The Business Journal of Phoenix - 12:32 PM MST Friday

Existing-home sales in the West rose 0.8 percent to an annual pace of 1.32 million in November but were 17.5 percent lower than a year earlier, according to the National Association of Realtors’ latest report.

The median price in the West was $351,000, down 0.8 percent from November 2005.

Nationally, sales continued to recover last month following a rise in October, suggesting a turn in the market, the group said. Existing home sales - including single-family, townhomes and condominiums - rose 0.6 percent to 6.28 million units in November from 6.24 million in October. That’s 10.7 percent below the 7.03 million-unit pace in November 2005.

The national median existing-home price for all housing types was $218,000 in November, 3.1 percent lower than November.

“As the housing market recovers from its correction, existing-home sales should be rising gradually during 2007 - it looks like we may have reached the low point for the current cycle in September,” said David Lereah, NAR’s chief economist. “We’ve entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down.”

According to Freddie Mac, the national average commitment rate for a 30-year, fixed-rate mortgage was 6.24 percent in November, down from 6.36 percent in October. The rate was 6.33 percent in November 2005.

“Mortgage interest rates are the lowest they’ve been since January, and it’s the first time since August of 2005 that interest rates are lower than a year earlier,” said NAR President Pat Vredevoogd Combs. “This is increasing buying power at the same time that sellers are showing a willingness to negotiate price and terms.”

Web Posted: 12/07/2006 11:06 PM CST

Jennifer Hiller
Express-News Business Writer

The party isn’t exactly over for San Antonio real estate, but the champagne has stopped flowing.

Home builders, feeding off of the anxiety of the national real estate meltdown coupled with the typical seasonal slowdown, have started offering deals and incentives not available a few months ago.KB Home even has started to lay off employees.

The flurry of year-end deals can be attributed, in part, to an annual strategy builders use to move homes off the books for tax purposes. But there’s also a sense that 2007 won’t be as good as 2006, and that the frenzy that typified home building and sales in recent years has eased.

“I’m hearing more people being concerned than I am (hearing them be) ecstatic,” said Michael Moore, vice president of the Greater San Antonio Builders Association.

KB Home, one of San Antonio’s largest builders, laid off numerous employees Thursday.

The layoffs came just after KB Home exceeded its sales goals for its fiscal year ending in November.

Spokeswoman Cathy Teague said the company had to streamline the business to match the volume of work it expects next year, while still remaining profitable.

“We will continue to open new communities and expand in the market by offering new home designs and neighborhoods to attract new home buyers,” she said.

KB Home has laid off workers in other cities — recently in Denver and Las Vegas — but Teague said Thursday’s layoffs were a local decision and weren’t done as a directive from the corporate office. She wouldn’t confirm the number of employees who lost jobs.

Those layoffs likely will feed a growing sense of industry unease.

It’s a new feeling for San Antonio, where for the last year the city’s real estate market has been a shining contradiction to the rest of the country’s woes.

The new home market party started when Fortune magazine anointed San Antonio the nation’s strongest housing market, predicting an 8.3 percent home price appreciation in 2006, luring investors who helped push the market to record levels.

As a result, one segment of the real estate market already has a hangover: single-family home rentals.

Out-of-town investors flooding into San Antonio this year have glutted the market with rental homes, and the average rent has dropped $202 a month since this time last year, from $1,301 to $1,099, according to the San Antonio Board of Realtors.

At the end of October, renters had their pick of more than 2,000 homes. So far this year, more than 10,650 homes have gone onto the rental market — 22 percent more homes than last year.

Kevin Knight with Liberty Management Inc. said the out-of-state investors had a different mentality than local landlords, who traditionally bought fixer-uppers.

The out-of-state investors wanted new homes that required little maintenance.

“San Antonio investors used to buy for positive cash flow,” Knight said. “In California, they buy for appreciation. They’ll buy a house here and lose $200 to $300 a month and they don’t care.”

That’s helped contribute to a drop in rents.

“We’ve had owners who are used to getting $1,100 a month in rent and we tell them they have to drop their price,” Knight said. “They don’t want to hear that.”

One such owner is Missy Stagers, a real estate agent with Coldwell Banker D’Ann Harper Realtors. She owns five rental homes that used to be moneymakers, but now are breaking even.

“They’ve ruined our rental market,” Stagers said of the investors, many of whom cashed out of the East or West Coast markets and planted their money here. “You can now rent homes cheaper than you can buy.”

Real estate malaise has struck much of the country, but Texas, which never saw a rapid run up in prices, stayed largely immune.

San Antonio homes appreciated in value about 8 percent this year, and the state is projected to have stronger job growth than the rest of the country in 2007 — a critical factor in whether people buy homes.

A recent report from the Federal Reserve Bank of Dallas said builders across the state have pulled back on starting homes and have increased incentives to sell rising inventory.

“On the new home side, we’re starting more houses than we’re selling,” said Bob Gardner of Gardner Financial Services.

Actual inventory figures were not immediately available, but new statistics should be released in January.

Business for home builders usually drops between September and January, often as much as 20 to 30 percent from spring and summer highs, but this seems to be larger trend than just a seasonal slowdown.

Centex Homes recently offered as much as $25,000 in incentives on its homes. Buyers could apply the money toward the down payment and closing costs or add upgrades to the home.

Such deals were unheard of a few months ago.

“We hit a wall at Halloween,” said Leslie Mullins, operational marketing manager for Centex Homes in San Antonio. “It’s not just us. We’ve spoken to all of the other big builders in town.”

Home buyers should expect to see aggressive marketing and the ability to negotiate prices on new home, said Jim Gaines, research economist with the Real Estate Center at Texas A&M University.

“The builders are seeing the market slow down. It’s doesn’t mean it’s falling off a cliff,” Gaines said.

Despite the troubles, no one predicts a San Antonio market crash.

Low interest rates for mortgages and job growth should drive sales and construction, even if it’s not at a party-atmosphere pace.

And the market for existing homes remains strong. It takes less time to sell a home this year than last — 60 days on average, compared with 70.

No one can say when the party might be over, but as Travis Kessler, CEO of the San Antonio Board of Realtors, puts it: “At some point you can’t go up forever.”

Tampa Bay Business Journal - 2:52 PM EST Monday
In the third quarter of 2006, Florida’s housing sector continued to mirror the national trend, showing higher inventory levels of homes available for sale in many markets and a slowdown in sales.

Across the state, sales of single-family existing homes totaled 43,395 during the three-month period, a decrease of 34 percent compared to 65,364 homes sold during the same time a year ago, according to the Florida Association of Realtors. The statewide existing-home median sales price remained stable at $247,900 in the third quarter; a year ago, it was $247,800. At the end of the second quarter of 2006, it was $254,800.

Housing in Tampa Bay is doing slightly worse, with sales declining 43 percent, to 8,009, from a year ago and 21 percent from last month’s 10,187. The median price increased 8 percent, to $234,000, from a year ago, and 1 percent from last month’s $232,200.

Tampa Bay’s prices peaked in June at $239,600.

In a new survey conducted by the University of Florida’s Center for Real Estate Studies, the threat of spiraling insurance rates was mentioned as the biggest concern, followed by the softening housing market as the second most-mentioned trend.

Still, even if a sharp downturn in the housing market occurs as some analysts predict, Florida will be less affected by it than other states because of the insulating effect of its high population growth rate, said Dr. Wayne Archer, director of UF’s Center for Real Estate Studies, in a release.

National Association of Realtors’ latest economic outlook calls for existing-home sales to be fairly stable in the fourth quarter, with 2006 expected to be the third strongest year for sales after consecutive records in 2004 and 2005.

Looking at Tampa Bay’s condominium market, sales decreased 46 percent from the same period last year, with median prices slipping by 2 percent to $165,400.

The Florida Association of Realtors provides programs, services, continuing education, research and legislative representation to its more than 155,000 members in 68 boards/associations.

The Denver Business Journal - 12:28 PM MST Wednesday

A sluggish market led to a dip in Denver metro-area housing starts during the third quarter of 2006, according to a report by Metrostudy’s Denver division.

Denver area third-quarter housing starts fell 22 percent from the same period last year, from 4,889 new homes to 3,830. The year-to-date rate through the third quarter declined 3 percent, from 19,568 in 2005 to 18,908 in 2006.

The Houston-based housing market research firm found that Douglas County led metro-area counties in new home starts, although the year-to-date amount was still down 14 percent from the same time last year, to 4,236 units.

Jefferson and Adams counties reported declines of 19 percent and 17 percent, with 1,479 and 3,433 starts, respectively. Arapahoe County posted a 4 percent increase in activity due to continued growth in southeast Aurora.

Inventory continues to climb, with 31,450 homes on the market at the end of September — an increase of 16 percent compared to the same time last year. Still, prices remain high, with 54 percent of new homes falling in the $200,000-to-$350,000 range. Homes priced above $500,000 made up 14 percent of the market.

“Housing in Denver appears to be more stable than in many other Western markets. However, consumer financial stress has increased, and many potential home buyers are worried about high foreclosure rates or are waiting for the market to normalize,” said John Covert, director of Metrostudy’s Denver division, in a statement. “These factors have led to softening demand and increased levels of both existing and new home inventory.”

Web Posted: 10/17/2006 09:20 PM CDT

San Antonio Express-News

For two decades, the lament was loud and constant whenever the question arose about why so little investment was being made in downtown San Antonio housing.

No downtown grocery store meant low demand for downtown condominiums and apartments.

The opposite was true, too. Low numbers of downtown residents meant that a downtown grocery, even one half the size of suburban stores, would fail.

This Catch-22 apparently blasted apart in the past year or two. It seems an additional downtown residential project is announced nearly every month. If a downtown grocery store is on a drawing board anywhere, though, it’s a deep, dark secret.

The new wave of downtown residential developers has adopted a brave attitude: To heck with grocery stores, full speed ahead.

“If residential is built, the retail will follow” is the way Ed Cross of Cross & Co. put it to a packed Central Area Business Council luncheon last week.

“I don’t want a grocery store. We don’t need one downtown,” said another developer, James Lifshutz, currently building or planning three downtown projects.

Small produce and meat markets are already there, and more stores will materialize as necessary as residential populations rise, added Lifshutz, of the Lifshutz Cos.

Cross plans a $46 million, 246-unit apartment development called the Vistana, near Market Square. He has set aside 15,000 square feet that he hopes will be occupied by a drugstore. Drugstores these days often offer fresh produce and meats along with other traditional grocery items, he noted.

The idea that people who live downtown desire a car-less lifestyle was pooh-poohed by a partner of a 22-story downtown condo tower, the Vidorra near St. Paul Square, now in the preselling stage.

Jeff Rochelle said grocery delivery services will arise as downtown populations grow, but residents will still own cars. “They still will get out and drive. They want rapid access to freeways,” Rochelle said.

Cross, who recently switched from real estate broker to developer, said the demand for downtown housing has barely been scratched.

Downtown demand typically accounts for 5 percent to 15 percent of a metropolitan area’s households. In San Antonio, that would put central business district demand at 30,000 to 90,000 units. Downtown San Antonio now has only about 2,500 units, he said, for 5,000 to 6,000 residents.

Downtown may not be ready for 30,000 apartments or condos, but it is easy to see why the developers believe demand justifies their projects.

San Antonio’s central business district, after all, already possesses amenities that many cities can only envy.

The River Walk, the arts district theaters, parks, HemisFair Plaza, Rivercenter mall and its movie theaters, the Nix Medical Center, Christus Santa Rosa Hospital, doctor offices, VIA Metropolitan Transit and its downtown circulating streetcars, and the San Antonio Museum of Art (with at least two other downtown museums planned) provide all the cornerstones for a livable downtown.

A grocery store once seemed a necessity. Now? Who needs it?

Downtown developers certainly don’t.

Jennifer Hiller
Express-News Business Writer

As the national real estate market sputters like a car on the way to a breakdown, San Antonio home sales remain robust.

One sign of the city’s good health: 150 to 175 new real estate agents stampede into the market each month.

More homebuilders, too, are arriving in San Antonio — albeit at a much less frenetic pace — vying to build a share of the 18,000 new homes anticipated this year.

In the past four years, the membership of the Greater San Antonio Builders Association has grown from 500 to 1,170 members, said Becky Oliver, executive vice president.

And while 2005 was a record year for San Antonio real estate — a year the industry relished as a once-in-a-lifetime boom — 2006 still shows every sign of breaking those records.

Eddie Gammill, division president for Stewart Title of San Antonio, receives two to three calls a week from builders looking to move into the San Antonio market.

He attributes their interest to the Fortune magazine story in December that pegged San Antonio as the nation’s best real estate market for 2006, with a projected 8.3 percent appreciation rate.

“The good news is everyone knows about us,” Gammill said. “The bad news is, there goes the neighborhood.”

A recent orientation session for new real estate agents at the offices of the San Antonio Board of Realtors was full.

“Have you had trouble parking?” asked Barbara Tarin, board chairwoman. “If you run into a problem like that, just smile. It’s a really good problem to have.”

San Antonio had 7,400 real estate agents in August, a 32 percent increase since August of last year.

“There are people making more in their first year than I did in my 20th year,” said Ron Smith, education director at the Realtors board, who received his real estate license in 1978.

Jennifer Beaudet moved to San Antonio from San Diego three months ago, leaving behind a teaching career to join her best friend in the real estate business.

The flexibility, the income potential and San Antonio’s good market attracted Beaudet. But there are other benefits.

“Here you can actually afford a home,” she said.

New real estate agents say they’ve paid at least $1,500 to $3,000 in start-up costs for things like business cards and marketing materials.

But builders face much steeper entry costs and enter into a market more slowly.

“It’s a capital-intensive business,” said Norman Dugas, a residential developer and president of Dugas Diversified Developments.

Lot availability is at an all-time low in San Antonio, so builders who can pay cash for large numbers of lots in another’s development have an advantage over smaller builders, who often must rely on financing for fewer lots, Dugas said.

Finding land and developing it into a neighborhood is another option, but it’s difficult.

It takes at least 18 months to turn raw land into lots ready for homes — a timeframe that forces builders to consider the market for the next two to five years.

Still, many builders are willing to try, and he said there’s opportunity.

“You can’t help it. You see the job growth,” Dugas said. “I guess you could say at the normal glacial pace that real estate moves, anyone walking is in a rush to get into the market.”

Several of the nation’s largest homebuilders — including Toll Brothers, KB Home, Pulte and Ryland — already have San Antonio offices. But several large regional builders have also been staking a claim here.

Among them, Dugas said, is Gehan Homes, which builds 1,200 houses a year in the Dallas, Austin and Houston areas, and has secured land in San Antonio for the first time.

Randall Allsup, manager of the San Antonio division of Metrostudy, a residential real estate research firm, said new builders continue to try to get a foothold in the market because even though a record number of homes are being built, supply is tight. Homes are selling quickly.

“Everyone feels like the sky is falling across the country, but locally things are still looking good,” he said.

Mortgage interest rates have stayed low, which has convinced fence sitters that it still might be time to buy a home, he said.

But San Antonio can’t completely avoid the ripple effect of the national real estate slowdown. Allsup said a crash on the East or West coasts would lower consumer confidence in San Antonio.

The condominium market’s loss is the apartment market’s gain, according to surveys of multifamily housing developers by the National Association of Home Builders.

Builder confidence in the condo market dropped dramatically in the second quarter of this year, while confidence in the apartment market hit record highs.

NAHB Chief Economist David Seiders says there is “clearly an oversupply” of unsold condo units, while vacancy rates for apartment buildings are dropping and rents are increasing.

“It looks pretty solid for the rental market for the foreseeable future,” says Leonard Wood, director of Wood Partners, a Marietta, Ga.-based multifamily housing developer.

The conversion of apartments to condominiums when the condo market was hot helped increase the demand for new apartments, he notes.

Now some projects that had been planned as condos are being switched to apartments. But these are “marginal projects” in poor locations, says Bruce Menin, president of Crescent Heights, a New York City-based developer of high-rise condominiums.

“Special projects on special streets in American cities are not going to get replicated,” he says, and will still do well.

But some projects may get harder to do as condo prices soften, he says. This means local governments should moderate their demands for low-income units in new condo projects, he says. That’s “a good public policy goal,” he says, but requirements that are too onerous could keep projects from getting off the ground. This ultimately would reduce housing supply, and make housing more expensive in tight markets, even for moderate-income residents, he says.

Wood says local governments should “be more careful” about adding costs to multifamily housing projects through impact fees and building codes.

San Antonio Business Journal - July 26, 2006
by Tricia Lynn Silva

Just when some may have been thinking that things couldn’t get any better in the local residential real estate market, a new report shows that housing starts are continuing at a healthy clip.

According to the second-quarter 2006 report by Metrostudy, a total of 5,367 single-family home-construction starts were recorded between the months of April and June. This figure marks a 29.4 percent increase from the number of housing starts recorded during the second quarter of 2005.

For the 12 months ending June 30, 2006, the Metrostudy report shows that 18,598 homes commenced construction. This is a 26.2 percent increase from new home starts from the previous 12-month period.

Metrostudy is a leading provider of housing information.

Local homebuyers also purchased a total of 4,482 new single-family homes during the second quarter of this year — a 24.5 percent jump from the number of new homes purchased during the same three months of 2005, according the report.

Over the last 12 months, sales were completed on 15,743 new units — an 18.9 increase from the number of home-purchase closings recorded during the previous 12-month period, the Metrostudy report shows.

“For the San Antonio housing industry, the second quarter of 2006 was the strongest on record in nearly every category … ,” says Randall Allsup, manager of the local division of Metrostudy.

The news in San Antonio is much brighter than the forecasts being posted in other areas of the country — namely the housing markets in California, Arizona, Nevada, Florida, Northern Virginia and Atlanta.

“Those markets are being affected by a combination of affordability problems caused by rapid price increases, recent increases in mortgage interest rates, investors dumping speculative inventory, and buyer fear caused by much talk of a housing bubble,” Metrostudy President Mike Inselmann says.

Nationally, housing construction is expected to slow by 5 percent to 6 percent over the remainder of this year, and going into 2007 — despite strong fundamentals such as job growth and the economy. Negative headlines in the media also could be having a big impact on demand, Metrostudy notes.

“Given the performance of the economy, metropolitan areas whose supply-demand balance has not been distorted by local development restrictions or disruptive investor activity should behave normally,” Inselmann says. “Metropolitan areas experiencing job growth will experience in-migration and household growth and will likely see demand for housing remain steady in the coming year.”

Charlotte Business Journal - 8:02 AM EDT Thursday
by J. Lee Howard
Senior Staff Writer

Merrifield Partners is drawing plans for a $15 million, 75,000-square-foot office-condominium building in South End.

The three-story project, dubbed 1927 South Tryon, will feature more than 100 parking spaces in a two-level deck. The 2-acre site is a former Hughes Supply Inc. plumbing warehouse.

Charlotte-based Merrifield plans to buy the Tryon Street site by Aug. 1 from a limited liability company headed by Ralph Falls of Pace Commercial. The prospective sales price was not disclosed. The property is valued for tax purposes at almost $1.1 million.

The project is an investment of Crosland Inc., with Merrifield, an affiliate company, acting as developer.

Merrifield plans to sell space in the building for $195 per square foot. The project is being designed to accommodate businesses measuring 2,500 square feet or larger.

Mark Newell, a Merrifield partner, says his target market includes architects, engineers and designers. For several years, South End has attracted a range of office operations and design firms.

Plus, the local market for businesses wanting to buy space appears to have grown deeper than for companies seeking to lease, Newell says. The opportunities to buy Class-A space are rare, he says.

The project also stands to benefit from being surrounded by South End’s shops, dining options and general commercial activity, Newell adds.

The project will be within walking distance of the light-rail line the Charlotte Area Transit System is building from uptown to Pineville.

Falls’ company acquired the property about a year ago from Hughes. His idea was to convert the 30,000-square-foot Hughes building into office condos. But he was later approached by Merrifield representatives, who were interested in pursuing a much larger project. So he and his partners agreed to sell.

The project is the latest in a series of office developments in the burgeoning South End district. Recent announcements include Abbott Professional Town Homes, a live-work project of MECA Properties. That 16-unit, $6.5 million development, which is under construction, will offer space starting at about $380,000 for 1,800 square feet.

And later this month, the city is expected to receive proposals from as many as five development teams for a mixed-use project in the Scaleybark Station area. Crosland is among those showing interest.

The 8.5-acre, city-owned site is on South Boulevard at Clanton Road, adjacent to 10 acres owned by CATS.

That project will likely set the tone for future South End developments along the transit corridor, says real estate consultant Frank Warren, president of Warren & Associates.

The 1927 South Tryon development will be unusual for South End, he says, given that it will be new space, rather than a rehab like those that are common in the area.

But it could be typical of what’s to come, he adds, citing the Scaleybark Station project.

Mass transit is going to have a major impact on that corridor, significantly boosting its worth as an office location, Warren says.

A general contractor has not been selected for 1927 South Tryon. The building is being designed by Robert Johnson Architects Inc.