Overseas investors see potential of U.S. property markets

 Skidding home prices in the United States have also drawn foreign investors looking for more bargains and taking advantage of the favourable exchange rate.

 Property industry professionals surveyed recently by Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC) showed their preference for the U.S. property markets.

 

The ULI and PwC surveyed and interviewed 360 internationally renowned real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants from across the globe.

 

The ULI and PwC final report said factoring the gloomy scenario in Europe and the inscrutable Asian markets, the United States presents the best spot for offshore capital amidst some anaemic prospects.

 

Prime and familiar U.S. gateway cities located along coasts are top considerations.

 

Aside from central business districts in Washington, D.C., New York City, and San Francisco, properties in Southern California and Miami have drawn the attention of Latin American investors.

 

The overseas investors are led by Asian sovereign funds led by China and Singapore. New investments from Israel, was noted and so are the interest from the conservative Islamic funds from the Middle East.

 

This trend was also affirmed by a recent report by the Move Channel.com and Global Edge showing searches for United States properties and narrowly edging France and Spain.

 

Global Property Guide (GPG) Research has shown the expanding rental markets potential in the U.S., with their moderate rental yields that are promising.

 

“Property in the US is now relatively inexpensive, from an international perspective. In addition, the US is a country with a growing population, due to its tradition of accepting a large number of immigrants. Low yields + low pricing in comparative terms + a growing population look an attractive combination,” according to Global Property Guide.

 

Potential property investments aside from rental apartments and condominiums include rentals and acquisitions of warehouses taking the cue from the electronic shopping boom.

 

Global trade will power export activity around the U.S. primary seaboard ports, where traditional big-box warehouse distribution assets rebound after experiencing uncomfortably high vacancies.

 

East Coast cities can position themselves to capture Pacific container-ship traffic slated to come through a widened Panama Canal in 2014.

 

Some winners will turn into new industrial hubs, but first need to dredge harbor channels to handle deep-hulled vessels. Miami, Charleston, Savannah, and Norfolk look like prime contenders, and New York/New Jersey will not be left out. Houston should pick up business along the Gulf Coast. (Global Property Guide)

Turkey Property: First Class Vacation Property And Investment Opportunities

Turkey property has become immensely popular with people looking for vacation properties and real estate investors alike all over the world. Until 2003, citizens of other nations were barred from purchasing property in the country, but these restrictions were relaxed before being overturned by the Turkish courts in 2005. Since 2005, overseas property buyers have eagerly purchased homes and other properties in Turkey, with approximately 73,000 foreign nationals buying somewhere in the neighborhood of 63,000 properties, including Istanbul property.

A lot of Turkey property is set among the stunning natural beauty of the country, including coastline on the Agean and Mediterranean seas, rivers, hills and mountainsides. The possibilities include beachfront and golf resort properties, with some luxury properties costing as little as 170,000 Euros on the low end of the scale. Overseas property available in Turkey includes apartments, hotels, villas and land which can be built to suit. We will begin with villas.

The natural beauty of Turkey attracts many buyers, with properties located amidst the stunning mountainsides, hills, rivers and Mediterranean, Black Sea and Aegean seasides. There are beachfront homes and villas and apartments located in golf resorts; and unlike many other places in Europe, there are some properties to be found here which go for as little as 170,000 Euros on the low end. Some of the overseas property in Turkey include hotels, villas, apartments and plots of land which can be built as the buyer sees fit. First we will have a look at villas.

This Turkey property apartment is comparable to a 4-star resort. It’s located at the Palm 235 Resort and sits along 60 acres of beautiful land. Palm 235 Resort has had amazing reviews from the New York Times saying “The grounds of Patara Prince are nothing short of a seaside paradise”. Palm 235 comes with one bedroom which is extremely large. It’s recommended to have only 4 people living in it though, just so everyone has their own space. The apartment has sunrise and sunset views from a terrace and the bedroom and living room window as well. Palm 235 comes with a refurbished bathroom, kitchen, stone walls and a character fireplace. Located just down the road are grocery stores, the pool and tennis court are down stairs as well as a great view of the sea. Next lets talk about hotels.

As you can imagine Turkey property is amazing to purchase and experience for yourself. Everywhere you turn you see beautiful landscaping, mountains, huge apartments, villas, land plots, rivers, the sea, tennis courts, 60 meter pools with illumination, stone walls, pretty much anything that you can imagine and you can make this dream of yours come true soon if you try. Living in Turkey is a dream of everyone’s once they have been there to see it for themselves and I would bet you would feel the same way too.

Since you made a choice that you truly are interested in a Istanbul Property ,you’ve come to the right place. On our website, you’ll discover everything you should make your property dream becoming reality. Don’t forget to have a look at Property In Turkey too!

Prices Decline Slightly But Show Signs of Stabilizing

While home values are continuing to decline, they are beginning to stabilize as the market nears the bottom, according to the Zillow Real Estate Market Report, released Tuesday.

Since their peak in May 2007, prices have fallen 23.7 percent, according to Zillow’s data.
On a yearly basis, prices fell 5.1 percent in October, arriving at $147,000.
However, on a monthly basis, prices fell just 0.3 percent, demonstrating a deceleration in decline.
“As expected, home values continue to fall in the back half of this year due to an abundance of housing supply relative to demand,” said Dr. Stan Humphries, Zillow’s chief economist. “Potential buyers remain on the sidelines or doubled up in other households, despite record high housing affordability and historically low mortgage rates.”

Zillow, based in Washington, measures 156 metropolitan statistical areas (MSAs) each month. In October, prices declined in 95 MSAs and rose in 39.
Prices in the remaining 22 MSAs remained relatively unchanged over the month.
Some of the harder hit areas are starting to a reprieve from their sharp declines in home values.
Miami’s prices remained essentially unchanged for the month, and hard-hit areas of Phoenix and Detroit saw slight gains – 0.2 percent in Phoenix and 1 percent in Detroit.
On a yearly basis, 10 of the 156 MSAs experienced rising prices.
In addition to stabilizing prices, Zillow reported another positive sign for the market in its most recent report. The foreclosure liquidation rate fell for in October to 8.1 out of every 10,000 homes.
This contrasts the record high reached one year ago – 10.7 of every 10,000 homes.
While Zillow reports some slight positive signs for the market, Humphries says the “crisis of consumer confidence along with high rates of negative equity, are the biggest factors hindering a housing recover.”
“However, I’m encouraged by the positive, albeit slow, progress in working down the unemployment rate, which should help to improve consumers’ appetites for buying homes,” he continues. (Krista Franks - dsnews.com)

Fed: House Flipping Led to Deeper Housing Collapse

There’s been much debate over the root causes of the housing meltdown that catapulted the nation into the worst financial crisis in 80 years – from lax lending and subprime loans to over-leveraging in the secondary market.

A new report from researchers at the Federal Reserve Bank of New York focuses on the sharp run-up and subsequent collapse in housing prices during the 2000s.
It concludes that real estate investors who used mortgage credit to purchase multiple residential properties with the intent of flipping, or reselling them within a short period of time, played a larger role in fueling the housing bubble than previously recognized.
These investors, the Fed researchers say, helped push prices up during 2004-2006, but when prices began to head south, they defaulted in large numbers, which served to intensify the housing cycle’s downward leg.
Fed officials point out in their report that investors are more likely than owner-occupants to walk away from an underwater property. As such, lenders typically factor in that higher default risk by requiring larger down payments from buyers who acknowledge that they won’t be living in the house.
The expansion of the nonprime mortgage market during the 2000s, however, provided the perfect opportunity for optimistic investors to get low-down-payment credit, according to the report. “Buy-and-flip” investors, in particular, were able to make higher bids on houses, even if they had relatively little cash.

At the peak of the boom in 2006, the New York Fed’s researchers found that over a third of all U.S. home purchase lending was made to people who already owned at least one house.
In the four states with the most pronounced boom-and-bust cycles – Arizona, California, Florida, and Nevada – the investor share was as high as 45 percent.
Overall, the investor share of mortgage-financed home purchases roughly doubled between 2000 and 2006, with the largest increases seen among those owning three or more properties, according to Fed data.
In 2006, Arizona, California, Florida, and Nevada investors owning three or more properties were responsible for nearly 20 percent of originations, almost triple their share in 2000, Fed officials report.
“Longstanding tradition in the mortgage lending business and the predictions of economic models hold that investors will quickly default if prices begin a persistent fall. This is what happened starting in 2006,” according to the Fed researchers.
From 2007 to 2009, they found that investors were responsible for more than a quarter of seriously delinquent mortgage balances nationwide, and more than a third in Arizona, California, Florida, and Nevada.
“We conclude that investors were much more important in the housing boom and bust during the 2000s than previously thought,” the researchers wrote in a blog post explaining their findings.
They stress that the availability of low- and no-down-payment mortgages in the nonprime sector enabled investors to make highly leveraged bets on house prices, which likely allowed the bubble to inflate further and caused millions of owner-occupants to pay more for their homes.
“In the end, even the value of the 20 percent down-payments made by responsible, prime borrowers was wiped out — leaving the housing market, and the economy, in the vulnerable state we find them in today,” according to the researchers at the New York Federal Reserve. (dsnews.com)

Industry Approaches 1M Loan Modifications This Year

About 885,000 borrowers have received permanent loan modifications this year, according to October data from HOPE NOW. The voluntary alliance of mortgage industry participants announced last month that the industry had completed 5 million modifications since 2007.

“With almost a million loan mods completed this year, it is clear that the industry and its partners continue to invest a tremendous amount of resources into assisting homeowners across the country,” said HOPE NOW executive director Faith Schwartz Wednesday with the release of the October data.
The industry completed almost 80,000 modifications in October after completing a little more than 90,000 in September.
Of the 80,000 modifications completed in October, more than 53,000 were proprietary modifications, while 26,102 were completed through HAMP.
Of the year-to-date modification total of 885,000, about 582,000 are proprietary, while 303,426 were completed through HAMP.

About 79 percent of all proprietary loan modifications completed in October included principal and interest payment reductions. On about 74 percent of the loans, the reductions in principal and interest were at least 10 percent.
Additionally, about 86 percent of proprietary modifications completed in October were fixed-rate modifications.
HOPE NOW also reported that foreclosure starts rose during the month of October, while foreclosure sales fell.
Foreclosure starts increased 7 percent, rising from 196,000 in September to 209,000 in October.
Foreclosure sales fell 5 percent over the month from 68,000 to 64,000.
Delinquencies of 60 days or more fell along with foreclosure sales, dropping 6 percent from 2.81 million in September to 2.65 million in October.
While Schwartz credited the industry for its efforts in accomplishing more than 5 million loan modifications since 2007 and its evolving efforts in borrower outreach, she stated, “The work is not done.”
However, HOPE NOW continues to conduct borrower outreach events throughout the nation to assist struggling homeowners.
“HOPE NOW recently wrapped up its 2011 homeowner outreach schedule – including 15 separate events with close to 12,000 attendees. Events are being planned for the first quarter of 2012 in Charlotte, Miami and Tampa, plus several cities to be determined,” Schwartz said. (dsnews.com)

Mortgage Rates Hold Near Record Lows

Freddie Mac released the results of its weekly mortgage rate survey Thursday, showing average fixed mortgage rates largely unchanged and near their record lows, helping to keep housing affordability high for those borrowers who are in the market.

The 30-year fixed rate dipped to 3.99 percent (0.7 point) for the week ending December 8, down from last week when it averaged 4.00 percent. Last year at this time, the 30-year rate was 4.61 percent.
At 3.27 percent (0.8 point), the 15-year fixed rate this week averaged just slightly above its all-time low of 3.26 percent on October 6, 2011. The 15-year rate slipped from 3.30 percent last week. A year ago at this time, it was averaging 3.96 percent.
Adjustable-rate mortgages (ARMs) rose slightly this week, but both products included in Freddie’s study are coming off of all-time historic lows recorded last week.
The 5-year ARM is now averaging 2.93 percent (0.5 point), up from 2.90 percent last week. This time last year, the 5-year ARM was at 3.60 percent.
One-year ARMs averaged 2.80 percent (0.6 point) this week. The average was 2.78 percent last week and 3.27 percent at the same time last year. (By Carrie Bay - dsnews.com)

GSEs Total 2 Million Foreclosure Prevention Actions

Servicers for Fannie Mae and Freddie Mac have completed almost 2 million foreclosure prevention actions for the two companies since they went into conservatorship in 2008, according to the Federal Housing Finance Agency’s (FHFA) third-quarter report.

More than half of these actions have been loan modifications, and of the remainder, about 676,500 have kept homeowners in their homes. About 269,700 were short sales or deeds in lieu.

The number of loans modified by the GSEs in the third quarter was 3 percent higher than that of the second quarter. The GSEs modified 83,600 loans during the third quarter.
About two-thirds of loan modifications completed during the third quarter included repayment reductions of more than 20 percent.

Fannie and Freddie also completed 48,900 repayment plans and 7,000 forbearance plans in the third quarter.
The number of borrowers in HAMP trial periods declined from 51,000 at the end of the second quarter to 42,300 at the end of the third quarter.
The FHFA says this decline occurred as borrowers completed their trial modifications and received permanent modifications.
About 22,600 trial modifications graduated into permanent modifications in the third quarter.
The total number of loans modified under HAMP since its inception falls just short of 400,000 at 380,300.
The GSEs also increased the number of loans refinanced under the Home Affordable Refinance Program (HARP) in the third quarter.
HARP refinancings increased 11 percent over the quarter, bringing the total to 928,600.
Additionally, over the third quarter, the GSEs saw serious delinquency rates decline from 3.85 percent to 3.81 percent.
However, the percentage of homeowners between 30 and 59 days delinquent increased from 2.04 percent in the second quarter to 2.07 percent in the third quarter.
REO inventory decreased from 196,000 to 182,000 over the quarter. (DSNews.com)

Bermuda to ease stiff property ownership rules for foreigners

Government authorities of Bermuda are considering easing the rules on foreigners wanting to acquire property in this British overseas territory.

With one of the highest property costs slapped on non-residents, Bermuda is now bent on reviewing laws hinged on

The British Overseas Territory’s National Security Minister Wayne Perinchief told delegates at the Real Estate Division of the Bermuda Chamber of Commerce in a recent convention that the government is seriously considering changes to existing property laws that have scuttled interest from foreign buyers.

“I support an urgent review of the ARV (Annual Rental Value) bands with a view to permitting the sale of properties by Bermudans to non-Bermudans provided they fall within that highest ARV band,” said Mr. Perinchief at the conference attended by the country’s real estate firms and brokers.

Global Property Guide Research cites that part of the challenges faced by foreign buyers in Bermuda is in securing a licence for a non-Bermudan spouse in order to purchase a property.   

“I have recommended to Cabinet that the requirement for a licence in these circumstances be removed and that this legal barrier denying home ownership to non-Bermudan members of Bermudian families be eliminated,” Mr Perinchief said.

This is one of the key policy changes for review, which according to the new president of the real estate division of the Chamber of Commerce, Ms Dale Young this is a welcome development that could further promote the growth of the property sector.

Ms Young said this move by the government if it would really take effect will increase the development of properties as there would be more people to sell to. Buyers of property would also be encouraged if the government would be able to reduce the fees slapped on PRC holders, which currently is that they have to 18% of the value of the property.

She cited that the government was able to lower the fees to about 6% for condominiums built at Tucker’s Point, and it would matter to buyers if the PRC rate will be reduced and best to abolish it altogether.

Source: The Royal Gazette Online

Foreign investors 'returning to South African property market'

International investors are increasingly considering the merits of buying a property in South Africa, it has been claimed.
Berry Everitt, managing director of international property group Chas Everitt, explained that a favourable exchange rate between the South African rand and major currencies such as the euro, US dollar and sterling has helped drive interest.

"Since May, the value of the rand has shown a sharp decline that was bound to catch the attention of overseas investors, especially in light of the economic distress in Europe," he stated.

Mr Everitt added that around 30 per cent of the enquiries received by his firm now come from foreign investors, with many people from the UK, China, Germany and the US contacting the company.

In terms of the assets being targeted, holiday homes and buy-to-let properties are the most popular among overseas buyers in South Africa, he noted.

However, the recent FNB Estate Agent Survey for the third quarter of 2011 found that domestic investors are less enamoured by the prospects offered by buy-to-let housing in the country.

According to the organisation, just eight per cent of transactions were made in this sector during this period, with more people concentrating on purchasing a primary residence. (globalpropertyguide)

Mortgage Delinquencies To Decline in 2012: Study

The current year will close with a 7 percent yearly decline in mortgage delinquencies, matching last year’s decline, according to predictions released Wednesday by TransUnion.

The percent of borrowers 60 days or more delinquent will fall to 5.95 percent by the end of the year, and will fall to 5 percent by the end of 2012, according to TransUnion.
However, despite yearly declines, the forecasters expect a slight rise in delinquencies through the first quarter of 2012.
After reaching 6.02 percent in the first quarter, delinquencies will decline for the following three quarters, the forecasters predict.

Tim Martin, group VP of U.S. housing in TransUnion’s financial services business unit, believes house prices and unemployment will continue to pose problems for the market in the coming year, but the market will see some positive movement due to “improving credit quality of new originations, consumer confidence, and GDP.”
“If things go as expected, there are no additional negative shocks to the U.S. economy and the average borrower’s situation, mortgage delinquencies could fall as much as 16% in 2012 compared to 2011,” Martin said.
While the nation is expected to experience overall declines in mortgage delinquencies in the coming year, 12 states and the District of Columbia will likely see increases. Thirty-eight states will experience declines.
TransUnion expects Florida, Nevada, and the District of Columbia to close the fourth quarter of 2012 with the highest delinquency rates.
Florida and Nevada will be seeing double-digit delinquency rates at 13.20 percent and 11.09 percent respectively. The District of Columbia will follow with a rate of 7.91 percent.
At the other end of the spectrum, North Dakota will see the lowest delinquency rate in the nation at the end of 2012 at 1.3 percent.
South Dakota and Wisconsin will follow with rates of 1.96 percent and 2.11 percent respectively. (DSNews.com)

Africa - Mauritius - Luxury Hotel For Sale.

The Hotel is a 214 rooms hotel situated in one of the prime coastal region of Mauritius.  The land of an area of 9.742ha is leased from the Government of Mauritius and expires in 2064. 
The Hotel is a spacious 4-star hotel with a resolutely contemporary setting for a young clientele looking for a difference. All the rooms, housed in a set of villas, face the sea and are arranged in three arcs, two around large swimming pools with a beach and the third one on the seafront. Around the hotel’s main swimming pool, the “Show” restaurant, the “B-Bar” and the boutique are grouped together in a village style, where each component is ideally placed. The view extends from the mountains through the lush sugar cane fields, to end up across an azure lagoon towards the horizon.

Offered at: $30,000,000

For more information visit: Oresy.com

Foreclosure Crisis Isn't Even Halfway Over: Study

The foreclosure crisis has had a long and destructive run – five years and counting, with millions put out of their homes. According to the Center for Responsible Lending (CRL), we’re not even halfway through the devastation.

The organization’s analysis of 27 million mortgage loans originated over a five-year period found that 6.4 percent of mortgages made between 2004 and 2008 have ended in foreclosure, and an additional 8.3 percent are at immediate, serious risk.
The study also offers up evidence that foreclosure patterns are strongly linked with patterns of risky lending. According to CRL, foreclosure rates are consistently worse for borrowers who received high-risk loan products that were aggressively marketed before the housing crash, such as loans with prepayment penalties, hybrid adjustable-rate mortgages (ARMs), and option ARMs.
Looking at the demographics of foreclosure casualties, CRL found that the majority of people affected by foreclosures

have been white families. However, borrowers of color are more than twice as likely to lose their home, the organization says.
According to CRL, these higher rates reflect the fact that African Americans and Latinos were consistently more likely to receive high-risk loan products, even after accounting for income and credit status.
African Americans and Latinos were much more likely to receive subprime loans with high interest rates and loans with features that are associated with higher foreclosures, CRL explained. The nonprofit group found that these disparities were evident even when comparing borrowers within the same credit score ranges, with the gap especially pronounced for borrowers with higher credit scores.
“Our study provides further support for the key role played by loan products in driving foreclosures,” CRL said. “Specific populations that received higher-risk products-regardless of income and credit status-were more likely to lose their homes.”
While some blame the subprime disaster on policies designed to expand access to mortgage credit, CRL says the facts undercut these claims.
Instead, the group argues that dangerous products, aggressive marketing, and poor loan underwriting were major drivers of foreclosures in the subprime market. CRL credits the Dodd-Frank Act as the first vital step taken to strengthen mortgage protections by restricting the use of risky products and requiring lenders to consider each borrower’s ability to repay a loan.
“These new rules will certainly have a positive effect on the success of future mortgages,” CRL said. (DSNews.com)

Fraud Schemes Adapt to Evolving Market Environment

While the government has recently enhanced its efforts to fight mortgage modification scams, mortgage fraud remains a prevalent issue throughout the industry.

According to Jenny Brawley, associate director of mortgage fraud investigations for Freddie Mac, three elements drive mortgage fraud schemes: pressure, opportunity, and rationalization.
The recent lending environment, which includes enhanced regulation, tighter underwriting standards, and full-documentation loan requirements, will not necessarily decrease mortgage fraud, Brawley said at a panel on mortgage fraud at the Five Star MPact Mortgage Conference and Expo.
In fact, the FBI characterizes mortgage fraud schemes as “particularly resilient” and credits them with being able to “readily adapt to economic changes and modifications in lending practices.”

According to Brawley, one common fraud scheme in the current environment of high lending standards involves recruiting a straw buyer with a high credit score to apply for mortgage loans, often in return for $10,000 to $20,000.
The scam artist enters a separate agreement with the straw borrower agreeing to pay the mortgage and pay him or her a specified amount. The scheme amounts to “buying” good credit. However, the fraudster then defaults on the mortgage, damaging the straw borrower’s credit and leaving him or her with the liability.
Stephen M. Hladik, partner in Pearlstine, Onorato & Hladik, LLP, based in Pennsylvania, has seen instances in which a straw borrower later attempted to sue the lender under the Truth in Lending Act. However, having signed the promissory note, the straw borrower is not offered sympathy from the law but rather treated as a fraudster as well.
Brawley points out that they key to preventing this type of fraud is for the lender to get to know the borrower. She believes the lender can often detect a borrower’s intent with straw borrowing schemes.
In addition to straw buying schemes, Brawley points out that steep qualifications such as the proposed qualified residential mortgage under Dodd-Frank, which would require a minimum down payment of 20 percent, will put pressure on the industry that will likely lead to misrepresentations of loans through inflated sales prices. (DSNews.com)

Miami Pending Home Sales in October Rise 10% Over Last Year

(MIAMI, FL) -- According to the Miami Association of Realtors, October cumulative pending home sales - including single-family homes and condominiums - in Miami-Dade County were 10 percent above what they were a year earlier, up from 10,264 to 11,245, and 0.4 percent below the previous month, down from 11,296.


October Sales Activity

The total number of listings, including single-family homes and condominiums, that pended during the month of October increased 26 percent, from 2,861 in October 2010 to 3,609 last month.  Compared to the previous month, pended sales increased .22 percent.   Single-family home and condominium sales that pended during the month increased 27 percent and 26 percent respectively compared to the previous year.

"In Miami, where market performance has outpaced the nation, strong pending sales activity has mirrored robust closed sales figures due to international buyers who mainly pay all cash and are not impacted by mortgage financing issues," said Jack H. Levine, 2011 chairman of the board of the Miami Association of Realtors.  "However in other parts of the country factors such as stronger underwriting standards and appraisal issues are impeding closings that are much more dependent on financing."

Cumulative Pending Sales Rise

Pending sales of condominiums were 10 percent higher than they were a year earlier, up from 5,878, and 2.3 percent below what they were the previous month, down from 6,620.  Pending sales of single-family homes were nine percent above what they were a year earlier, up from 4,386 to 4,775, and five percent below the previous month, when pending single-family homes sales totaled 4,676.

"In addition to the unyielding demand from foreign buyers that has boosted the local market and resulted in Miami outperforming the nation, there is also increasing demand from domestic buyers," said 2011 Miami Association of Realtors Residential President Ralph E. De Martino.  "Domestic buyers are now accounting for a higher percentage of closed sales.  In addition, the stronger rental rates have resulted in strong demand for rental properties, which is putting increased pressure on the greatly reduced inventory of properties for sale."

Nationally, the Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 4.6 percent to 10.4 in October from 84.5 in September, according to the National Association of Realtors. The index is 9.2 percent higher than the 85.5 index reported in October 2010.

Increased pending sales are an indication of increased future sales.  A sale is listed as pending when a contract is signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. (worldpropertychannel.com)

Beige Book Illustrates Weakness in Real Estate, Pickup in Refinancing

The Federal Reserve released a new market-gauging rendition of its Beige Book Wednesday. The publication recounts signs of “slow to moderate” economic growth across 11 of the 12 Fed districts. The St. Louis district was the lone dissenter, reporting a decline in economic activity.

Residential real estate activity overall was described as “generally sluggish,” while commercial real estate activity was depicted as “lackluster” across most of the nation. Mortgage refinancing, however, was said to have grown at a “rapid pace.”
Beige Book findings are based on commentary and observations collected by the 12 Fed districts from businesses and contacts outside of the central banking system. The latest version covers the reporting period from early October through mid-November.
Overall bank lending increased only “slightly” since the last report, according to the Federal Reserve. However, one bright spot could be found in the refinancing of home loans as homeowners looked to cash in on the period’s rock-bottom interest rates.
From the previous report issued in mid-October, the Fed described loan demand for the most part as “declining.” Then too, the one exception noted was an increase in mortgage refinancing in many districts, but even since then, Fed contacts are seeing greater demand from homeowners applying for a new refinanced loan.
Changes in credit standards and credit quality varied across districts. Philadelphia, Kansas City, San Francisco, and Dallas all reported improvements in loan quality, with Dallas contacts touting a decline in problem loans.

Cleveland, Chicago, and St. Louis noted relatively unchanged credit quality. Boston, Richmond, and Atlanta saw some tightening of lending standards.
In New York, bankers reported declining delinquency rates for commercial and industrial loans, but no change in delinquencies for other loan categories.
The central bank says residential real estate activity increased somewhat, but conditions were varied across districts.
Philadelphia, Richmond, Minneapolis, Kansas City, and Dallas reported improvements in their residential real estate markets. New York, Boston, Cleveland, and San Francisco reported flat activity at relatively low levels, while Atlanta and St. Louis indicated decreased sales.
Single-family home construction remained weak, while multifamily construction picked up in New York, Philadelphia, Cleveland, Chicago, and Minneapolis.
On the commercial real estate front, Boston, New York, Chicago, Minneapolis, and San Francisco indicated roughly unchanged activity. Atlanta and Kansas City noted slight improvements. Philadelphia and Dallas reported mixed activity. Richmond and St. Louis noted that vacancy rates increased.
In terms of labor markets, hiring was generally subdued, but some firms with open positions reported difficulty finding qualified applicants.
Stable employment levels or subdued hiring were mentioned by New York, Philadelphia, Cleveland, Atlanta, Chicago, and Dallas. Assessments of labor market conditions were mixed in Richmond and St. Louis, while Minneapolis reported reduced availability of labor.
In Boston, demand for workers at services firms grew, but hiring among manufacturers was limited. In Kansas City, hiring plans among manufacturers remained solid, while expectations of future hiring among manufacturers in Philadelphia nearly doubled.
Meanwhile, Boston, Philadelphia, Cleveland, Richmond, Atlanta, and Minneapolis noted that some firms looking to fill open positions were having difficulty finding qualified workers, particularly for high-skilled manufacturing and technical positions. Atlanta noted there was growing concern that the skills of the unemployed were deteriorating. (DSNews)