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BOOK REVIEW: Columnist, Educator Edith Lank Puts Some Fun Back Into Real Estate with ‘I’ve Heard It All and So Should You’

Posted by kinchendavid on February 1, 2007

Reviewed By David M. Kinchen
Huntington News Network Book Critic

Hinton, WV  – Real estate is no laughing matter for most folks: It’s deadly serious – too serious. Now comes real estate columnist and educator Edith Lank with “I’ve Heard It All and So Should You: Confessions of a Real Estate Columnist (Dearborn Real Estate Education, Chicago: 250 pages, $22.39 paperback) to put some laughter back into the subject.

As fans of the 1929 Marx Brothers comedy “The Cocoanuts” (about the Florida land boom and bust of the 1920s) know, there’s a lot of humor in housing. Lank, based in upstate New York and the author of eight previous books on real estate – all serious tomes – looks at the lighter side of property in a book that collects letters and emails from her syndicated column – a column that appears in more than 100 newspapers and web sites.

Think Ann Landers or Dear Abby and you’ve got a pretty good idea of what Edith (I can call her that because I’ve known her and husband Norm and their son Avi for years from my membership in the National Association of Real Estate Editors) is up to in this entertaining and informative book.

Yes, humor can be informative, because a funny book with real-life situations is an excellent teaching tool. Edith Lank, a former real estate broker, has written textbooks on real estate law in New York and New Jersey and has taught pre-licensing classes for prospective real estate agents.

Down through the years, buyers and sellers have asked Edith Lank questions that they’re too embarrassed to ask their own agents. She shows that situations that might seem obvious to the experienced broker or sales person are not necessarily all that obvious to lay people.

Here are some samples from the book:

* “…please send all information on how to sell our home without using a realator. I think you call it being a FSOB…”

* “Would adding extra to our mortgage payment save us money in the long run? If so, should we pay extra on principal, interest or escrow?

* “I would appreciate any information on Fanny Mae. Also if she has any books out…”

* “Hello Edith: I don’t know what to do. First of all I’m incarcerated and the reason is my husband, well x-husband was sleeping around with my best friend and I walked in on them in our home and lost it with a golf club…”

* “Forgive the ‘Dr. Laura’ nature of this letter. Recently my fiancée allowed a friend of hers to rent a room from us while she gets her life back on track. The only lease is a verbal agreement, and her rent is a token amount. However, I’m growing tired of her lifestyle with a steady stream of men entering our house….how do I go about removing her with no written lease?”

* “Dear Edith: My daughter recently bought a home and is interested in how to pay it off so she will save as much as possible. I saw an account in your column but forgot about it and used it to wrap some jars. I would like you to send me a copy so I can give it to her.”

Edith notes in her delightful, informative book: “At least she didn’t use it to wrap fish!”

If you think you know a lot about real estate, think again. You don’t know Jack compared to Edith Lank. But after reading her new book, you’ll be both entertained and educated. It’s an unbeatable combination.

About the Author: Edith Lank’s real estate column has won awards for journalistic excellence and consumer education from the National Association of Real Estate Editors, the Real Estate Educators Association, the Mortgage Bankers Association, various Bar Associations and NAR. She has appeared on CNN, MSNBC, Minnesota Public Radio, Public Radio International, has hosted her own television and radio shows and is heard weekly on public radio at WXXI-FM in her hometown of Rochester, NY. Edith has taught real estate at the college level for 15 years, and her work has been published in many national magazines. Edith is a past director of the National Association of Real Estate Editors and also of the Real Estate Educators Association.

Publisher’s web site: http://www.dearbornRE.com

 

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Posted in Books, Real Estate | 3 Comments »

REAL ESTATE: WHAT AM I BID? Alabama Firm Promotes Online Auctions for Selling Real Estate

Posted by kinchendavid on December 30, 2006

By David M. Kinchen
Editor, Huntington News Network

Mike Keracher, left and Tony Isbell of RealtyBid.com

With the bursting of the real estate price bubble in most of the country, you’d expect to find a firm that markets real estate through online auctions to be suffering.

You’d be wrong in the case of Gadsden, Alabama-area-based RealtyBid.com. This is a firm that was part of the dotcom revolution of the late 1990s and early 2000s that not only survived the boom and bust of dotcoms, but has thrived, according to CEO Tony Isbell. “The firm was founded in 1999 as a traditional auction company,” Isbell told HNN in a telephone interview. “The online business — RealtyBid.com — was created in 2001, inspired, Isbell said, by the success of eBay’s online auction model.

“We have been exclusively selling properties online since 2001,” he added.

Anniston, AL-native Isbell, who founded the firm with another veteran of real estate auctions, Mike Keracher, from the Birmingham suburb of Hoover, said that bad times for real estate are often good times for real estate auction concerns – especially RealtyBid.com.

The comparison with eBay is only superficial, he told HNN.

“We don’t accept listings from individuals and we don’t have real estate ads, like eBay,” Isbell said. ““We assist real estate agents throughout the nation for homes for sale and we handle foreclosed properties for the top lenders in the nation.”

Foreclosed properties are not identified separately now, but will be in the very “near” future as foreclosures continue to rise, Isbell added.

Isbell and Keracher each have about 20 years experience in real estate auctions, and Keracher, the firm’s executive vice president, is a licensed auctioneer.

Since its founding, RealtyBid.com, with 16 employees, has sold more than 5,000 properties – valued at more than $250 million – in all 50 states, according to the Rainbow City, AL-based firm’s marketing director Daphne Shannon.

Shannon told HNN that, “according to the National Auctioneers Association (NAA residential property auction sales grew 39.2 percent or $4 billion from 2002 to 2005 (from $10.2 billion to $14.2 billion annually).”

“It’s important to note that this phenomenal growth came during a time when the real estate market was extremely healthy, during a time that conventional wisdom would say that real estate auctions shouldn’t have be ‘necessary,’ yet the growth speaks for itself,” she added. “And, with the real estate market now downshifting, we certainly expect that the acceptance and use of real estate auctions, especially online auctions, is only going to continue to grow.”

Shannon: “Also, the NAA recently announced that residential real estate auctions were up 4.5% in the third quarter 2006 over the same time period in 2005. This is an impressive statistic that shows how residential real estate auctions are becoming more integrated into the mainstream of the real estate industry; however, during the same third quarter when the NAA reported an increase of 4.5 percent in residential real estate auctions overall, RealtyBid.com experienced a more than 84 percent increase in online real estate auction sales over the same period in 2005. In other words, the residential real estate auction industry is growing, and RealtyBid.com and online real estate auctions are leading the charge.”

This past July, when national home sales dropped for the eighth time in the last 10 months, RealtyBid.com had a record-breaking 1,000 residential properties nationwide up for bid on its web site, five times the same month in 2005, Isbell added.

Business writers, including one from The Birmingham (AL) News, have taken note of the “Stars Fell On Alabama” state’s homegrown success story, with News writer Roy L. Williams quoting Isbell: “The sheer volume of properties offered each month around the nation keeps the company in the spotlight among agents and investors nationwide…”. Williams went on to say that the firm’s sales volume “ranks it among the top five largest real estate auctioneers in the country.”

RealtyBid.com has garnered publicity in publications as varied as the Los Angeles Times, the (San Jose, CA) Mercury News, The Philadelphia Inquirer, New York’s Newsday, The Wall Street Journal, the Miami Herald, CNNmoney.com, MSNBC.com, Inmannews.com, in addition to the home state The Birmingham News.

Isbell noted that because of RealtyBid.com’s relationship building with real estate brokers, technological savvy real estate agents find it easy to work with the firm. And tech-savvy agents are where it’s at in today’s high-tech, online, wired world.

“RealtyBid.com is an accelerated sales tool for the real estate agent, providing greater coverage for listings – something that real estate brokers need in today’s real estate market,” Isbell told HNN, noting that the firm receives its revenue in the form of a 1 percent Buyer’s Premium based on the selling price of the property, paid by the buyer at closing. “The commission the broker receives comes from the seller, so we’re complementing the agent, not competing with him or her,” Isbell stressed. “We are one of the only online real estate models that is helping the agent and not getting into their pocket.”

He added that very few bidders close the deal without either seeing the property personally or having another person inspect it for them and report back to make sure the property is as advertised.

Isbell: “For the consumer, we are offering great opportunities to purchase homes, condominiums and land and good discounts over retail pricing. All properties offered on RealtyBid.com requires that it be offered with a discounted ‘reserve’ price.”

Isbell is upbeat about the future of online auctions, especially his firm, telling HNN that “We expect to triple our business volume in the next two years.”

As foreclosures “skyrocket” throughout the country, he said he expects more business from that segment of the market. In addition, real estate brokers want to move properties faster, to get their commissions sooner, so that segment will also grow rapidly, Isbell added.

Selling real estate by auction is nothing new to North American rural dwellers and is the preferred way to market real estate in Australia, where 70 percent of houses sold are sold by real estate auctioneers, he added.

So far this year, the top states by volume of properties listed and bid upon are, in order: Michigan, Texas and Georgia, Isbell told HNN. “We also expect to see more properties in places like California, Nevada and Illinois.” Web site: http://www.realtybid.com

* * *

David M. Kinchen began covering real estate in 1970 at The Milwaukee Sentinel and was a real estate reporter at the Los Angeles Times from 1976 to 1990. He has been a member of the National Association of Real Estate Editors since 1971 and was president of NAREE in 1984.

Posted in Real Estate | 6 Comments »

PARALLEL UNIVERSE: Relax, Marshall Field’s Fans: Macy’s Didn’t Ruin Your Favorite Store!

Posted by kinchendavid on December 12, 2006

By David M. Kinchen
Editor, Huntington News Network

Chicago, IL  – It’s been a Holiday tradition for many decades, traveling to Chicago’s Loop and viewing the gigantic Christmas tree at Marshall Field’s State Street flagship department store. Most people make a day out of it, shopping at Field’s and other stores on State Street and enjoying a meal at one of the restaurants in the store or nearby.

Given the relatively compact dimensions of the Loop, it’s possible to see a musical, stage play or opera, have lunch or dinner and shop, all in the same day during the holiday season. When I was there in early December, an unseasonable cold wave made that experience something only Mumble the penguin (the star of the hit film “Happy Feet”) would enjoy, but I have that extra native-Midwesterner cold weather gene that permits people like us to venture out when the weather is life-threatening.

Now that Cincinnati-based Federated Department Stores has rebranded the Field’s stores as Macy’s, many people familiar with Chicago are wondering what’s in store (couldn’t resist that one!) for a really Big Box institution that occupies an entire city block (Wabash Avenue to the east, State Street to the west, Randolph Street to the north and Washington Street to the south) in the Loop.

Relax, fans of FrangoLand: The store and overall chain, acquired by Federated in 2005, appears to be in good hands after several years of ownership by Minneapolis-based Target. The Marshall Field’s “As Chicago as it gets” slogan has been replaced with Macy’s “Way to Shop” and the famous dark green Marshall Field’s awnings are now Macy’s black. Those Macy’s red stars are also present in abundance. (By the way, Frango was not originally part of Marshall Field’s: It was acquired when the chain purchased the Frederick & Nelson department store chain in Seattle many decades ago).

The tree is a wonder to behold. On my recent visit, I took the elevator to the 8th floor to view the tree and the diners around it in the Walnut Room. Speaking of Frango candies, they have a favored spot in the basement level, where they share space with the Marketplace food court, an excellent dining place that’s much less formal than the Walnut Room.

My sister Natasha Yuhas, who – until her retirement a few years ago — worked in the furniture department at Field’s, concurs in my assessment, saying the store is much cleaner than it was during the heyday of Target, formerly known as Dayton Hudson. Prior to that chain, Field’s was owned by Batus, British American Tobacco; it really hasn’t been owned by the descendants of the original Marshall Field for many years. My sister advises the few people still protesting the name change to get over it – the store is in good hands, she says.

The building is an historic landmark, so the Marshall Field & Co. plaques are still in place around the building’s exterior. The two signature State Street clocks — at Randolph and at Washington — are there and are favored meeting spots for Chicagoans.

State Street is looking better than ever, with many new shops, including one from the very trendy and affordable Swedish H&M chain and the spruced up Sear’s store. A few years ago, the Daniel Burnham designed Reliance Building – one of the best Chicago landmarks that survived the wrecking ball – was renovated into the Hotel Burnham.

The Block 37 development – directly to the west of the Macy’s/Field’s store – is apparently on track. Ground was broken in November 2005 by the Mills Corp. of Arlington, VA for a mixed-used development on the long-vacant site, now called 108 N. State. This past August, the respected Chicago-based developer Golub & Co. bought the residential and office portions of the massive development, expected to be finished in 2008.

One sad note: Carson Pirie Scott & Co., another Chicago landmark, is closing its State Street store in March of 2007. Carson’s, occupying since 1904 one of the most distinguished buildings on the street, the landmark Louis Sullivan-Dankmar Adler designed building, is owned by Bon-Ton Stores. It was formerly owned by Saks Fifth Avenue. The State Street store will house a collection of boutique shops, according to news accounts.

Posted in Parallel Universe, Real Estate, Travel | Leave a Comment »

Realtors: Commercial Real Estate Sectors Basically Strong, Improving

Posted by kinchendavid on November 12, 2006

By Staff, from NAR Press Release

New Orleans, LA  – Commercial real estate sectors are on solid ground with generally tightening vacancy rates and sound fundamentals, according to a commercial market update and forecast presented at a forum on commercial business trends at the National Association of Realtors® 2006 Conference & Expo here.

Lawrence Yun, NAR senior economist, said the expanding economy is pulling up commercial sectors. “Commercial real estate is fundamentally sound with growing jobs and expanding businesses,” he said. “We’re seeing record levels of mergers and acquisitions, and institutional investors have returned in a big way.”

Commercial lending volume is up, and delinquencies are down. High construction costs are holding speculative activity in check, but the value of newly finished construction is running nearly 10 percent above a year ago. Imports and exports remain at high levels, sustaining demand in warehouse and distribution facilities. Corporate profits are strong, providing the wherewithal for businesses to expand. Hotel occupancies have been rising this year and are the highest since 9/11.

“Nearly 4 million new jobs have been created in the past two years, which in turn is creating need for additional commercial space, notably in the office sector,” Yun said. “Wage growth is picking up, household net worth has reached a new high and oil prices have been falling – all providing a nice backdrop for continued expansion in the commercial sector.”

The commercial property rate of return has averaged in the range of 3.5 to 4.0 percent this year, according to the National Council of Real Estate Investment Fiduciaries, with a weaker performance in the retail sector. While the present forecast is positive, potential risk factors for the future include oil prices, interest rates and higher construction costs resulting from global economic expansion; all are being closely monitored for any market impact.

Office Market

With healthy job growth, office market vacancy rates continue to fall in most major markets and are expected to average 13.0 to 12.0 percent in 2007 — a steady downtrend since exceeding 16.0 percent in 2004. After falling in the first part of the decade, average office rents are projected to grow 7.5 to 8.5 percent next year, while new office completions are forecast in the range of 35 to 40 million square feet.

Industrial Market

Trade and distribution continue to drive the industrial real estate market, with a lack of suitable inventory in traditional and inland ports fueling build-to-suit facilities. A low inventory-to-sales ratio, and a low wholesale inventory-to-sales ratio, means there is a need to restock, creating the demand for more space. In addition, orders for durable goods are rising. Some urban industrial properties are being redeveloped for mixed-use and residential purposes.

Vacancy rates in the industrial sector should average 9.7 to 9.0 percent next year, a steady downtrend since early 2004 when they were close to 12 percent. Rents are expected to increase 3.5 to 4.0 percent in 2007, while new industrial space coming online is estimated at 155 million to 160 million square feet and net absorption of space has been trending up all year.

Retail Market

Regional shopping centers have been impacted by vacancies resulting from the merger of Federated and May department stores, and consumer confidence — which has been fairly steady but iffy — is dampening retail leasing. On the upside, personal income is rising and retail sales have been healthy to date.

Retail vacancy rates are likely to rise to an average of 7.8 to 8.2 percent in 2007. After dropping about 1.5 percent this year, average retail rent is forecast to increase 2.5 to 3.0 percent next year, with 20 million to 25 million square feet of new space coming online.

Multifamily Market

The apartment rental market — multifamily housing — is strengthening as potential home buyers remain in rental housing. New supply is matching absorption, keeping vacancy rates fairly flat – next year they are projected to average 5.2 to 5.3 percent. Average rent should rise 4.5 to 5.0 percent in 2007. Between 220,000 and 225,000 new units are likely to come on the market next year.

Not surprisingly, the highest demand is in areas where population growth is greatest. Institutions are very active in acquiring investment grade apartments, and condo conversions have almost completely stopped.

Foreign Investment

Also addressing the commercial forum was James Fetgatter, chief executive of the Association of Foreign Investors in Real Estate. AFIRE’s membership is comprised of about 180 large foreign institutions located in 17 countries, and represents about three-quarters of all foreign investment in the United States. Fetgatter shared findings from an AFIRE survey that evaluated foreign investment in U.S. commercial real estate, examining who’s buying and areas of greater interest to foreign investors.

The survey showed that the mean investment by respondents in the U.S. commercial market was $3.7 billion. “In looking at portfolios held by global commercial real estate investors, by far the most popular region for investment is North America, followed by Western Europe and the United Kingdom,” Fetgatter said. “Smaller investment shares go to Australia, Japan, Eastern Europe and Asia.”

In 2005, $494 million was invested by survey respondents in the United States out of a global total of $801 million; this year the same investors planned to invest $444 million in the United States out of a global share of $943 million.

“Although the United States remains the most popular country for foreign investors, they are diversifying globally and the market share is down this year,” Fetgatter said. “Even so, the U.S. is still favored around the world for or depth and stability, and other sources show the total amount invested this year will be higher than 2005. Most of the investment is from private equity, and foreign investors are now doing more development and also are more active in the second home market.”

The most popular commercial property types for foreign investors are office, hotel, retail, industrial and multifamily. In looking at overall portfolio holdings, 52 percent are in office, 26 percent retail, 12 percent multifamily, 5 percent industrial and 3 percent hotel – the rest are other types.

The most popular cities for global investors are London, Washington, New York City, Paris and Tokyo. Los Angeles was tied for 6th, San Francisco was 8th and San Diego was 10th. This is the first time since 2001 that London surpassed Washington as the most popular investment market. Other U.S. cities receiving favorable rankings include Chicago, Boston, Miami, Seattle, Austin, Phoenix and Orlando.

Thirty-one percent of respondents thought investment opportunities in the United States were much stronger than in other parts of the world, and 34 percent said they were somewhat stronger. Even so, 52 percent said it was very difficult to find attractive investment opportunities in the United States, and 43 percent said it was somewhat difficult. Three-quarters said top competitors in acquiring U.S. properties include domestic pension funds and advisors, and 42 percent identified domestic real estate investment trusts (REITs).

The United States was ranked the most stable and secure real estate investment by 74 percent of respondents, followed by the United Kingdom, 9 percent. The United States also was ranked as the best opportunity for capital appreciation, by 39 percent, followed by China, 12 percent.

The most active foreign buyers in the United States are from Germany, followed by Australia and the Middle East, with the latter two rising in market share and Germany declining.

The AFIRE survey, conducted last year, generated 70 usable responses from 148 major foreign investors, with a response rate of 47.3 percent.

Posted in Real Estate | Leave a Comment »

PARALLEL UNIVERSE: Baby Boomer Study Shows Changing Housing Needs, Uncertain Retirement – If Any

Posted by kinchendavid on October 19, 2006

By David M. Kinchen
Editor, Huntington News Network

Hinton, WV   – I don’t know about you, but I’m sick and tired of reading about the “Baby Boomer” generation – those born between 1946 and 1964 – and their whining about how tough things will be for them. But the generation was the biggest in the U.S. – 78 million – far more than the one immediately preceding them to which I belong, so I’d better get used to the Time magazine covers, etc., etc.

I may be tired of reading – and writing – about Boomers, but my attitudes on many things mirror the generation. Many of my “Sandwich Generation” – those born from about 1935 to 1945 – are more into jazz and early rock music. We often emulated the Beatniks rather than the Hippies, but we created the zeitgeist for the Boomer Generation.

The latest on Baby Boomers comes from the National Association of Realtors, a trade group that’s vitally interested in the housing wants and needs of all generations. I’m guessing that most of the recent presidents of NAR are Boomers and certainly most of the staffers in Chicago and Washington, DC are Boomers or the post-Boomer generation.

Here’s what the NAR says about Boomers:

“Baby boomers have a wide variety of housing needs in the future, depending on their retirement plans – or lack thereof – according to a study by the National Association of Realtors®.

“Most of the 78 million baby boomers are far from retirement, with diverse plans and timelines, resulting in different housing requirements and significant shifts from patterns established by earlier generations. The comprehensive study is based on a survey of nearly 2,000 American baby boomers born between 1946 and 1964 – the largest generation in U.S. history; the survey was conducted for NAR by Harris Interactive®.

“David Lereah, NAR’s chief economist, said baby boomers are living longer and are different from previous generations because they have no set path for retirement and have more varied circumstances in life. ‘The differences from past generations – and between baby boomers themselves – will have a significant impact on housing needs over the next 10 to 20 years that is very different from the World War II generation, and many boomers simply don’t know how they’ll retire,’ he said.

More from Lereah, a Boomer himself and a really smart guy: “A significant portion of baby boomers married later in life and had children at a later age, which means many will continue to work beyond the traditional retirement age. Older boomers are thinking about retirement, but one-third expect to go back and forth between periods of work and periods of leisure, and another 35 percent want to work at least part-time or start a business – all of this will have an impact on the kind of homes they buy as well as where they buy them.” The median age at which baby boomers expect to stop working is 70, but 27 percent say they never intend to stop working.

Lereah adds that most baby boomers are currently in the workforce, a good portion of them have children living at home, and boomers remain a driving force in the housing market. “Just over a quarter of the boomer generation is aged 55 to 60, which is when many people traditionally begin to focus on their retirement plans, but analysis of the survey suggests they are more likely to stay in the workforce longer and will be less likely to downsize than previous generations – the leading edge of the boomer generation is the key to future housing impact,” he says.

“Because they will be in the workforce longer, boomers will postpone purchase of retirement property and won’t be making those moves as early as assumed,” Lereah says.

Forty-two percent of survey respondents would like to retire in the South, 32 percent in the West, 15 percent in the Midwest and 12 percent in the Northeast. “This tells us that the Sunbelt will remain a traditional draw for retirees,” Lereah said.

Most boomers live in two-income households, with a median income in 2005 of $64,700, which is 31 percent higher than the median for all households.

This generation makes up 37.5 percent of U.S. households, but receives nearly half of all aggregate household income. “This translates into a lot of purchasing power, and helps to explain why 8 out of 10 boomers are homeowners,” Lereah said.

For baby boomers earning $100,000 or more, the study shows that more than 9 in 10 are homeowners. Among middle-income boomer homeowners, home equity accounts for fully half of their net worth. Even so, 19 percent of respondents are renters, 37 percent say they have just enough to make ends meet and 17 percent say they are having financial difficulty.

A quarter of baby boomers own one or more other kinds of real estate in addition to a primary residence: 13 percent own land, 8 percent own rental property, 7 percent a vacation home or seasonally occupied property, 2 percent commercial real estate and 3 percent some other kind of real estate.

Four out of 10 respondents intend to convert their vacation home into a primary residence in retirement. Analysis by NAR shows baby boomers are proportionately more active in the second home market, owning 57 percent of all vacation/seasonal homes and 58 percent of rental property.

Ten percent of boomers indicate they plan to buy some form of real estate within the next year, which corresponds with U.S. Census Bureau data that shows 3.5 million boomer households moved during the last year. Two-thirds are considering a primary residence, but the rest are thinking about land, second homes or commercial property.

Now, here’s something I can identify with, having “officially” retired in 2001, when I started drawing Social Security benefits, but continuing to work a variety of part-time jobs, including editing and writing for Huntington News Network:

“Most survey respondents were unsure of their financial future, with three-quarters saying they are not financially prepared for retirement and many expressing anxiety about their ability to retire. Some boomers said they might withdraw retirement funds for housing or real estate expenses.

Peter Francese, an independent demographic trends analyst and founder of American Demographics magazine, consulted on the findings. “For the vast majority of baby boomers, retirement is somewhere off in the future,” he said. “Considering that boomers are healthier than their predecessors, and are more likely to work in an office setting, many of them may work five or 10 years beyond the traditional retirement age of 65,” he said.

Half of boomers who live in an urban area would like to retire in a small town or rural area. Their ideal retirement location characteristics include a lower cost of living, being near family, quality health care, better climate and being near a body of water.

More than a third of all baby boomers want to retire in an urban or suburban setting, motivated by quality health care and cultural activities. Half of boomers said they would consider living in an age-restricted community. Given a longer tenure in the work force baby boomers may choose a larger home than earlier generations, speculates Francese. “Boomers may want or need a somewhat larger dwelling that includes one or two home offices, and a low-maintenance home on a single level would have broad appeal to this group,” Francese said.

From the study: Almost one in four boomer households have a high net worth of $500,000 or more, and this ratio is expected to increase in the future as the generation ages. Virtually all high-net-worth households are homeowners (97 percent), and 47 percent are likely to also own other real estate in addition to their primary residence. More than a third expect to help children or grandchildren with a down payment on a home. Wealthier boomers want amenities where they retire, including cultural activities such as museums and art galleries. As a result, they are more likely to retire in an urban area or city.

Although most boomers are married couples and 27 percent have children under the age of 18, nearly two out of five baby boom households are nontraditional households, most of which are headed by women.

Non-traditional households may have different needs and desires about where they want to live. For boomers with children, neighborhood schools are of obvious concern, but for those without children, security may be a bigger issue.

Twenty percent of boomer households are headed by women, but because women aged 60 to 69 account for a quarter of homeowners in that age group, the number of women boomer homeowners is likely to increase much faster than average as they age.

Francese said there’s little doubt that the vast majority of baby boomers will delay retirement. “Some will put off retirement because they have to, but many because they want to,” he said. “Many will have a larger income stream to purchase possibly two homes, which they may use to move back and forth between their retirement life and their working life.”

“However, some caution should be exercised here regarding retirement preferences,” Francese said. “Surveys of future intentions often include a dose of wishful thinking, and attitudes can be influenced by the media and other outside pressures. For example, many are probably not going to be able to, or even want to, retire in a small rural town far from their current home, even if they may dream about it currently.”

Preliminary study results were released May 18 at NAR’s Midyear Legislative Meetings & Trade Expo, with a focus on the real estate and second-home appetite of boomers. The more extensive analysis released today is also supplemented with context and data from the Census Bureau’s mid-2006 estimates of population characteristics; it offers an abundance of information helpful for planning to Realtors®, builders, mortgage lenders and others connected to the housing industry.

The survey for the 2006 National Association of Realtors® study, BABY BOOMERS AND REAL ESTATE: Today and Tomorrow, was conducted online by Harris Interactive® between March 31 and April 6, 2006, among a nationwide cross section of 1,969 U.S. adults born between 1946 and 1964. Figures for age, sex, race, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. With 95 percent certainty, overall results have a sampling error of plus or minus 2.2 percentage points; the sampling error for various sub-sample results is higher and varies.

The study can be ordered by calling 800/874-6500, or online at: http://www.realtor.org/babyboomerstudy. The cost is $50 for NAR members and $125 for non-members.

A final note from somebody who moved from Los Angeles to a small town – Hinton, WV – in 1992. The Wall Street Journal recently spotlighted small towns as retirement destinations, including actor Andy Griffith’s hometown of Mount Airy, NC – the model for Mayberry. I’ve been to Mount Airy a number of times and like it. It’s a not near any body of water, unlike Hinton with its rivers and Bluestone Reservoir, but it seems to be a good place to live. Boomers – and others – seeking a “retirement” home could benefit from looking at places like Hinton, Bluefield (both the WV and VA ones), Princeton, WV – and small towns in West Virginia and elsewhere not far from cities.

Happy hunting!

Posted in Parallel Universe, Real Estate, West Virginia | 1 Comment »

PARALLEL UNIVERSE: Inside the Beltway, Cheerleader for Housing Industry Says Housing Bubble Bursting is Good News

Posted by kinchendavid on October 12, 2006

By David M. Kinchen
Editor, Huntington News Network

Hinton, WV – There’s a big snowstorm brewing in the Upper Midwest and snow flurries may make an appearance in the Mountain State, but leave it to the National Association of Realtors to break out the lemonade. As in if you have lemons, make lemonade.

The latest press release from the NAR — on Oct. 11, 2006 — is headlined: “Home Prices Correcting, Buyers Returning to the Market.”

As a veteran real estate reporter who began covering the housing market more than 35 years ago, I predicted last year that rapidly inflated home prices couldn’t be sustained in the wake of massive consumer debt and incomes that weren’t even keeping pace with inflation. It’s happened in California, where I covered housing at the L.A. Times for more than 14 years. It’s happening in Las Vegas, Phoenix, Dallas and will soon happen in places like Chicago, which has experienced an unprecedented condominium boom in the downtown areas, especially along both banks of the Chicago River adjacent to Lake Michigan.

The NAR says that “home sales appear to be bottoming out with lower home prices attracting buyers in many areas of the country.”

David Lereah, NAR’s chief economist, said the housing market is showing signs of life and that sales may be leveling out. “Many potential home buyers who have been taking a wait-and-see attitude or taking their time and being methodical in the search process are being enticed by lower home prices,” he said. “Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year.”

Lereah is paid to be optimistic; I’m paid to take the spin out of what passes for news and I say a major downward correction will be necessary to attract buyers to a still overpriced housing market. Prices are so far out of kilter with reality – and realty – that actual declines will have to be substantial to attract buyers, in my opinion.

The NAR says that “existing-home sales are forecast to be fairly stable in the fourth quarter and sales for all of 2006 are expected to drop 8.9 percent to 6.45 million – still the third strongest year after consecutive records in 2004 and 2005. New-home sales are forecast to fall 17.3 percent this year to 1.06 million, the fourth highest year on record. Housing starts should be down 10.9 percent to 1.84 million in 2006.

The trade association of the nation’s real estate agents adds: “with a recent correction in the market, the national median existing-home price is likely to rise 1.6 percent to $223,000 for all of 2006; it’s anticipated prices will remain slightly below year-ago levels before gaining positive traction in the first quarter of 2007. The median new-home price is projected to decline 0.2 percent to $240,500 – largely the result of builder price cuts to move unsold inventory.”

Folding the legs and setting up his lemonade stand table, NAR President Thomas M. Stevens from Vienna, Va., says in the release: “this presents a unique opportunity for buyers. The supply of homes on the market is the highest we’ve seen in over 13 years, and mortgage interest rates are experiencing an unexpected decline. The 30-year fixed rate is hovering around 6.3 percent, and sellers in most of the country are now showing a willingness to negotiate. While this changing market is a great time to buy, it’s become increasing important for parties on both sides of the real estate transaction process to have professional representation.”

I guess the real estate sales industry is the only place where a record inventory of unsold houses – the most since 1993 – is good news, but so be it. Car manufacturers have a high inventory of unsold vehicles and they don’t see it as good news.

According to the economic double-domes at NAR’s Washington, DC office, the 30-year fixed-rate mortgage will probably average 6.5 percent in the fourth quarter but will “trend up modestly in 2007.” If they want to move the houses, the folks at NAR should talk Fed Chairman Ben Bernanke into lowering rates, but that’s not likely to happen with the prospect of rising inflation.

The NAR says that the unemployment rate should average 4.8 percent in the fourth quarter. Inflation, as measured by the Consumer Price Index, is expected to be 3.4 percent for all of 2006, while growth in the U.S. gross domestic product is forecast at 3.3 percent. Inflation-adjusted disposable personal income is likely to grow 3.4 percent for 2006.

I’m not saying “I told you so…or maybe I am. When you’ve put a few hundred thousand miles on a career of covering real estate, you gain perspective about the peaks and valleys – maybe even depressions – of the housing industry.

Editor’s Note: David M. Kinchen began covering real estate at The Milwaukee Sentinel in 1970 and continued from 1976-1990 at the Los Angeles Times. He’s been a member of the National Association of Real Estate Editors since 1971 and was president in 1984.

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NAR Signs Mexican Joint Real Estate Agreement

Posted by kinchendavid on October 6, 2006

By  Staff

 
Mexico City, Mexico       The National Association of Realtors® has formally signed its first joint reciprocal membership agreement with a foreign real estate organization. NAR President-elect Pat Vredevoogd Combs executed the agreement with the Mexican real estate association, Asociation Mexicana de Professionales Inmobiliarios, at AMPI’s 50th anniversary meeting in Mexico City on Oct. 5, 2006.

Because of this historic partnership, all of Mexico’s AMPI members will become Realtors® in January. “This is an important initiative. Not only will it create a wealth of new business opportunities for NAR’s members in the United States and AMPI members here in Mexico, but also it will help promote standardization of international real estate practice,” Vredevoogd Combs said.

The agreement between the two organizations confirms the importance of branding in real estate marketing. As official dues-paying members of NAR, AMPI members, who will join NAR in the international membership category, will be able to use the Realtor® logo and registration mark. According to a recent study by a leading international brand valuation firm, the Realtor® brand is worth about $32,000 to every Realtor®, and the average member with six to ten years experience realizes $4,500 a year in incremental income due to the marketplace advantages the brand brings to a member’s business. The value of the brand is based on the trust NAR members have established with consumers, the study shows.

“NAR chose AMPI for this groundbreaking partnership, in large part, because its members adhere to a strict Code of Ethics like that of NAR. AMPI’s high standards of practice will help increase the positive perceptions of Realtors® worldwide,” Vredevoogd Combs said.

The new relationship highlights the increasing level of business cooperation in real estate markets in both countries, as a growing number of United States citizens opt to acquire second and retirement homes in Mexico and residents of Mexico are buying property in the United States more frequently. Mexico is attractive to second home buyers from the United States, thanks to the availability of properties near the ocean and mountains, reasonable costs of resort properties, and lifestyle considerations. Thanks to a favorable legal and financial infrastructure, the No. 1 foreign destination for retirees from the United States is Mexico, with more than 1 million Americans living there.

To help Realtors® in the United States increase business opportunities with AMPI members, NAR is launching a four-hour course titled “Doing Business in Mexico,” which will begin soon in Mexico and at the NAR annual conference in New Orleans in November. The course will later be made available in an online version in 2007. It will help teach Realtors® in the United States about business opportunities in Mexico and help them connect with their AMPI counterparts.

Mexican President Vicente Fox keynoted the AMPI meeting. Expansion of the housing sector and homeownership opportunities has been a major focus during the Fox administration. Government policy has promoted programs that have expanded mortgage lending, assistance to low-income families and development of a secondary mortgage market similar to that in the United States. As a result, more than 2.4 million families have become new home owners during the six years of Fox’s term, which will end in December.

“This joint venture reflects AMPI’s desire to be more closely linked to international business standards and practices, and opens up opportunities for members on both sides of the border to do more business together,” said Galo Blanco, AMPI’s 2006 president.

AMPI, the Mexican national professional organization of real estate brokers and agents in both commercial and residential real estate, was established in 1956, and presently has 2,500 members, who represent companies located in all regions of Mexico. Further information about AMPI is available at http://www.ampi.org. AMPI is also a founding member of the International Consortium of Real Estate Associations. Information about ICREA is available at http://www.worldproperties.com.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

 

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PARALLEL UNIVERSE: Indianapolis: Affordable Housing; L.A.: Anything But! Median Income Higher in Indy than in L.A.

Posted by kinchendavid on August 25, 2006

By David M. Kinchen
Editor, Huntington News Network

Hinton, WV – Bringing to sharp relief the craziness of the housing market in the U.S., a new survey shows that Indianapolis, IN maintained its standing at the most affordable major housing market in the nation, while the Los Angeles-Long Beach-Glendale, CA area retained the dubious crown of the least affordable metro area for the SEVENTH straight quarter.

RISMEDIA released the survey Aug. 24. It’s called the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) and it covers Q2 of 2006.

“Today’s HOI reading indicates that 40.6 percent of new and existing homes that were sold during the second quarter were affordable to families earning the national median income of $59,600,” said NAHB President David Pressly, a home builder from Statesville, N.C. “This is just below the 41.3 percent of homes that were affordable to median-income earners in the first quarter and tied to the somewhat higher mortgage rates that prevailed in the April – June period.”

According to the survey: “In the nation’s most affordable major housing market of Indianapolis, 87.4 percent of homes sold in the second quarter were affordable to families earning the area’s median household income of $65,100. The median sales price of all homes sold in Indianapolis during that time was $120,000, which is up from $113,000 in the previous quarter and equivalent to the median sales price for Indianapolis homes sold in the final quarter of 2005.”

What about L.A. (I noticed fast-growing Glendale, northeast of L.A. has been added to the traditional Los Angeles-Long Beach designation), where $120,000 won’t even buy you a garage: “There, just under 2 percent of new and existing homes sold during the second quarter were affordable to those earning the area’s median family income of $56,200. The median sales price of all homes sold in the area during the period was $521,000.

Aside from the astonishingly high housing prices in L.A. – something I knew first hand from covering real estate at the L.A. Times from 1976 to 1990 – a number jumped out at me: The median family income in Indy — $65,000 – is almost $10,000 a year more than the L.A. median of $56,200. The survey doesn’t mention the reason, but I’m willing to bet it’s a factor of the large number of immigrants in the L.A. area, many of them illegals from Mexico and Central America. Illegals tend to drive the median income figures way down. I doubt that Indianapolis has that many illegals from South of the Border – yet.

Meanwhile, nationwide housing affordability edged slightly downward as the median price of all homes sold in the period remained unchanged and a slight up-tick was registered in the average mortgage rate, Pressly, the North Carolina builder said.

“Today’s HOI reading indicates that 40.6 percent of new and existing homes that were sold during the second quarter were affordable to families earning the national median income of $59,600,” said Pressly. “This is just below the 41.3 percent of homes that were affordable to median-income earners in the first quarter and tied to the somewhat higher mortgage rates that prevailed in the April – June period.”

Not surprisingly, most of the nation’s most affordable housing is where people don’t want to live, thanks to departing jobs and problems in the auto industry. This undoubtedly accounts for the inclusion “near the top of the list for affordable major metros” of Detroit-Livonia-Dearborn, Michigan; Grand Rapids-Wyoming, Michigan; Buffalo-Niagara Falls, New York; and Youngstown-Warren-Boardman, Ohio-Pennsylvania – in that order.”

The survey: ”Five smaller metro markets outranked all others in terms of housing affordability during the second quarter, including Springfield, Ohio, as well as four Michigan locations: Bay City, Lansing-East Lansing, Saginaw-Saginaw Township North, and Battle Creek, respectively.” All of these metros are in the so-called “Rust Belt” of my native Midwest.

Indianapolis (city population about 780,000; Metro, about 1.6 million) has become a major financial and distribution center, and is thriving like few other heartland cities. It’s the home of Eli Lilly, one of the world’s biggest pharmaceutical firms. My first newspaper job was in the Hoosier state, in Hammond, and my second was in Bloomington, about 50 miles south of Indy. All in all, Indiana is doing better than most of its neighbors.

It’s no surprise to me that the most unaffordable housing in the nation is on either the West Coast or the New York-New Jersey area of the East Coast: “Other major metros at the bottom of the housing affordability chart included Santa Ana-Anaheim-Irvine, California; San Diego-Carlsbad-San Marcos, California; New York-White Plains-Wayne, New York-New Jersey; and Stockton, California, in that order,” the HOI survey disclosed.

Nor is this surprising to a veteran of the California real estate scene: “Among metro areas smaller than 500,000 people, every entry at the bottom of the affordability chart was located in California, starting with Salinas as the least affordable and followed by Merced, Modesto, Santa Cruz-Watsonville and Santa Barbara-Santa Maria, California, respectively.”

Editor’s Note: David M. Kinchen has been a member of the National Association of Real Estate Editors since 1971 and was president in 1984. The accompanying photos picture two houses in the Beech Grove suburb of Indianapolis listing for about $123,000, an older house with over 2,000 square feet and a newer ranch with about 1,500 square feet.

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Specialty Journalism Organization Offers $5,000 Fellowship to Real Estate Journalists

Posted by kinchendavid on August 18, 2006

By DavidKinchen.com Staff

 
Boca Raton, FL  NAREE has increased the award purse from $3,500 to $5,000 for its mid-career NAREE Bivins Fellowship. The deadline for entries is less than a month away, so the time to prepare your entry is NOW.

The National Association of Real Estate Editors (NAREE) is accepting applications from real estate journalists, including editors, free-lance writers and staff reporters, for the $5,000 NAREE Bivins Fellowship program. Grants are available to mid-career journalists to enhance their ability to cover real estate, and residential or commercial building topics.

Sept. 15, 2006 is the deadline to postmark your application.  Fellowship applications are available on line at http://www.naree.org. Grant awards will be announced on November 10, 2006 at the NAREE Summit Banquet in New Orleans, La., during the National Association of Realtors convention.

Journalists who are not currently members of NAREE are welcomed and encouraged to apply. There is no charge for NAREE Active members to enter. Nonmember journalists pay a fee of $75, which can be applied to membership dues.

Fellowship guidelines allow grants to fund independent study, the pursuit of special research projects, or registration at skill-building workshops. Prior winners have studied green building, learned how to apply computer-assisted research to real estate journalism, and written book chapters on real estate topics.

The NAREE board hopes that by raising the grant to $5,000 journalists will have  more opportunities to pursue ambition professional development topics.  One grant for the full $5,000 may be awarded to one applicant or several grants totaling $5,000 may be awarded to several applicants at the discretion of the judges.

This year, and for the past four years, applications for the NAREE Bivins Fellowship have been judged by the faculty of Northwestern University under the direction of Prof. George Harmon, who directs the business writing program at the university’s Medill School of Journalism.

As part of its non-profit function, NAREE is pleased to offer these funds for the betterment of real estate news coverage and a more informed public.

The fellowship is named for NAREE past president Ralph Bivins, a veteran journalist, to honor his years of devotion to NAREE, a 700-member organization. Founded in 1929, the National Association of Real Estate Editors represents editors, writers, authors and broadcasters working in newspapers, magazines, broadcast and Internet news outlets across North America covering both residential and commercial real estate news, mortgage finance, and design.

Contact NAREE Executive Director, Mary Doyle-Kimball at madkimba@aol.com. for more information.

 

Editor’s Note: DavidKinchen.com host David M. Kinchen has been a member of NAREE since 1971 and was president in 1984.

 

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PARALLEL UNIVERSE: Parade Magazine Spotlights Eminent Domain Abuse in Norwood, OH, Long Branch, NJ

Posted by kinchendavid on August 7, 2006

By David M. Kinchen
Editor, Huntington News Network

Hinton, WV  – Kudos to Parade magazine and writer Sean Flynn for the cover story in the Aug. 6, 2006 newspaper supplement on the perils of eminent domain in the wake of the U.S. Supreme Court’s infamous Kelo vs City of New London decision of June 2005.

We at HNN were right on top of the decision, in large part because this writer specialized in covering real estate for more than 30 years at newspapers in Milwaukee and Los Angeles and saw the hazards to homeowners of unrestricted taking of property by eminent domain. Given a choice between a high-end condo development with Starbucks on every corner and existing houses that pay relatively moderate property taxes, most cities will go for the “high-end” development every time.

I’m reprinting a portion of my June 29, 2005 commentary about Kelo at the end of this column. That wasn’t even my first story about Kelo: I had jumped into the fray several days earlier.

Kelo, a 5-4 decision by the liberals and swing votes on SCOTUS – the conservatives were solid in their opposition to it – is quite possibly the worst high court decision since Plessy v. Ferguson in 1896, the “separate but equal” ruling that segregated the South and much of the rest of the nation.

Sean Flynn, an able writer who makes this complicated issue easy to comprehend, tells the stories of Joy and Carl Gamble of Norwood, OH, population 21,000, a suburb of Cincinnati, and Denise and Lee Hoagland and their three daughters of the seaside community of Long Branch, N.J. Flynn doesn’t mention it, but Long Branch, population 32,000, was the birthplace in 1923 of author Norman Mailer, who grew up in Brooklyn, NY.

Flynn says that Long Branch wants to take 35 properties—plus the house of the Hoagland family—to build – you guessed it – luxury condominiums. Traditionally, eminent domain was reserved for public takings, including schools and highways. Kelo drastically – and I believe, illegally – expanded it to serve the needs of private developers backed by greedy city officials. The court even warned when the decision was handed down that it was up to local communities, states – even the U.S. Congress — to pass legislation that would block private developers from taking houses and other properties for private gain.

In the year plus since Kelo, more than 5,700 “homes, businesses and even churches were threatened with seizure for private development, according to the nonprofit Institute for Justice (IJ),” Flynn writes, “and at least 350 were condemned or authorized for condemnation. By comparison, about 10,000 were similarly threatened or taken over from 1998 through 2002.”

Flynn is from Lakewood, OH, a Cleveland suburb of 56,000, where pre-Kelo eminent domain reared its ugly head, he writes. The people of the Scenic Park section of Lakewood raised “such a successful public campaign three years ago that voters spared their homes from being taken “ for cliffside mansions. Flynn notes that a designation of “blight” is required for eminent domain, adding that by the definition in Lakewood, more than 80 percent of the city – including a former mayor’s home – would fall into that category. Some Scenic Park houses may lack amenities like garages, but they’re well maintained, as are the houses in Long Branch and Norwood.

Both Ohio and New Jersey already have high property taxes, with New Jersey’s the highest in the nation. How much more money do these cities need, with the average worker facing wages that have declined to the point that – adjusted for inflation – they are less than they were in 1973?

My view is that private developers should pay whatever the owners of property want, without resorting to eminent domain. If there are holdouts, so be it. No one should be forced from his or her home. The offers to property owners in Long Branch, for instance, were paltry in view of the high price of ocean-view property in Long Branch and everywhere, Flynn points out in his article. Check out the article online — it’s worth reading in its entirety – at http://www.parade.com

* * *

Here’s a portion of my June 29, 2005 column on Kelo v. City of New London:

In my latest … column, commenting on the Kelo vs City of New London U.S. Supreme Court decision, I suggested that Wal-Mart might find favorable for development property owned by the five associate justices – Souter, Ginsburg, Breyer, Stevens and Kennedy – who voted on the side of the city of New London, Conn. in the drastic expansion of the doctrine of eminent domain.

As if to answer my not-so-secret wishes, now appears on the scene a man named Logan Darrow Clements, CEO of Freestar Media, LLC, who decided to fax a request to Chip Meany, the code enforcement office of the Town of Weare, N.H. seeking the application process to build a hotel on 34 Cilley Hill Road, the location of Associate Justice David H. Souter’s home.

Clements said in a press release Monday, June 27, 2005 that the “Kelo vs. City of New London decision allows city governments to take land from one private owner and give it to another if the government will generate greater tax revenue or other economic benefits when the land is developed by the new owner.”

Clements emphasizes that the Town of Weare – Towns are a form of government in New England and can include a number of communities, much like townships in Illinois or Wisconsin – “will certainly gain greater tax revenue and economic benefits with a hotel on 34 Cilley Hill Road than allowing Mr. Souter to own the land.”

Insisting that the request is “not a prank,” Clements said the proposed development, called “The Lost Liberty Hotel” will feature the “Just Desserts Café” and include a museum, open to the public, featuring a permanent exhibit on the loss of freedom in America. Instead of a Gideon’s Bible each guest will receive a free copy of Ayn Rand’s novel “Atlas Shrugged.”

Clements indicated that the hotel must be built on this particular piece of land because it is a unique site being the home of someone largely responsible for destroying property rights for all Americans.

“The Town of Weare has five people on the Board of Selectmen,” Clements said in his press release. “If three of them vote to use the power of eminent domain to take this land from Mr. Souter we can begin our hotel development.”

Clements’ plan is to raise investment capital from wealthy pro-liberty investors and draw up architectural plans. These plans would then be used to raise investment capital for the project. Clements hopes that regular customers of the hotel might include supporters of the Institute For Justice and participants in the Free State Project among others. Postscript: Unfortunately for freedom-loving Americans, Clements plan was rejected by the Town of Weare. Souter gets to have quiet enjoyment of his property, unlike thousands of Americans threatened by Eminent Domain Gone Wild.

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