January 2-7, 2011

Major Commercial Developer Sees Commercial Real Estate Indicators as “100 Percent Positive”

Jan. 03, 2011 – CB Richard Ellis chief executive Brett White considers 2011 commercial real estate indicators to be “100 percent positive,” he told the Washington Post[1]. “There is no question that we are in the early days of a recovery phase,” he said, adding that investors’ sentiments are “strongly positive” and that businesses are looking years (instead of only months) into the future. White added that “vacancies have clearly peaked in almost every market and every asset class” and that while some markets might still suffer through part of 2011, the “vast majority of major markets now across the U.S. are turning positive.”

Failed Commercial Properties Find New Life as Public Parks

Jan. 04, 2011 – When the commercial real estate crisis was at its height, many feared that middle-tier commercial properties would never recover from the damage. With commercial buildings needing up-to-date technology and a vast oversupply of poorly built properties on the market that were thrown up by inexperienced developers at the height of the boom in an effort to make a quick buck, it is going to be difficult to fill all the vacancies still out there even as the commercial market recovers. According to senior research scientist Kevin Caravati of the Georgia Tech Research Institute, commercial properties that have truly turned defunct should not be resuscitated, but rather converted to green space to help green cities while reversing urban sprawl[2]. Caravati proposes that commercial loans that have been written off by banks should be developed as parks, while adjacent properties can be held vacant but maintained – possibly as picnic areas or playing fields – until the value of the property rebounds. Caravati believes that there is even room for private investors in this enterprise, explaining that “the investor buys a piece of real estate that has a seriously depressed value today” and then, through greening a small portion of that real estate, increases the value of the entire tract of land and can have it rezoned for higher, more valuable uses.

Bank of America “Settles” with Fannie and Freddie, Stands Accused of a “Backdoor Bailout”

Jan. 05, 2011 – Following the announcement on January 3, 2011 that government-controlled Fannie Mae and Freddie Mac had reached a repurchase agreement with Bank of America to the sum of $3 billion dollars, politicians, the media and the general public responded with skepticism[3]. The agreement, which resolved outstanding issues and claims against Countrywide, which was purchased by Bank of America in 2008, was designed in hopes of putting the vast liabilities incurred by Countrywide to rest once and for all so that the lender could move forward. However, many, including controversial congresswoman Maxine Waters (D-Los Angeles), are wondering aloud if the deal is actually a “backdoor bailout” for the lender, who has been rumored to be in need of more federal assistance after paying back its TARP money in record time[4]. Bank of America shares have risen 8 percent since the deal was announced, and it is this that concerns Rep. Waters, according to her public statement, which calls the settlement “both premature and a giveaway.”

Short Sales Heading Up in 2011

Jan. 06, 2011 – In south Florida, at least, the much-maligned short sale process appears to finally be settling in. According to a report released by Miami “real estate market intelligence” firm Condo Vultures, “all indications are that short sales will increasingly be the primary focus of buyers searching for properties in the south Florida market”[5]. Condo Vultures’ director of sales, Hernan Osorio, says that thanks to the “federal government’s loan modification program having minimal effect and the economy failing to create enough jobs to jumpstart the housing market,” more and more homeowners are opting for short sales, and lenders are starting to view the transactions as more viable than they have in the past. Banks are still trying to hold on to REO properties long enough to recoup their losses, but this makes the idea of adding to the REO volume unattractive. Hence, an increase in short sales. In December, short sales had increased 49 percent over the same time a year ago in south Florida.

Property Taxes May Go Up Despite Plummeting Values

Jan. 06, 2011 – While you might expect that opening your newly-lowered property tax bill would be the one bright thing about your property values heading down, many homeowners will not experience that silver lining this year. Around the country, local governments are trying to raise the revenues necessary to keep schools and other public services operating by raising property taxes even as the value of the properties falls. For example, in DeKalb County, Georgia, water rates and property taxes are projected to go up about $240 (an increase of 20 dollars per month) for most households in the area over the course of the coming year[6]. CEO Burrell Ellis announced this in his State of the County address, explaining that furlough days, unpaid holidays and job cuts across the board were not enough to keep the county running effectively. Higher property taxes have already resulted in higher tax lien auction activity in cities and counties across the country.

---

[1] http://www.washingtonpost.com/wp-dyn/content/article/2010/12/30/AR2010123003271.html

[2] http://www.towardfreedom.com/home/global-news/2243-turning-failed-commercial-properties-into-parks

[3] http://www.dsnews.com/articles/bank-of-america-agrees-to-3b-settlement-with-fannie-and-freddie-2011-01-03

[4] http://latimesblogs.latimes.com/money_co/2011/01/maxine-waters-asks-if-bofa-deal-with-fannie-and-freddie-was-backdoor-bailout.html

[5] http://www.realestatechannel.com/us-markets/residential-real-estate-1/miami-short-sales-condo-foreclosures-in-miami-south-florida-home-sales-short-sales-listings-condo-vultures-mls-listings-condos-for-sale-in-miami-condos-for-sale-in-ft-lauderdale-condos-for-sale-in-west-palm-beach-3701.php

[6] http://www.wsbtv.com/news/26388627/detail.html