When is Beige, Not Soothing?
Hey kids, the new Beige Book is out and RE received a big kapowie right on the snoot. For anyone who doesn't know, the Beige Book is not Martha Stewarts' latest creation , but rather a report posted by the Federal Reserve on the state of the nations' economy. Of course, the thing that my eager eyes sought out quickly was, what was up with Real Estate. Not so much according to the report compilers.
Construction and Real Estate
Residential real estate markets continued to cool across much of the country--with most Districts reporting slower homebuilding and sales of existing homes. In contrast, commercial real estate activity continued to strengthen in most Districts. A few reports noted concern about too much building.
Gee, d'yah think?
Some softening of the market for existing homes was reported by ten Districts--Chicago, Cleveland, Dallas, Kansas City, Philadelphia, Minneapolis, New York, Richmond, St. Louis, and San Francisco. Dallas and Richmond noted that activity remained quite strong, and Chicago reported slowing from high levels. San Francisco reports hot housing markets in Utah and parts of the Pacific Northwest. Several Districts said sales had weakened for some of the most expensive homes, except in the Dallas District where demand for lower-priced homes "had dipped noticeably." Atlanta reported that residential sales were near year-ago levels in most parts of the District, but that sales weakened and inventories increased in Florida. The Philadelphia District said sales of homes in resort areas have declined sharply. The New York District reports a sharp deceleration in prices in the suburbs around New York City, but a tightening of the Manhattan rental markets.
Homebuilding slowed in most Districts--Chicago, Cleveland, Dallas, Kansas City, New York, Philadelphia, St. Louis, and San Francisco. The New York District reported that some homebuilders in New Jersey are withdrawing from the authorization process and allowing their options to build to expire, noting that increases in fuel and materials costs are pinching profits. Homebuilders in the Atlanta District reported that single-family home construction was near year-ago levels in most parts of the District, except in Florida, where sales slowed. The Atlanta District also reported that Florida condominium sales continued to weaken and several projects were cancelled.
Commercial real estate activity strengthened in nearly all Districts, with mostly positive reports about office markets. Commercial building "improved" in the Cleveland District. Office markets were steady or stronger in the New York City metro area, with scattered signs of accelerating rents. The Philadelphia District said vacancy rates have continued to decline in the region's office markets. The Richmond District reported "fairly strong" office markets. Demand for office space "edged up at a steady pace" in the Dallas District. Office vacancy rates fell and rental rates rose in most major markets in the San Francisco District.
Boston reported that downtown office real estate markets were improving but mostly at the expense of suburban markets. Demand for commercial real estate in the Chicago District continued to expand, but the pace of new commercial construction slowed, according to contacts, who said rents were too low to justify new construction.
The Kansas City District reported that commercial construction remained strong, but received a few reports that high material costs were resulting in the scaling down or postponement of some projects. Construction firms in the Philadelphia District reported that rising costs have caused some construction projects to be rebid or redesigned to reduce the amount of costly materials used. Some builders in the San Francisco District continued to face cost increases and minor project delays as a result of tight availability of skilled workers and selected materials, such as steel and cement.
The Philadelphia District reported growing demand for industrial space and an increase in construction of industrial buildings both on a speculative and build-to-suit basis. Demand for industrial properties was said to be gradually improving in the Dallas District. The Richmond District also reported growth in commercial leasing in the industrial sector.
Contacts in the Boston, Chicago, and Dallas Districts expressed concern about the level of investment in some portions of the real estate market. The Boston District reported that New England--and Boston in particular--continues to attract large volumes of commercial real estate investment, resulting in price increases that require "ambitious assumptions" to justify the transaction. The Dallas District noted growing concern about overbuilding of condominiums and town homes in Dallas, and contacts "fear that it will end badly." A contact in the Chicago District expressed concern about the potential for overbuilding of large distribution centers in Indiana.
What, overbuilding you say?! Harrumph!
Also while all this declining is going on , what about the poor FB that's bought one of those new houses in a new development? Well, it's not just the toxic loan that's out to get him/her. It seems there's a little matter of just how exactly their property tax works
This little item was found in the Austin American Statesman
the interesting part was this:
Central Texas foreclosures decline
The number of homes posted for foreclosure in the Austin area is down 5 percent from the first ten months of 2004, and postings for the Oct. 4 auction were down 2 percent from last October, according to Foreclosure Listing Service. Bastrop County is the only Central Texas county with an increase in year-to-date postings. Its postings are up 12 percent from 2004.
Peter Sajovich, owner of ReMax Austin Advantage, said the robust Austin market, which is driving up home prices, is helping "borrowers who would normally go into foreclosure . . . to try to sell the home and get out."
Although foreclosures have declined in the past year, they are still high by historical standards. So far this year Travis County has had 3,266 houses posted for auction, and Williamson County has had 2,282 postings.
Sajovich says that aggressive lending practices, in which buyers can get loans regardless of credit history or proof of the ability to make payments and with little or no money down, are contributing to foreclosures.
Sometimes property taxes are based on unimproved lot values. When the property is reassessed payments go up, and the homeowners can no longer afford the home, Sajovich says.
Of course in the spirit of all good RE articles the next paragraph dealt with making RE loans easier to get. Yep, bring out the pongee sticks and start digging that pit.
There's lots of good reading out there this morning.
From the The New Jersey Star Ledger..just a taste
Senate President Richard Codey and Assembly Speaker Jo seph Roberts said yesterday they hope to enact laws to ease New Jersey's highest-in-nation property taxes by the end of the year, and will begin that effort with hearings over the summer.