Home Buying for the Long Haul Pays Off

Despite the slump, housing remains a good long-term investment—in the right markets

The era of get-rich-quick real estate is dead. The era of increasing long-term wealth in your home is back.

Historical data from the National Association of Realtors (and adjusted for inflation by Businessweek.com) show that in 18 of the 25 largest metro areas in the U.S., the value of homes purchased in 1990 had increased by 2010, often by double digits. And this in a year when real estate prices around the country have softened since their peak in 2006. These houses would have been worth even more a few years ago.

While that's cold comfort for the many Americans whose homes have lost more than $1.7 trillion in value in 2010, according to a new report by Zillow.com, it underscores the fact that homeowners who buy for the long term have historically seen the value of their investment increase over the years. In inflation-adjusted terms, the median U.S. home sale price in the third quarter remains approximately 9.5 percent higher than in 1990, despite falling 26 percent from peak levels, according to calculations based on NAR data.

Says Greg Hebner, chief operating officer at Sorrento Capital, an Irvine (Calif.) asset management firm: "You should at least be looking at housing now," especially as interest rates are low and homeowners can deduct mortgage interest from their income taxes. "It's still a good game" if a buyer understands the risks, has consistent income, and purchases a house he can afford, Hebner says.

When Supply Is Limited

Based on data since 1968, nominal U.S. home prices have risen 5.5 percent annually and outpaced inflation by about 1 percent to 2 percent, says Lawrence Yun, NAR's chief economist. The main reasons housing has grown faster than inflation, he says, are that more people wanted to buy in places with a finite supply of developable land, which drove up prices, and owners increased the value of their properties through home improvements.

Home prices followed this pattern through most the 1990s but started shooting up in the early 2000s. Between 2000 and 2006, nominal prices rose 89 percent, according to data from Moody's Economy.com and Fiserv (NasdaqGS: FISV - News), a financial service company in Brookfield, Wis.

Economists from NAR, Fiserv, and Moody's Analytics interviewed for this story expect home prices to continue to grow slightly more than inflation in the long term. Still, buyers are not likely to see prices skyrocket the way they did in the early 2000s, at least in the near future.

Up by Half, or More

In an analysis of the country's 25 largest metro areas, Businessweek.com found that the Portland, Ore. area had the largest real price gain since 1990, with the median sale price in this year's third quarter ($242,100) up about 85 percent over 1990, in inflation-adjusted terms. Home prices in the Denver, Baltimore, and Seattle areas also made gains of more than 50 percent in that period.

Yet in some other markets where homeownership skyrocketed during the housing boom, inflation-adjusted prices have fallen so dramatically that they are now below 1990 levels. Real prices in the Atlanta metro, for instance, are down about 21 percent compared with 20 years ago, and in Sacramento they are down 19 percent.

After recovery from the housing bust, "we expect house prices to settle into a price-growth trend that's slightly higher than inflation over the long term. So in that sense, housing is still a long-term investment with a positive yield," says Andres Carbacho-Burgos, an economist at Moody's Analytics.

Securities Look Better

After accounting for the time and money put in for property taxes, home insurance, security, and maintenance, "investing in a home doesn't have the rate of return of a diversified, well-managed portfolio in stocks and bonds," adds Carbacho-Burgos. Securities potentially offer greater returns, but buyers are wary.

A national housing survey by Fannie Mae shows that in the third quarter this year, 66 percent of consumers believed buying a home is a safe investment, compared with 16 percent who believe stocks are safe. That does not mean confidence in real estate has not been shaken in recent years: In 2003, 83 percent considered a home a safe investment.
Fannie Mae's survey also showed that 59 percent of respondents still believe owning a home is a good way to build wealth, and 84 percent believe buying makes more sense than renting.

Assuming home prices continue to increase 1 percent to 2 percent better than inflation, a buyer needs to own the property for at least five years to break even and cover selling costs, says Sorrento Capital's Hebner.

How 2011 Shapes Up

According to the latest forecast by Moody's Economy.com and Fiserv, nominal home prices in the U.S. will decline 4.8 percent from the fourth quarter of 2010 to the third quarter of 2011, when they are forecast to reach their trough.
NAR estimates that in 2010, 4.8 million homes will be sold in the U.S.—less than the 5.2 million sold in 2000, which is regarded as a "normal" year, says Yun, as the market had not yet overheated.

As the market normalizes, Yun expects sales volume to rise 6 percent year-on-year in 2011—assuming GDP grows 1.9 percent, 1.5 million jobs are created (bringing the unemployment rate to about 9.5 percent), and mortgage rates stay near 5 percent. Markets with high foreclosure rates, such as Nevada, Arizona, and Florida, will remain volatile.


David Stiff, chief economist at Fiserv, says despite hopes that we can avoid another housing bubble, there likely will be upswings again in the future. "In general, people are optimistic" and get caught up when times are good, he says. "When you see the next cyclical upswing in housing, try not to get carried away."

Biggest Metros With the Best Long-Term Real Estate

Best Performers

For many U.S. residents burned by the housing bust, the notion that real estate can not only tread water but actually increase in value might seem a fairy tale. It's not. A Businessweek.com analysis of home sales data from the National Association of Realtors shows that in 18 of the nation's 25 biggest metro areas, home prices grew in value between 1990 and 2010. In one area the change in real dollar price was as much as 85 percent, a return applying only to those who bought homes as a long-term investment, not for easy money flipping real estate. Seven of these metros lost value—generally the result of overbuilding during the real estate boom. Despite recent housing woes, real estate remains one of the best investments the average American can make. And unlike a stock certificate, it provides a place to live.

 1. Portland-Vancouver-Beaverton, Ore.-Wash.

1990 Price: $130,590 ($78,200 in 1990 dollars)
2010 Price: $242,100
Change in Real Dollars: +85.4 percent
Population: 2,241,841
Year Home Prices Peaked: 2007
Notwithstanding recent declines, Portland area home prices (adjusted for inflation) remain significantly higher than 1990 levels. The median price rose quickly from 2004 through 2007, peaked at about $311,000 (in 2010 dollars) in 2007, and has since dropped by about 22 percent. Moody's Economy.com and Fiserv predict prices will reach their trough in fourth-quarter 2011.
2. Baltimore-Towson, Md.
1990 Price: $152,300 ($91,200 in 1990 dollars)
2010 Price: $257,100
Change in Real Dollars: +68.8 percent
Population: 2,690,886
Year Home Prices Peaked: 2007
From 2000 through 2005, Baltimore area home prices skyrocketed. The growth rate in nominal prices increased from 3.4 percent year-on-year in 2001 to 20.6 percent in 2004 and 22.3 percent in 2005, according to price data from the National Association of Realtors. In 2007, the median home price peaked at $301,412 (in 2010 dollars). Since then, prices have fallen about 14.7 percent. While well above 1990 levels, prices are expected to continue falling and should bottom in third-quarter 2011, predict Fiserv and Moody's Economy.com.
3. Denver-Aurora-Broomfield, Colo.
1990 Price: $144,290 ($86,400 in 1990 dollars)
2010 Price: $238,500
Change in Real Dollars: +65.3 percent
Population: 2,552,195
Year Home Prices Peaked: 2006
Metro Denver housing prices grew fastest from 1999 through 2001, when nominal prices increased at double-digit rates, according to a report by the Metro Denver Economic Development Corp., a regional economic development group. Since reaching a peak in 2006 at $270,340 (in 2010 dollars), the median home price has fallen nearly 11.8 percent in real terms. Moody's Economy.com and Fiserv expect prices in Denver to reach a trough in third-quarter 2011.
4. Seattle-Tacoma-Bellevue, Wash.
1990 Price: $204,240 ($122,300 in 1990 dollars)
2010 Price: $308,200
Change in Real Dollars: +50.9 percent
Population: 3,407,848
Year Home Prices Peaked: 2007
Home prices in Seattle have grown significantly over the last 20 years. The metro area's housing market exploded in the late 1990s as the population grew. Nominal price increases slowed in 2002 and 2003, but jumped to 19 percent in 2004, 11 percent in 2005, and 14 percent in 2006, show NAR data. Prices peaked in 2007 at $407,607 (in 2010 dollars). Adjusted for inflation, prices are now about 24.4 percent below that level.
5. New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa.
1990 Price: $285,070 ($170,700 in 1990 dollars)
2010 Price: $404,100
Change in Real Dollars: +41.8 percent
Population: 19,069,796
Year Home Prices Peaked: 2007
Inflation-adjusted home prices in metro New York were stable through most of the 1990s and started rising rapidly in the early 2000s. The median sale price peaked in 2007 at $494,840 (in 2010 dollars)—about 73.6 percent above 1990 levels in real terms—and has since dropped by about 18.3 percent. Fiserv and Moody's Economy.com expect prices in the area to bottom in 2011.
6. Miami-Fort Lauderdale-Pompano Beach, Fla.
1990 Price: $152,140 ($91,100 in 1990 dollars)
2010 Price: $214,800
Change in Real Dollars: +41.2 percent
Population: 5,547,051
Year Home Prices Peaked: 2006
Metro Miami home sale prices soared for years, growing by 164.4 percent from 1990 through 2006 in real dollars. In recent years, however, nominal prices dropped quickly, coming down 22 percent year-on-year in 2008 and 25.9 percent in 2009. In third-quarter 2010, Miami had the country's seventh-highest metro foreclosure rate, at 2.42, according to RealtyTrac. Fiserv and Moody's Economy.com do not expect the Miami market to reach its trough until 2012.
7. Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.
1990 Price: $246,160 ($147,400 in 1990 dollars)
2010 Price: $338,600
Change in Real Dollars: +37.6 percent
Population: 5,476,241
Year Home Prices Peaked: 2006
Washington area home sale prices grew by nearly 90 percent in real terms between 1990 and 2006, when they peaked at $467,000 (in 2010 dollars). They have since fallen 27.5 percent and Fiserv and Moody's Economy.com expect continued decreases in 2011. Still, the area remains one of the country's strongest metro economies because government staffing demand keeps unemployment low.
8. Boston-Cambridge-Quincy, Mass.-N.H.
1990 Price: $267,030 ($159,900 in 1990 dollars)
2010 Price: $366,500
Change in Real Dollars: +37.2 percent
Population: 4,588,680
Year Home Prices Peaked: 2005
"Metro Boston's housing market was affected by the real estate bubble earlier—and less severely— than other metro areas around the country" and sale price declines have brought homes to historic affordability levels, according to a 2009 paper by the Concord Group, a real estate consultancy. Prices peaked in 2005 at $462,160 (in 2010 dollars) and have since dropped a total of 20.7 percent. Despite the fall, home sale prices have still increased in real dollars over the last 20 years.
9. San Francisco-Oakland-Fremont, Calif.
1990 Price: $433,030 ($259,300 in 1990 dollars)
2010 Price: $588,900
Change in Real Dollars: +36 percent
Population: 4,317,853
Year Home Prices Peaked: 2007
San Francisco housing prices rose in the 1990s during the tech boom. In the past decade, the fastest growth occurred in 2004 and 2005, when nominal prices increased by 15 percent and 11.5 percent, respectively. In 2007, prices peaked at $847,873 (in 2010 dollars). While prices are now 30.5 percent below peak, they remain well above 1990 rates and have been increasing recently. In third-quarter 2010, the nominal median sale price was up 9.4 percent year-on-year, according to data from the NAR.
10. Houston-Sugar Land-Baytown, Tex.
1990 Price: $118,070 ($70,700 in 1990 dollars)
2010 Price: $158,900
Change in Real Dollars: +34.6 percent
Population: 5,867,489
Year Home Prices Peaked: 2007
While home prices shot up and then plunged over the last decade in most parts of the country, the Houston market has been stable: The greatest fluctuation in the last decade was an 8.5 percent year-on-year nominal price increase in 2002. A recent survey by the Brookings Institution and the London School of Economics and Political Science ranks Houston fifteenth among U.S. metros for recovery from the recession, reported the Houston Chronicle.

 Source: Yahoo Finance

Remodeling Your Home

Remodeling a Home

Quite often, it is necessary or desirable to remodel your home. This article provides an overview of some of the economic and stylistic issues that you should consider when undertaking this endeavor.

Remodeling Your Home

Renovating an existing home can be a significant undertaking. There are budget issues to resolve, permits to obtain, contractors to interview, and legal factors to consider. This article provides an overview of issues you may want to consider when updating the look or structure of your home.

Budgeting Basics

Establishing a budget is an important first step for many homeowners. Costs vary widely, depending on whether you pursue a standard renovation project with materials purchased from a national chain store vs. a high-end remodel with elements designed to your specifications. For example, REMODELING Online has estimated that the cost of a kitchen renovation can range from $17,928 to more than $54,241, depending on the scope of the work done. An upscale makeover with elements custom-designed for a homeowner may cost significantly more.

REMODELING Online's 2006 Cost vs. Value Report presented the following national averages for mid-range renovations frequently undertaken by homeowners:

• Vinyl siding replacement: $9,134
• Vinyl window replacement: $10,160
• Bathroom remodel: $12,918
• Roof replacement: $14,276
• Deck addition: $14,728
• Bathroom addition: $28,918
• Basement remodel: $56,724

Keep in mind these numbers are averages, which means you may be able to spend less. If you are just beginning to think about a renovation project, visit several home improvement stores to get prices for the types of materials that appeal to you. Ask representatives to help you develop a list of items you are likely to need for a given project. Larger stores may employ personnel who can develop rough drawings of kitchens or other rooms to help you determine your options for placement of appliances, lighting and other issues.

Bang for Your Buck

Many homeowners want to select renovation projects that are likely to yield the highest return on their investment when they ultimately sell their home. The following renovations are those most likely to result in a payback for homeowners:

	Average Cost	Return on Investment
Vinyl Siding Replacement	$9,134	87.2%
Minor Kitchen Remodel	$17,928	85.2%
Window Replacement (Wood / Vinyl)	$11,040 / $10,160	85.3% / 83.7%
Bathroom Remodel	$12,918	84.9%
Two-Story Addition	$105,297	83.2%
Attic Bedroom Remodel	$44,073	79.9%

Although return on investment is important, also consider your lifestyle. If your family is growing, an extra bathroom or bedroom may be your most immediate need, even if a kitchen remodel would result in a higher return on investment. In contrast, empty nesters may be more inclined to take on renovations that reduce ongoing maintenance, such as vinyl siding, instead of adding space to their home.

Planning for Permits

In most instances, a building permit is required when the living area of a home is changed or when structural work is undertaken. For instance, transforming an unfinished attic into a master bedroom suite typically requires a permit. The types of permits mandated by different jurisdictions vary considerably. If you are undertaking a project that encompasses structural, plumbing and electrical work -- such as a new bathroom or kitchen -- you may need separate building, plumbing and electrical permits.

The National Association of the Remodeling Industry (NARI) recommends that homeowners not take out their own permits but instead leave this task to their contractor, who typically is familiar with the permitting process in a given locale. Typically, the individual who obtains a permit is considered to be the contractor and is legally responsible if work does not adhere to local building codes. Requiring your contractor to obtain permits protects you legally and is part of the job you are paying a contractor to do. Because it can take weeks or months to obtain permits, be sure to leave time in your schedule for the permitting process.

A Written Contract

A contract defines the scope of a job and provides a degree of legal protection for both the contractor and the homeowner. Although contracts vary in length, they frequently include the following provisions:

• Details about what the contractor will and will not do
• A list of materials specifying size, color, model and other particulars
• Approximate start and completion dates
• Design plans that you approve before work begins
• Right of Recision, a federal law that requires a contractor to inform a homeowner of the right to cancel a contract without penalty within three days of signing it
• Financial terms, including total price, payment schedule and cancellation penalty
• Warranty covering materials and workmanship for a minimum of one year

You may want to ask your attorney to review the contract before you sign it.
Paying attention to your budget, potential return on investment, permits and a written contract may help ensure that your renovation project is a success. Even if problems do emerge, you will have a framework for dealing with them and potentially moving on to a satisfactory completion.

Summary

• Remodeling demand is driving new product technology and costs.
• Kitchen remodeling ranks first in popularity and resale value.
• Retain a reputable contractor through references and estimates.
• Do not proceed without a written contract.
• Project financing is available through home equity loans, mortgage refinancing, and home improvement loans from banks, credit unions, and insurance and finance companies.

Checklist

• Ask your local Better Business Bureau if they can provide information about the contractors you are considering.
• Find out whether you need any special permits or zoning variances from your municipal government before starting work.
• Make sure that you and the people who will be working on your home have adequate insurance coverage.

 Source: Remodeling Your Home

Divorce and Your Finances

Keeping an eye on your financial health during a divorce is essential. This report outlines the rules that may apply and offers tips on some traps to avoid.

Divorce can be a complicated and challenging process in which details are easily overlooked. Protecting your financial health during this time is crucial, and no one should enter this process without a trusted attorney (specializing in divorce) on his or her side. Equally important is knowing the laws that shape divorce proceedings, and the impact they can have on your assets.

Dividing the Assets

Typically, everything you and your spouse acquired from the day you were married is subject to division. The exceptions are individual inheritances, gifts to an individual spouse, and assets acquired before marriage. When assets are divided, the court considers each spouse's earning ability, the length of the marriage, and how much each spouse contributed to building household assets.

The exception to this are the nine "community property" states -- Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Under the laws of these states, almost all assets will automatically be divided equally.

Don't try to hide assets from the court, either by neglecting to mention them or transferring them after the proceedings have begun. This can trigger an "omitted asset" penalty and force the court to redivide your property.

Dealing With Debt

Don't assume that a divorce will erase any debt. If you live in a community property state, debt -- like your assets -- will be split down the middle. You will be responsible for half of all debt in jointly held accounts and, in some cases, for half of a spouse's individual debt as well.

If you don't live in a community property state, you remain responsible for your individual debt (but not your spouse's) and any debt in jointly held accounts. One important trap to avoid is maintaining joint accounts after the divorce. Your spouse could continue running up expenses and leave you with the debt. As soon as the divorce is finalized, freeze all joint accounts and have your creditors reclassify them as individual accounts. Most creditors will do this at your request, though they are not legally required to do so. To protect your credit rating, make sure to keep up with monthly payments.

In addition, include the payment of debt as part of the settlement. Take on the responsibility for the debt yourself, if necessary, and take a share of the assets to pay the debt down.

If you and your spouse own a home that has appreciated in value, you may want to sell it before the divorce is finalized. Federal tax rules offer an exclusion of up to $500,000 in realized capital gains for married taxpayers. This amount is cut in half for single filers. Be sure to consult a tax advisor for additional information about these rules.

Tax Relief for Innocent Spouses

Divorce will not protect you from the IRS. If you filed jointly with your spouse, you can be held liable for delinquent taxes.

In 1998, Congress enacted legislation that offers protection to spouses who filed joint returns, relieving them of paying taxes that are the responsibility of an ex-spouse. The law also allows an innocent spouse to limit tax liability if he or she has been living apart from the delinquent spouse for at least 12 months from the time the joint return was filed. Talk to a tax advisor about how this information relates to your own situation.

Your Retirement Assets

Money in your 401(k) or pension plan may legally be divided during a divorce. The divisible amount typically begins to accumulate on the day you are married and ends on the day you are divorced.

To claim a share of a spouse's 401(k) or pension plan benefit, you need to obtain a court order called a Qualified Domestic Relations Order (QDRO) and provide it to your spouse's plan sponsor before distributions are completed to your spouse, which prevents your spouse from making withdrawals.

You and your spouse can decide to not divide your 401(k) assets or pension plan benefits, but you should make this agreement in writing and include it as part of the settlement to prevent the courts from declaring the money divisible.

If there are outstanding loans against a 401(k) and only one spouse was able to contribute, the noncontributing spouse may be exempt from paying back the loan. However, if the purpose of the loan was something that benefited both spouses -- such as a home -- the noncontributing spouse's share of the assets may be reduced to facilitate repayment of the debt.

If you do receive a share of a spouse's 401(k) assets or pension plan benefit, it may be best to roll over your share immediately into an individual retirement account (IRA) to avoid taxes and maintain tax deferral. You should discuss this with your attorney or a financial advisor familiar with divorce proceedings as soon as you anticipate a divorce.

Estate Planning

Be sure to review your will or, if you don't have one, draw one up. You should consult an attorney familiar with your state's estate laws to ensure that your assets are properly distributed. Do not wait until the divorce is final. You should review and amend your estate plan at the same time you decide to commence a divorce proceeding. Also make sure to review beneficiary designations for pensions, 401(k)s, and life insurance policies. Federal law requires a spouse to be the sole beneficiary of pension or 401(k) benefits unless that right is waived in writing by the spouse.

If you find yourself faced with divorce, it is essential to protect your financial future. Enlisting the help of an attorney and carefully monitoring the process can ensure that your interests are considered and that you won't need to revisit the proceeding later on.

Next Time, Should You Have a Prenup?

A prenuptial agreement can be a valuable tool for protecting your finances. These documents are difficult to contest in the event of a divorce. The prenup should be drawn up by both you and your spouse with the assistance of attorneys, and should include:

• Current assets and debts
• Financial arrangements (such as alimony payments)
• Estate and inheritance plans
• Financial care and custody of children from previous marriages
• How assets will be divided in case of a divorce

Finally, include in your prenup a future date to review this document. Should circumstances change, you can then amend the agreement.

Summary

• The division of assets in a divorce depends on the state where you live.
• Be sure to include debt resolution as part of the settlement, and be sure to continue making payments on any outstanding debt.
• Once the divorce is granted, freeze all joint accounts and have them converted to individual accounts.
• Unless waived in writing, 401(k) and pension plan benefits are divisible during a divorce by a Qualified Domestic Relations Order.
• Review your beneficiary designations for 401(k) plans, pension plans, and life insurance policies.
• Review your will, or draw up a new one.

 Source: Yahoo Finance

Are You Still A Real Estate Agent? If So, Why?

Seriously, this now has to be a question asked of many Realtors out there. It’s funny. When data that just hammers home the reality of the imminent housing sector collapse, where is the National Association of Realtors and Lawrence Yun?

Right now someone should be standing post lighting the bon fires and ringing the alarm bells. You know they give tsunami warnings when an earthquake happens in the ocean? Well someone needs to be sounding the alarm across the land right now telling everyone in the real estate business to head for cover.

It’s not just the agents who need to head to higher ground. If you’re trying to sell a house or complete a short sale you may want to don the life jacket and begin rationing the morsels that you have in the cupboard.

Don’t believe me? Mark it down. Take a note, put it in your wallet or pocketbook and then take it out in about 6-12 months and look at it. If you don’t take heed now, you’ll be wondering why you didn’t listen and why you didn’t jump head first into the lifeboat.

Why do I sound so ominous? Well, I get info, I get data, I see studies, and right now the storm clouds are as bad as I have ever seen them. But I’m not an economist so I’ll just tell you what the guys with the MBA’s are saying.

Maybe then you’ll stand up and take notice.

The third quarter reports from Fannie Mae, Freddie Mac and the FHA were recently released. In those reports it was stated that the combined Real Estate Owned (REO) inventory of the coven of debt rose 24 percent since the 2nd quarter and an unbelievable 93% over the same period last year.

For you math challenged, that’s almost a doubling of REO inventory! Let me pose it to you in a different way.

There are nearly 300,000 REO properties sitting on the books of JUST Fannie, Freddie and the FHA. That doesn’t even include the other lenders sitting on bad mortgages and REO’s.

So what does all of this mean? It’s really simple and something that I have been saying for years. Realtors don’t understand, or refuse to acknowledge the irrefutable Law of Supply And Demand.

Instead they go to flowery seminars and meet-ups where everyone speaks the same language and no one speaks the hard facts. Listen, if you were in the used car business… (as if you wanted to escalate up the food chain) and there were a bunch of cars on the lot and no buyers, would you hang around just waiting, hoping someone would eventually walk onto the lot?

Now imagine that same lot being on the route for 50 trucks bringing hundreds of more cars to sell. What would you do? Ya can’t even sell the ones on the lot now! Get the picture?

If you have a ton of savings and want to wait it out, ya might survive the real estate Armageddon. But how many real estate agents can actually do that?

Diana Olick from CNBC’s Realty Check said it best today when she penned an article about this very subject and closed it with a great, punctuating quip.

“We can talk prices, affordability, confidence, foreclosures, scandals, politics, whatever you want, but in the end it comes down to supply and demand.

We are looking at a ballooning supply coupled with dwindling demand. You do the math.”

Source: RealEstateRadioUSA

The Barometer Towers: New York's 10 Biggest Available Spaces

Manhattan's commercial real estate brokers talk about vacancies the way newlyweds talk about divorce. It happens, just not to us.

Our island market is thought to be sheltered from the forces of over-building that imperil other cities. But in October 2007, 3 million square feet of office space flooded that market in a single month. "The news has caused a low buzz of concern in the industry," wrote the New Jersey Record, "that this could be the first sign that New York's office market is not as impregnable as once thought."

Fast-forward three years, and we have to hand it to our neighbors in Jersey. Several of the huge vacancies that opened up in that black month still haven't been filled, and many more have come onto the market since then. Of the three biggest space hogs in Manhattan, banks have collapsed and many media companies have shrunk; only law firms have held their own.

In 2010, mega-leases were signed by companies like Société Générale, Proskauer Rose and Polo Ralph Lauren-though none as big as 2009's largest of 540,944 square feet by Paul Weiss. Leasing volume was higher last year than in both 2008 and 2009, according to Grubb & Ellis' 2011 Forecast for the New York and the Tri-State Area, to be released this week. At last, deal activity climbed back up to the 13-year average.

Dozens of companies jumped around, taking advantage of a weak market to lock down cheap rents and sweet concessions. In the final tally, they took a 2.5 million-square-foot chunk out of the 52.5 million square feet of office space available at the beginning of 2010, according to the report.

Looking ahead to 2011 now, the year will see a "market of situations," said Richard Persichetti, market research director for Grubb & Ellis, meaning that landlords with nearly full buildings will be able to command higher rents and fewer concessions, while those with more empty space will keep offering recession-era deals. Overall, he expects the vacancy rate to continue declining this year.

Click through our top 10 list of the Manhattan towers with the most available space, contiguous and otherwise, and it reveals that in many cases, the glass (and brick and concrete) is still half-empty. From the chilly halls of 58 Broad Street to the darkened windows of 11 Times Square, there's plenty to watch in 2011.

The data was provided to The Commercial Observer by CoStar, and is current as of the end of 2010.

 Source: Observer

January buying advice: Bidding on a foreclosure and a warm place to retire

Buying Advice

Learn how best to snag that distressed home that everyone wants, where the hot spots are for retirees and how soon you can get back into homeownership after a short sale.

The housing market may seem like a cold, bleak place this January, with a looming inventory of foreclosures and a pall of uncertainty hanging over many markets. In this installment of Buying Advice, we'll tell buyers how to use this situation to their advantage and beat out their competition for bank-owned bargains. We'll also point you in the direction of some appealing warm-weather markets with bright prospects, and shine a light on what it takes to recover from a short sale.

The right way to bid on a foreclosure

During this wintry month, you'll probably find that most of what's on the market is bank-owned or a short sale. (Who would want to sell right now unless they had to?)

These distressed properties can be a real bargain, if you and your agent handle it correctly, says Kim Drusch, an agent with Century 21 Award in Escondido, Calif., who represents both buyers and banks in property sales.

Unfortunately, she says, many agents drop the ball when making an offer, and lose the deal for their clients.

"The offers are written so poorly that the letter is rejected" by the bank, Drusch says. That's a problem when you have 10 offers on a "screaming deal" of a house, she says.  And that may be why you have lost out on bids that you thought were in the bag. Here are some of the most common mistakes when bidding on REO, or bank-owned, properties.

1. Missing or incorrect deposit check

The bank wants to see a deposit check that is dated on the day of the offer, not a check that has been used for three different offers.

2. Bad bank statement

Again, the lender wants to see a recent bank statement — as in the last 30 days — with the bidder's name on it and enough money to qualify their purchase. The account number can be blacked out, Drusch says.

3. Missing letter from the bidder's lender

Asset managers for REOs want to know, Drusch says, that she has talked to a bidder's lender to verify FICO score, employment, funds and the bidder's ability to close in 30 days. That should all be confirmed in a lender letter.

Moreover, she says, buyers should be realistic about their expectations when dealing with a bank, rather than a typical seller.

While most traditional sellers will pay for certain inspections or minor repairs, most bank asset managers won't, she says. That's the bidder's responsibility. However, a good agent should ask for any reports done in previous inspections, she says.

But please don't neglect inspection, Drusch cautions. Vacant properties carry more risk of unseen problems, from mold to faulty plumbing to wiring damage caused by irate former owners.

Retirement hot spots

With Florida and Arizona home markets still tanking, where should warm-weather seekers turn for their retirement home?

Some of the best spots for investment these days are in the South, says Local Market Monitor President Ingo Winzer.

"There are many areas with a good outlook for home prices, a large university or universities and good access to health care," he said.

LMM selected its top warm-weather picks for retirees, ranked by their home-price outlook and size — populations between 200,000 and 600,000 — amenities, stable employment and quality medical facilities. Keep in mind, these are not markets expected to boom in coming years, just to appreciate steadily, therefore providing a haven for investment.

1. Durham/Chapel Hill, N.C.

Home to Duke University and the Research Triangle, this market may be stagnant now, but it has a bright outlook over the next couple of years. By 2013, the third-quarter average home price of $232,500 is expected to rise 6.6%.

2. Augusta/Richmond County, Ga.

This beautiful city along the Savannah River is home to Augusta State University, the Medical College of Georgia and University Hospital. Its average home price of $179,600 is expected to rise 6.2% by the end of 2013.

3. Las Cruces, N.M.

The only Western market to make the list, this city thrives due to its large base of government employment. While home prices have declined here, as they have in most other cities on our list, it's poised for a strong comeback, Winzer says. The average home price of $162,200 is expected to rise 5.9% by fourth-quarter 2013.

4. Charleston-North Charleston-Summerville, N.C.

Southern hospitality and beautiful downtown architecture are draws to this town, which boasts stable employment, as well as the Citadel and the Medical University of South Carolina. The average home price of $256,300 is expected to rise 5.5% by the end of 2013.

5. Nashville, Tenn., and surrounding suburbs

There's no lack of things to do in this hub for health care, music and banking. Vanderbilt University, Tennessee State University and a strong performing-arts center provide plenty for locals to do. The average home price of $200,000 is expected to rise 2.6% by the end of 2013.

Rounding out the top 10 were: Hickory-Lenoir-Morganton, N.C.; Athens, Ga.; Columbia, S.C.; Wilmington, N.C.; and Bowling Green, Ky.

When can I get back into homeownership?

We've received many questions from readers wanting to know when they can expect to get a home loan again after a devastating financial event such as a short sale or foreclosure, including this one from "Jeff":

 "I was forced to sell my home short six months ago. Fortunately, that is the only negative thing on my credit report. How long do I need to wait before the FHA will consider me for a new, much lower-cost home loan?"

The answer depends on your situation at the time of the sale. According to the Department of Housing and Urban Development, borrowers are considered eligible for a new Federal Housing Administration loan if they were current on their mortgage and other installment debts at the time of their short sale and those proceeds served as payment in full.

It gets trickier if a borrower was in default at the time of the sale. Generally, the FHA will refuse to insure loans to these borrowers for three years from the date of the short sale.

Of course, as with anything else, there are exceptions. HUD will sometimes excuse defaults that were "due to circumstances beyond the borrower's control," such as the death of a primary wage earner, a long uninsured illness or lengthy job loss. However, its review of the borrower's credit report must indicate "satisfactory credit" before these circumstances.

Source: RealEstate MSN

A Brief History of Real Estate: The Fee Simple Ownership

Arthur Wellesley (1769-1852), Duke of Wellington, is reputed to have been the one to exclaim 'All good things come from England, but cavalry is not one of them' while facing Napoleon's French Army at Waterloo on June 18, 1815. Wellesley had learnt his military trade in India applying his study of the art of war and had became a master of the reverse-slope tactic - keeping his forces screened from artillery fire behind the brow of a hill. At Waterloo, however, Wellesley's Armies were outwitted by Napoleon. The French Emperor had imitated Wellesley's tactics by positioning 200 heavy artillery guns behind a ridge at La Haye Sainte. When the Hussars and Dragoons cavalrymen led by Lord Uxbridge attacked in the famous Charge of the Scots Greys, Napoleon commanded the guns on the topline of the ridge and one of the epic artillery bombardments in history began. It was at this very moment, at the height of the Charge and while his 3,000 cavalrymen were being slaughtered by the rapid artillery fire of Napoleon's heavy guns, that the phlegmatic English General is reputed to have exclaimed his now famous remark, directed at Lord Uxbridge who had apparently ordered the Charge without Wellesley knowing it. The day was saved by Gebhard von Blucher (1742-1819), Field Marshal of Prussia, who led the assault of the Kaiser's Prussian Cavalry against the French right wing, thus causing the entire French line to collapse.

Wellesley's famous remark has been retouched several times throughout the years, depending on one's point of view. The British dropped the second part - the reference to the ill-fated cavalry charge - thus creating the popular short version 'All good things come from England' - period. When about a century later Britain had the unwise idea of attacking the Ottoman Empire and the British and French Armies were fighting the Turks side-by-side in WWI, General Mustapha Kemal - the English-speaking Commander of the Turkish Garrison and victorious defender of Gallipoli - paraphrased the English dictum after 289 days of siege by turning it, somewhat deprecatingly, into: "No good things ever come from England". And Mahatma Gandhi throughout his teachings of non-violent conflicts resolutions makes reference to the fact that "All good things come from India".

Alas, no matter what your point of view is, I shall submit to readers of my Blog that "at least two good things comes from England" : Fee Simple Ownership and Organized Real Estate.

English real estate law (or 'Estate Law' as it was known back then) was imported, through colonization, into the earlier forms of law in the U.S.A., Canada, Australia and New Zealand. Many of these states, or their territories, have since modified this historical law, to varying degrees. A study of the old feudal land system of England provides us with an invaluable glimpse of legal history regulating the most valuable asset of them all: land. In medieval times, land was the sole form of wealth and it depended primarily on possession. You had it, you owned it. You wanted it, you fought for it. You found it, you kept it. There were no courts or police force ready to recognize or enforce "legal rights" as we know them today. All this changed with the Norman conquest of England in 1066. William decreed that he owned all of the land in England by right of conquest. Not one acre of England was to be exempted from this massive expropriation. This sudden vacuum of privately-held land was promptly filled by a variety of huge land grants given by the new King to either his Norman officers or to those of the English who were ready to recognize him as king. The device used by the King to control and administer his land was that of tenure. Tenure was the key component of the feudal system. The King struck a bargain with a Lord for a large chunk of land. The Lords that held their tenure directly from the King were called Tenants-in-chief. It was this group of persons who formed the basis of English aristocracy and began, by the process of subletting the King's land, the implementation of the feudal system.

Tenures were of a variety of duration known as "estates" and the Fee Simple Estate was the most extensive and allowed the Tenant to sell or to convey by will or be transferred to the Tenant's heir if he died. In modern law, almost all land is held in fee simple and this is as close as one can get to absolute ownership in common law. It was in this context that the British began their dominion over the seas and their explorations which led to the modern nations of Australia, Canada, New Zealand and the United States of America. The concept of developing an informal association of local real estate agents originated in the United States in the 1880s, and by the turn of the century about 15 Real Estate Boards had been established. The National Association of REALTORS® (NAR) was formed in the U.S. in 1908 with 19 boards and one state association. Organized real estate in Canada is almost as old as the country itself. The very first Real Estate Board was set up in 1888 in the growing community of Vancouver. Back then, a commercial lot on Hornby Street near the Hotel Vancouver sold for $600. The Vancouver Board - as it was known then - was active until the start of the First World War, when operations were suspended. It resumed in 1919, and has been operating ever since.

The distinction of the oldest, continuous running Board belongs to Winnipeg, Manitoba. It started in 1903, and the Winnipeg Real Estate Board was the first in Canada to celebrate its 100th anniversary. The Toronto Board was incorporated in 1920, followed by boards in Ottawa, Hamilton, Regina and Victoria in 1921. More than half of the existing Real Estate Boards in Canada were created after 1955, in part because of the evolution of the "Photo Co-Op System" that was introduced in 1951. That was the forerunner of today's MLS®, introduced in 1962. The Co-op System not only created a need for an organization to establish rules and promote co-operation among agents, but also to provide funds to operate a real estate board. That's when technology first changed the real estate industry.

Resource: Ezine Articles