Fears about the future for the Commercial Real Estate Market

In this era of challenging times, there is no lack of people taking a "gloom and doom" outlook on the future. Weather it is the economy, politics, real estate, money....everything.

I guess it's only human nature. I could go on and on about this topic, but I think there is an important "silver lining" we can draw from these time.

First, I'd like to show you an article from Time. It illustrates some concerns about the Commercial real estate market. The premise is that we are about to see... I think you should read the article.

http://www.time.com/time/business/article/0,8599,1901718,00.html?xid=rss-business

Ok, so there are some challenges ahead in the Commercial Market. But the "silver lining" I mentioned is that we are learning.

Realtors are learning. We are learning ways to put deals together. (no deals, no food) Banks are learning how to deal with loan modifications, foreclosed properties, and short sales more efficiently. (something is better than nothing) Consumers are learning that there are opportunities out there to achieve their real estate goals.

The article from Time assumes that the Commercial Market will suffer the same mis-steps and mistakes of the past residential decline. My contention is that the Commercial Market will have learned from the residential experience.

Banks know now that it is better for them (and consumers) to work together to solve the problems a declining economy brings. My guess is that they will modify, modify, modify. Working with the consumer to modify their loans, re-negotiate rents, short sale properties can help minimize bank losses. Consumer losses too.

I also guess that there are alot of smart people in the market. Many have experienced these things first or second hand. I'm hopeful that the Commercial Market will not suffer from the same mis-step and mistakes.

What do you think?

Reverse Mortgage Problems - or just a Robert Wagner thing?

I saw this article from Reuters about reverse mortgages.

http://money.cnn.com/2009/06/08/real_estate/reverse_mortgages.reut/index.htm?postversion=2009060813

You know, the commercials on TV for reverse mortgages have always scarred me. I always thought it was a Robert Wagner thing. According to the article, it seems that regulators have had issues with the practices of many reverse mortgage lenders.

I think this probably stems from the fact that not very many people understand how the reverse mortgage works. Also, the fact no bank gives anything away for free.

In these tough economic times you hate to think that lenders are preying on older people. Hopefully, the recommendations in the article are taken seriously. And abusers will be dealt with harshly.

Let me know what you think:

More about the Foreclosure Moratorium

You know it's funny. I talked to alot of people yesterday about the foreclosure moratorium in California. Almost everyone said that they had heard about it but didn't know much about it.

I find that interesting because most of these people were telling me that we were to expect a "wave" of foreclosures in June. They had heard that foreclosure notices were up and the market would be flooded with properties, dropping home values even more than what has already occured.

Another thing I find interesting is that many lenders I come in contact with are saying that their companies are trying to work out modifications at a much higher rate than ever before. They are convinced that loan modifications are better for them, the consumer, and the market in general. I agree.

Here's an article from the Sacramento Bee about the foreclosure moratorium. It's a little opinionated but good.

http://www.sacbee.com/business/story/1943201.html?storylink=omni_popular

Let me know what you think

Foreclosure Moratoriumin California for the next 90 days

If you haven't heard, the State has enacted a moratorium on foreclosures for the next three months. The governor signed the bill in February.

Here's a short article from the Mercury News: http://www.mercurynews.com/news/ci_12585513?nclick_check=1

This will give homeowners who are struggling with staying out of foreclosure a chance to take a deep breath and look hard at their situation. Three months isn't a long time to wait, but with some good signals in the real estate market and loan modification programs out there, struggling homeowners have choices.

The best advice I can think of for homeowners is to consult a Realtor. They will probably have information about specific loan modification programs, whether lender driven or government driven. A Realtor will be able to help determine market value for your home and the saleability of you property as well.

They can explain the process of selling in a "short sale" situation too. Many lenders are have gotten better at working out the details of a "short sale". We are actually closing more of them now than in the past.

Let's hope this works out to be a good move for the overall health of our real estate market and the economy.

Let me know what you think!

First Time Buyer Tax Credit - Many are taking advantage

When I sat down to write this...I had a clear idea of what I wanted to say. My message was going to be that the first time buyers tax credit was being taken advantage of by many people and the legislature was making plans to suppliment and extend the program into the future. The market is being affected positively. Finally something that is working! That sounds like a good thing.

Check out this article from USA Today.

http://www.usatoday.com/money/economy/housing/2009-06-22-homebuyer-credit-may-be-extended_N.htm

So, that said... as I was reading some more on the topic, I stumbled across an article from CNN Money. (I'm not going to put a link in for it)

It was dealing with the same story. Lots of people using the program. But their spin was that we are all going to hell in a handbasket because the First Time HomeBuyers Tax Credit program was running out of money and the market is still showing signs of instability. The feeling I took away from the article was not very positive.

What a load of hooey! My perspective is that CNN Money wanted a negative story. They took a positive and made it a negative. Don't ask me why. Disaster sells?

I think it's important for us, as Realtors, to know the difference. How we communicate to our clients and the public in general makes a huge difference. We need to know the difference. We are advocates.

Ok, I'll go rest now.

Board of Governors of the Federal Reserve System - Press Release 6-24-09

I guess this can be some heavy reading but check out what the FRB has to say about the sustainable economic growth in a context of price stability...whatever that means. I think what they are trying to say is... go out and buy stuff. Prices will be low for a while until the majority of folks figure out there are deals out there. If I can paraphrase.

Press Release

Release Date: June 24, 2009

For immediate release

Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

I got this information from the California Association of Realtors. Dues are due.

3 Articles - Same data - May home sales

It's funny but I'm always looking for material for this blog. I can find interesting material everywhere. Good news, bad news, news news. Check out these 3 articles.

The first article is from Portfolio.com in Portland:

Existing home sales drop in MayJun 23 2009 5:13PM EDT

The pace of existing homes dropped 3.6 percent in May, according to figures released Tuesday by the National Association of Realtors.

read the full article here:

http://www.portfolio.com/news-markets/local-news/portland/2009/06/23/existing-home-sales-drop-in-may

Here is article #2 from the Los Angeles Times:quoting Bloomberg News

Home resales in U.S. rise 2.4% in May to 4.77 million rate

Bloomberg News

7:09 AM PDT, June 23, 2009

read the full article here:

http://www.latimes.com/business/la-fi-homesales-wire24-2009jun24,0,2268595.story

Here's the third atricle from the California Association of Realtors:

For release:

Thursday, June 25, 2009

C.A.R. reports May home sales increased 35.2 percent, median home price declined 30.4 percent

read the full article here:

http://www.latimes.com/business/la-fi-homesales-wire24-2009jun24,0,2268595.story

The first two articles are quoting the same figures from the National Association of Realtors. The third article is from the California Association of Realtors and only shows what's happening in California.

I find this all so confusing. No wonder we feel like no one know's what's going on. No one does.

$6 Billion in Federal Money for Foreclosures: I want some!

I didn't know that the Federal Government is subsidising foreclosure purchases. They are. It is though HUD. Money is targeted by them.

The formula gives California over $529.6M out of the $6Billion. I want some!

I stumbled across this article from CNN Money.

Check it out:

http://money.cnn.com/2009/06/23/real_estate/money_for_foreclosures/index.htm?postversion=2009062405

Let me know if you know of any local programs or any other access to the funding for my clients.