claiming business conditions are “bad” decreased to 45.6 percent from 46.5 percent, however, those claiming conditions are “good” decreased to 8.6 percent from 8.9 percent. Consumers’ appraisal of the job market was more favorable this month. Those saying jobs are “hard to get” decreased to 45.1 percent from 48.5 percent, while those claiming jobs are “plentiful” increased to 4.2 percent from 3.7 percent.

Consumers’ short-term outlook was much improved from last month. Those expecting an improvement in business conditions over the next six months increased to 22.4 percent from 18.4 percent. Those anticipating conditions to worsen decreased to 15.8 percent from 19.0 percent.

The labor market outlook was also more upbeat. The percentage of consumers expecting more jobs in the months ahead increased to 18.4 percent from 15.5 percent, while those expecting fewer jobs decreased to 23.3 percent from 26.1 percent. The proportion of consumers expecting an increase in their incomes increased slightly to 10.6 percent from 10.1 percent.

 

For further information contact:
Lynn Franco
at +1 212 339 0344
lynn.franco@conference-board.org