In a spin, hating that spin we're in...
Statistically, it hasn't been a terrible week for real estate.
Nationally, existing home sales were up about 5 percent in February over January. That sounds like good news until you look at the primary source of sales -- foreclosures, which account for 40 percent of property transactions in the West and Florida, and slightly lower in the Midwest. Without distressed sales, national numbers would be in the negative range -- anywhere between 18 and 25 percent. They are still 4.6 percent lower than February 2008. All one needs do is look at the national median year over year price drop of 15.5 percent to see reality.
Let's dissect this news:
1. Sales up 5 percent month to month. You can always tell when real estate is in the tank if housing economists are grasping first at month over month gains, especially January versus February. Year over year is the normal comparison.
2. If you want to use month over month numbers, subtract a maximum of 90 days from agreement of sale to closing from both January and February, which brings you back to October and November. Then find the number of pending sales for October and November, and see how many were closed in January and February. That would be a better indicator of the health of the market, given the sorry state of lending as a for instance.
3. The median price of an existing home in February 2008 was $195,000 when "conditions were close to normal," as the NAR economist put it. I don't know where you were, but conditions haven't been close to normal since the subprime meltdown in August 2007. What is "normal" anyway?
As we know, when a man is starving, a few crumbs seem like a buffet.
Until the market reaches bottom and returns to the point of health (supply just slightly lower than demand to boost prices), we'll be subject to a lot of announcements that the worst is over from housing industry economists, who, I'm sorry to say, are employed by the housing industry. As Mr. Obama's approval numbers drop, the same kinds of premature speculation will be emanating from administration circles, too.
It ain't over till it is over, and that won't happen until the inventory in the West and Florida reaches a point at which lenders need to start lending again and builders begin digging foundations -- although we hope that they will build in more reasonable numbers and smaller and more affordable homes.
From Philadelphia economist Kevin Gillen:
The real encouraging news is that inventories still continue to drop. If these record-low interest rates help turn the recent data point of increased home sales into a trend, inventories will continue to decline. Only when they are restored to their long-run average will we return to a more balanced housing market, and hence more stable economy.
Friday, March 27, 2009
Thursday, March 26, 2009
Surprise, surprise
So, it appears that Hope for Homeowners has been a bust, which doesn't bode well for the Obama plan, which is still having trouble getting its act together several weeks after it was promised. One wonders how long it will take for the warehousers to end their foreclosure moratoriums and start adding to their REO inventory.
The score so far for H for H is one foreclosure out of 2.6 million stopped, with 762 applicants pending.
The biggest joke was the $7,500 pay-Uncle-Sam-back tax credit that no one could understand and fewer people sought.
The score so far for H for H is one foreclosure out of 2.6 million stopped, with 762 applicants pending.
The biggest joke was the $7,500 pay-Uncle-Sam-back tax credit that no one could understand and fewer people sought.
Friday, March 06, 2009
Shame, shame, shame!
Barbie’s Malibu Dream House is coming true.
On the eve of her 50th birthday, interior decorator Jonathan Adler has decked out a real-life 3,500-square-foot pad overlooking the Pacific Ocean to look like the blond doll’s outrageous home.
Adler, who was commissioned by toy maker Mattel Inc. to decorate the house for Monday’s party, said outfitting the sleek mansion (a property that’s frequently rented for film and photography shoots) took six months of planning and a few weeks to install.
“Barbie was a dream client because she doesn’t exist as a person,” Adler said. “She exists as fantasy and is the perfect client because she’s always happy and fun and loves everything. I thought to myself, ’How would Barbie live?’
What I thought was Barbie would have a house that is glamorous, kittenish, chic, colorful and happy — as well as functional.” Adler lined Barbie’s bedroom with wall-to-wall pink carpeting emblazoned with her initial. The closet is filled with 50 pairs of pink peep-toe heels while her kitchen is stocked with cupcake-making ingredients. An in-house museum features 25 vintage Barbie dolls on display. In the garage? A pink Volkswagen New Beetle with a motorized pop-up vanity in the trunk.
“I think this really is Barbie’s Malibu Dream House because the setting is so incredibly dreamy and ethereal,” Adler said. “We’re perched on a cliff in Malibu overlooking the ocean. It’s a fantasyland for anyone. It was difficult to find the house to celebrate Barbie’s 50th birthday because it had to be the ultimate Malibu house, and I think we found it.” Decorating Barbie’s real-world dream home, which will be the site Monday of a star-studded soiree celebrating the
doll’s birthday, was a dream for Adler, the potter and decorator who has served as head judge on Bravo’s “Top Design.” He said Mattel gave him access to the company’s archives, including a look at all of Barbie’s various dream homes over the years.
Following the festivities, most of Barbie’s custom decor will be shipped to the Palms Casino Resort in Las Vegas to furnish a special pink-tinted Barbie Suite that will be available for bachelorette parties, birthdays or anyone who wants live like Barbie. Other items will be available from the “Jonathan Adler Loves Barbie” collection launching in September.
Adler’s favorite furnishings are hanging in the living room: an original Andy Warhol portrait of Barbie valued at over $200,000 and a chandelier — designed by “Project Runway” contestant Chris March — that’s made up of over 30 blond wigs and took more than 60 hours to craft. Adler also admires a one-of-a-kind black-and-white wall mirror created with 64 dolls.
So where’s Ken?
“Ken’s around, but does she need Ken?” said Adler. "No."
On the eve of her 50th birthday, interior decorator Jonathan Adler has decked out a real-life 3,500-square-foot pad overlooking the Pacific Ocean to look like the blond doll’s outrageous home.
Adler, who was commissioned by toy maker Mattel Inc. to decorate the house for Monday’s party, said outfitting the sleek mansion (a property that’s frequently rented for film and photography shoots) took six months of planning and a few weeks to install.
“Barbie was a dream client because she doesn’t exist as a person,” Adler said. “She exists as fantasy and is the perfect client because she’s always happy and fun and loves everything. I thought to myself, ’How would Barbie live?’
What I thought was Barbie would have a house that is glamorous, kittenish, chic, colorful and happy — as well as functional.” Adler lined Barbie’s bedroom with wall-to-wall pink carpeting emblazoned with her initial. The closet is filled with 50 pairs of pink peep-toe heels while her kitchen is stocked with cupcake-making ingredients. An in-house museum features 25 vintage Barbie dolls on display. In the garage? A pink Volkswagen New Beetle with a motorized pop-up vanity in the trunk.
“I think this really is Barbie’s Malibu Dream House because the setting is so incredibly dreamy and ethereal,” Adler said. “We’re perched on a cliff in Malibu overlooking the ocean. It’s a fantasyland for anyone. It was difficult to find the house to celebrate Barbie’s 50th birthday because it had to be the ultimate Malibu house, and I think we found it.” Decorating Barbie’s real-world dream home, which will be the site Monday of a star-studded soiree celebrating the
doll’s birthday, was a dream for Adler, the potter and decorator who has served as head judge on Bravo’s “Top Design.” He said Mattel gave him access to the company’s archives, including a look at all of Barbie’s various dream homes over the years.
Following the festivities, most of Barbie’s custom decor will be shipped to the Palms Casino Resort in Las Vegas to furnish a special pink-tinted Barbie Suite that will be available for bachelorette parties, birthdays or anyone who wants live like Barbie. Other items will be available from the “Jonathan Adler Loves Barbie” collection launching in September.
Adler’s favorite furnishings are hanging in the living room: an original Andy Warhol portrait of Barbie valued at over $200,000 and a chandelier — designed by “Project Runway” contestant Chris March — that’s made up of over 30 blond wigs and took more than 60 hours to craft. Adler also admires a one-of-a-kind black-and-white wall mirror created with 64 dolls.
So where’s Ken?
“Ken’s around, but does she need Ken?” said Adler. "No."
Friday, January 02, 2009
Only If You Can Get A Loan or PMI, Of Course
From the croaking voice of real estate...
The NAR
There is some misinformation in the media lately about the required size of a down payment for a mortgage in today’s market, and the blog world is abuzz with misperceptions. Not all so-called experts are knowledgeable in this area, and some experts are being misunderstood.
The facts:
1. An individual may be required to put down 20 percent based on that person’s financial situation. But that is not an across-the-board requirement for all borrowers.
2. A borrower who puts down less than 20 percent is required to obtain mortgage insurance.
3. Even in a declining market, a borrower is required to make at least a 5 or 10 percent down payment.
4. FHA requires a 3.5 percent down payment by borrowers, so long as they meet a 31 percent housing cost-to-income ratio. In other words, anyone who stays within their budget and who can afford a 3.5 percent down payment (even with family help) can become a homeowner.
The NAR
There is some misinformation in the media lately about the required size of a down payment for a mortgage in today’s market, and the blog world is abuzz with misperceptions. Not all so-called experts are knowledgeable in this area, and some experts are being misunderstood.
The facts:
1. An individual may be required to put down 20 percent based on that person’s financial situation. But that is not an across-the-board requirement for all borrowers.
2. A borrower who puts down less than 20 percent is required to obtain mortgage insurance.
3. Even in a declining market, a borrower is required to make at least a 5 or 10 percent down payment.
4. FHA requires a 3.5 percent down payment by borrowers, so long as they meet a 31 percent housing cost-to-income ratio. In other words, anyone who stays within their budget and who can afford a 3.5 percent down payment (even with family help) can become a homeowner.
Hanley Wood weighs in
New and existing home sales continued to stumble in November. New home sales were at their slowest annual pace in almost 18 years while existing home sales were at their lowest levels in 11 years. Concerns of job security and increased uncertainty about the future of the economy have kept consumers from spending, especially in big ticket items like cars and houses. Personal consumption expenditures have declined for five straight months as consumer spending fell 0.6 percent in November.
Conditions in the housing market continued to deteriorate in November as rising unemployment and the weakening economy has kept homebuyers on the sidelines. Both new and existing home sales posted drops in November. New home sales in November declined 2.9% to a seasonally-adjusted annual pace of 407,000 units. Seasonally-adjusted annualized new home sales are at their lowest levels since January 1991. Sales for the previous three months were also revised lower by 35,000 units. However, the number of new homes for sale continued to decline as builders continue to scale back production. Seasonally-adjusted inventory of new homes declined for the 19th straight month to 374,000 units. In November, median new home prices increased to $220,400 from a downwardly revised October figure of $214,600. Median new home prices have now recorded seven straight months of year-over-year declines. Competition from the existing home market and the flood of foreclosures along with slower demand due to the weak economy may continue to pressure the new home market going into next year.
Annualized sales of total existing homes in November dropped 8.6% from October levels to 4.490 million units. Sales of existing homes are down 10.6% from the 5.020 million units in November 2007. The seasonally-adjusted annual rate of existing home sales is at its lowest levels since November 1997. Median existing home prices in November declined to $181,300 which is the lowest it has been since February 2004 and the fifth straight month that median existing home prices have recorded a decline. In November, the number of existing homes on the market increased for the first time in four months. Inventory increased a slight 0.1% to a preliminary 4.203 million units from a revised 4.198 million units in October. Lower rates and falling prices have pushed the existing home affordability ratio in November to 59.0% which is the highest it has been since we started tracking the field in January 1990.
Employment Growth (2,050,000) D-
Unemployment Rate 6.7% C-
Real GDP Growth (0.5%) F
Consumer Confidence 38.0 F
Purchase Mortgage Apps. 316.5 D-
Mortgage Rates 5.14% A+
Median Price Existing Home $183,300 F
Existing Home Sales 4,490,000 D-
Existing Home Inventory 4,203,000 F
Existing Home Affordability 59.0% A
Median Price New Home 220,400 F
New Home Sales 407,000 F
New Home Inventory 372,000 F
New Home Affordability Ratio 50.7% A-
Conditions in the housing market continued to deteriorate in November as rising unemployment and the weakening economy has kept homebuyers on the sidelines. Both new and existing home sales posted drops in November. New home sales in November declined 2.9% to a seasonally-adjusted annual pace of 407,000 units. Seasonally-adjusted annualized new home sales are at their lowest levels since January 1991. Sales for the previous three months were also revised lower by 35,000 units. However, the number of new homes for sale continued to decline as builders continue to scale back production. Seasonally-adjusted inventory of new homes declined for the 19th straight month to 374,000 units. In November, median new home prices increased to $220,400 from a downwardly revised October figure of $214,600. Median new home prices have now recorded seven straight months of year-over-year declines. Competition from the existing home market and the flood of foreclosures along with slower demand due to the weak economy may continue to pressure the new home market going into next year.
Annualized sales of total existing homes in November dropped 8.6% from October levels to 4.490 million units. Sales of existing homes are down 10.6% from the 5.020 million units in November 2007. The seasonally-adjusted annual rate of existing home sales is at its lowest levels since November 1997. Median existing home prices in November declined to $181,300 which is the lowest it has been since February 2004 and the fifth straight month that median existing home prices have recorded a decline. In November, the number of existing homes on the market increased for the first time in four months. Inventory increased a slight 0.1% to a preliminary 4.203 million units from a revised 4.198 million units in October. Lower rates and falling prices have pushed the existing home affordability ratio in November to 59.0% which is the highest it has been since we started tracking the field in January 1990.
Employment Growth (2,050,000) D-
Unemployment Rate 6.7% C-
Real GDP Growth (0.5%) F
Consumer Confidence 38.0 F
Purchase Mortgage Apps. 316.5 D-
Mortgage Rates 5.14% A+
Median Price Existing Home $183,300 F
Existing Home Sales 4,490,000 D-
Existing Home Inventory 4,203,000 F
Existing Home Affordability 59.0% A
Median Price New Home 220,400 F
New Home Sales 407,000 F
New Home Inventory 372,000 F
New Home Affordability Ratio 50.7% A-
Mortgage applications flat over holidays
Mortgage loan application volume for the week ended Dec. 31 was 1245.7, essentially unchanged, on a seasonally adjusted basis from 1245.4 one week earlier. This week's results included an adjustment to account for the shortened week because of Christmas. On an unadjusted basis, the Mortgage Bankers Association index decreased 40 percent from the week ended Dec. 24 and was up 155.0 percent from Dec. 31, 2007.
The Refinance Index decreased 0.4 percent to 6733.8 the previous week and the seasonally adjusted Purchase Index increased 1.4 percent to 320.9 from one week earlier. The seasonally adjusted Conventional Purchase Index increased 1.1 percent while the Government Purchase Index (largely FHA) increased 2.2 percent.
The four-week moving average for the seasonally adjusted Market Index is up 10.3 percent. The four week moving average is down 3.2 percent for the seasonally adjusted Purchase Index, while this average is up 15.7 percent for the Refinance Index.
The refinance share of mortgage activity decreased to 82.9 percent of total applications from 83.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 0.8 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.03 percent from 5.04 percent, with points increasing to 1.24 from 1.17 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.79 percent from 4.91 percent, with points increasing to 1.26 from 1.03 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 6.15 percent from 6.36 percent, with points increasing to 0.44 from 0.28 (including the origination fee) for 80 percent LTV loans.
The Refinance Index decreased 0.4 percent to 6733.8 the previous week and the seasonally adjusted Purchase Index increased 1.4 percent to 320.9 from one week earlier. The seasonally adjusted Conventional Purchase Index increased 1.1 percent while the Government Purchase Index (largely FHA) increased 2.2 percent.
The four-week moving average for the seasonally adjusted Market Index is up 10.3 percent. The four week moving average is down 3.2 percent for the seasonally adjusted Purchase Index, while this average is up 15.7 percent for the Refinance Index.
The refinance share of mortgage activity decreased to 82.9 percent of total applications from 83.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 0.8 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.03 percent from 5.04 percent, with points increasing to 1.24 from 1.17 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.79 percent from 4.91 percent, with points increasing to 1.26 from 1.03 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 6.15 percent from 6.36 percent, with points increasing to 0.44 from 0.28 (including the origination fee) for 80 percent LTV loans.
Gee Whiz from Inman
Tougher rules for those employed in real estate -- especially lenders -- is practically a given, Inman News readers say, but many hope that trade associations like the National Association of Realtors and the Mortgage Bankers Association will have the biggest say in drafting and implementing them.
In a survey of more than 700 Inman News readers, most saw lenders as the likeliest target of new regulations, followed by title insurers, real estate brokers and real estate agents.
Got to hand to Inman. Its readers are really prescient ...
and...
A grim 2008 in real estate
The Federal Reserve and federal government worked to lessen the impact of a financial disaster in 2008 through a series of unprecedented actions that included pumping hundreds of billions of dollars into banks and other financial companies and the takeover of secondary mortgage giants Fannie Mae and Freddie Mac.
In a survey of more than 700 Inman News readers, most saw lenders as the likeliest target of new regulations, followed by title insurers, real estate brokers and real estate agents.
Got to hand to Inman. Its readers are really prescient ...
and...
A grim 2008 in real estate
The Federal Reserve and federal government worked to lessen the impact of a financial disaster in 2008 through a series of unprecedented actions that included pumping hundreds of billions of dollars into banks and other financial companies and the takeover of secondary mortgage giants Fannie Mae and Freddie Mac.
Dividend.com on Toll Bros.
The Bottom Line
Despite lower mortgage rates, access to capital and those that have any capital toward down payments is very hard to find. We recently mentioned the number of unsold homes reached 4.2 million in November. That represents 11.2 months of supply, at the current rate of sales, up from 10.2 months in October. We are keeping our eyes on Toll Brothers (TOL) and KB Homes (KBH) as homebuilders that seem to rally the most whenever there is any glimpse of real estate perhaps bottoming. KBH has doubled off its bottom from several months ago.
Despite lower mortgage rates, access to capital and those that have any capital toward down payments is very hard to find. We recently mentioned the number of unsold homes reached 4.2 million in November. That represents 11.2 months of supply, at the current rate of sales, up from 10.2 months in October. We are keeping our eyes on Toll Brothers (TOL) and KB Homes (KBH) as homebuilders that seem to rally the most whenever there is any glimpse of real estate perhaps bottoming. KBH has doubled off its bottom from several months ago.
SmartMoney on Toll Bros.
Toll Brothers: This Old House Builder
Housing was at the heart of 2008's economic upheaval, though the role of home builders was less clear-cut, as evidenced by the erratic performance of the sector's biggest names. Since mid-September, Toll Brothers (TOL: 21.55*, +0.12, +0.55%) for one has seen its stock gain as much as a third in value and lose as much as a quarter. Shares actually climbed 2.1% this year, a laudable achievement all things considered.
As bad as the real-estate market has been, recovery is still a long ways off. Rather than dwelling on the lousy data investors seem to be concentrating on federal intervention in the mortgage and financial arenas, which has yielded a curious mix of fundamentals and hope.
Pali Research analyst Stephen East, who downgraded Toll Brothers' stock to Sell from Hold in November, said market hope is triumphing over experience, particularly the belief that the government may be able to push mortgage rates down to 4.5% for some buyers.
There's not much evidence that fundamentals are backing it up, though. Toll's last set of quarterly results showed a 40% sales drop from the previous year. But CEO Robert Toll pointed to the company's healthy balance sheet — about $1.6 billion in cash and $1.3 billion in available credit — and said competing builders of high-priced homes will have less access to credit.
"Those lenders likely will gravitate to the home-building companies that offer them the greatest security, the strongest balance sheets and the broadest array of potential business opportunities," the CEO said on a Dec. 4 conference call. "We believe a less crowded playing field, combined with attractive long-term demographics, will reward those well capitalized builders who can persevere through the current challenging environment."
Anna Torma, an analyst at Soleil Securities, said Toll's affluent, moving-up customer base has been hit hard by financing issues as credit gets scarce, particularly for large mortgages, but she gave credit to Toll's management.
"They have sufficient liquidity to weather the downturn," she says.
Keefe Bruyette & Woods analyst Bose George points out that weathering the downturn, which could easily continue into 2010, isn't the same thing as thriving, and that Toll's solidity is at best a relative position of strength.
"We believe that earnings are likely to remain weak for some time because of the oversupply in the housing market," he wrote of the entire sector. "Further, we expect the housing market recovery to be lackluster because the deleveraging of both borrowers and lenders is likely to continue."
Bottom Line: Hold
This stock has gone from cellar to second story and back this year, and it's worth waiting for an Obama administration move to help stabilize the battered housing market. Just be ready to sell if the limits of government intervention are reached and the industry's weakened fundamentals assert themselves.
Housing was at the heart of 2008's economic upheaval, though the role of home builders was less clear-cut, as evidenced by the erratic performance of the sector's biggest names. Since mid-September, Toll Brothers (TOL: 21.55*, +0.12, +0.55%) for one has seen its stock gain as much as a third in value and lose as much as a quarter. Shares actually climbed 2.1% this year, a laudable achievement all things considered.
As bad as the real-estate market has been, recovery is still a long ways off. Rather than dwelling on the lousy data investors seem to be concentrating on federal intervention in the mortgage and financial arenas, which has yielded a curious mix of fundamentals and hope.
Pali Research analyst Stephen East, who downgraded Toll Brothers' stock to Sell from Hold in November, said market hope is triumphing over experience, particularly the belief that the government may be able to push mortgage rates down to 4.5% for some buyers.
There's not much evidence that fundamentals are backing it up, though. Toll's last set of quarterly results showed a 40% sales drop from the previous year. But CEO Robert Toll pointed to the company's healthy balance sheet — about $1.6 billion in cash and $1.3 billion in available credit — and said competing builders of high-priced homes will have less access to credit.
"Those lenders likely will gravitate to the home-building companies that offer them the greatest security, the strongest balance sheets and the broadest array of potential business opportunities," the CEO said on a Dec. 4 conference call. "We believe a less crowded playing field, combined with attractive long-term demographics, will reward those well capitalized builders who can persevere through the current challenging environment."
Anna Torma, an analyst at Soleil Securities, said Toll's affluent, moving-up customer base has been hit hard by financing issues as credit gets scarce, particularly for large mortgages, but she gave credit to Toll's management.
"They have sufficient liquidity to weather the downturn," she says.
Keefe Bruyette & Woods analyst Bose George points out that weathering the downturn, which could easily continue into 2010, isn't the same thing as thriving, and that Toll's solidity is at best a relative position of strength.
"We believe that earnings are likely to remain weak for some time because of the oversupply in the housing market," he wrote of the entire sector. "Further, we expect the housing market recovery to be lackluster because the deleveraging of both borrowers and lenders is likely to continue."
Bottom Line: Hold
This stock has gone from cellar to second story and back this year, and it's worth waiting for an Obama administration move to help stabilize the battered housing market. Just be ready to sell if the limits of government intervention are reached and the industry's weakened fundamentals assert themselves.
Toll Watch
from MyCentralJersey.com:
Now the real work begins.
To recap, Toll Bros. grand scheme to build a mega transit village on one of New Jersey's most valuable pieces of highway real estate appeared in danger of coming apart at the seams this fall when the developer's pressing financial difficulties led it to request a change in its plans.
Originally, Toll Bros. had targeted the Route 18 land as the ideal site for a sweeping transit village, including housing, retail and commercial footage, plus a parking garage. Several years later, only the garage stands.
Last year, Toll Bros. asked that its plans be delayed, noting the moribund economy and sagging real estate markets no longer made its venture a profitable one, at least not until the financial climate improves. The township granted the developer's request.
Then the deal took an even bigger turn for the worse, when Tolls Bros. indicated it wants to scale back the project, stripping housing from the equation.
East Brunswick officials, noting they were due a Jan. 1 payment of $4.5 million from the developer for purchase of the land, but unsure whether that sum would arrive, decided to take out a little self-insurance against a default, borrowing the heady sum of $25 million to guard against the deal's possible demise. Officials had little choice, since those payments were already factored into East Brunswick's annual budget. The loss of that money would have staggered town expenses - and taxpayers through their property bills. Of less immediate concern, two more installments of $4 million apiece still remain, the final payoffs on the $30.4 million deal.
So here's the scenario:
East Brunswick is in better shape today than it was a few days ago, but the township isn't clear of trouble yet. Not by a long shot. Toll Bros. remains adamant that its plan be down-sized to eliminate residential housing, and there's still plenty of doubt, even if the township grants that concession, whether the company is adequately positioned to follow through on the remainder of the blueprint.
Those conditions — and the threat of the immediate loss of revenues already factored into township spending plans — afford the developer some leverage to renegotiate. But East Brunswick has a couple of aces in its pocket, too. For one, the $25 million in bonds at its disposal is enough to pay off Toll Bros. and send it packing, with a little left over as budget cushion. For another, there is a belief among some in the township that Golden Triangle land and its potential is worth a lot more than what Toll Bros. paid for the tract. In other words, East Brunswick could get more bang for its buck if the arrangement was to fail and it found a new suitor.
Risky? Perhaps. But its enough for municipal officials to stand firm in insisting that Toll Bros. deliver on its pledge — and legal obligation — to the shape the Golden Triangle as agreed. After all, East Brunswick only gets one shot to get this right. Once the land is developed, that chance is gone. Township officials ought to demand the agreement is carried out to its letter and in full.
Now the real work begins.
To recap, Toll Bros. grand scheme to build a mega transit village on one of New Jersey's most valuable pieces of highway real estate appeared in danger of coming apart at the seams this fall when the developer's pressing financial difficulties led it to request a change in its plans.
Originally, Toll Bros. had targeted the Route 18 land as the ideal site for a sweeping transit village, including housing, retail and commercial footage, plus a parking garage. Several years later, only the garage stands.
Last year, Toll Bros. asked that its plans be delayed, noting the moribund economy and sagging real estate markets no longer made its venture a profitable one, at least not until the financial climate improves. The township granted the developer's request.
Then the deal took an even bigger turn for the worse, when Tolls Bros. indicated it wants to scale back the project, stripping housing from the equation.
East Brunswick officials, noting they were due a Jan. 1 payment of $4.5 million from the developer for purchase of the land, but unsure whether that sum would arrive, decided to take out a little self-insurance against a default, borrowing the heady sum of $25 million to guard against the deal's possible demise. Officials had little choice, since those payments were already factored into East Brunswick's annual budget. The loss of that money would have staggered town expenses - and taxpayers through their property bills. Of less immediate concern, two more installments of $4 million apiece still remain, the final payoffs on the $30.4 million deal.
So here's the scenario:
East Brunswick is in better shape today than it was a few days ago, but the township isn't clear of trouble yet. Not by a long shot. Toll Bros. remains adamant that its plan be down-sized to eliminate residential housing, and there's still plenty of doubt, even if the township grants that concession, whether the company is adequately positioned to follow through on the remainder of the blueprint.
Those conditions — and the threat of the immediate loss of revenues already factored into township spending plans — afford the developer some leverage to renegotiate. But East Brunswick has a couple of aces in its pocket, too. For one, the $25 million in bonds at its disposal is enough to pay off Toll Bros. and send it packing, with a little left over as budget cushion. For another, there is a belief among some in the township that Golden Triangle land and its potential is worth a lot more than what Toll Bros. paid for the tract. In other words, East Brunswick could get more bang for its buck if the arrangement was to fail and it found a new suitor.
Risky? Perhaps. But its enough for municipal officials to stand firm in insisting that Toll Bros. deliver on its pledge — and legal obligation — to the shape the Golden Triangle as agreed. After all, East Brunswick only gets one shot to get this right. Once the land is developed, that chance is gone. Township officials ought to demand the agreement is carried out to its letter and in full.
How low can they go?
Fixed interest rates fell for the ninth straight week, with Freddie Mac announcing a day early that the 30-year was at 5.10 percent with 0.7 point average, down from 5.14 percent Dec. 24 and from 6.07 percent a year ago. The average 30-year is at its lowest point since record-keeping started in 1971.
Other numbers: 15-year fixed averaged 4.83 percent with 0.7 percent, down from 4.91 percent Dec. 24 and 5.68 percent a year ago. Record low was 4.70 percent 3/25/04.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.57 percent this week, with an average 0.7 point, up from last week’s 5.49 percent and 5.78 percent last Dec. 31.
One-year Treasury-indexed ARMs averaged 4.85 percent, with an average 0.5 point, down from last week’s 4.95 percent. At this time last year, it averaged 5.47 percent.
Comment from chief economist Frank Nothaft: “Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all time record low since Freddie Mac’s survey began in April 1971. Since the end of October of this year, these rates have declined by about 1-1/3 percentage points, or payment savings of approximately $173 a month for a $200,000 loan. As a result, the number of refinance applications for conventional mortgages jumped over 500 percent between the weeks ending on Oct. 31 and Dec. 26.
House prices fell 18 percent over the 12-month period ending in October, according to the S&P/Case-Shiller 20-city composite index. Every city posted a second consecutive month of decline in October. From its peak in July 2006, the composite index is down 23.4 percent.
Other numbers: 15-year fixed averaged 4.83 percent with 0.7 percent, down from 4.91 percent Dec. 24 and 5.68 percent a year ago. Record low was 4.70 percent 3/25/04.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.57 percent this week, with an average 0.7 point, up from last week’s 5.49 percent and 5.78 percent last Dec. 31.
One-year Treasury-indexed ARMs averaged 4.85 percent, with an average 0.5 point, down from last week’s 4.95 percent. At this time last year, it averaged 5.47 percent.
Comment from chief economist Frank Nothaft: “Interest rates for 30-year fixed-rate mortgages fell for the ninth straight week and represented a third consecutive all time record low since Freddie Mac’s survey began in April 1971. Since the end of October of this year, these rates have declined by about 1-1/3 percentage points, or payment savings of approximately $173 a month for a $200,000 loan. As a result, the number of refinance applications for conventional mortgages jumped over 500 percent between the weeks ending on Oct. 31 and Dec. 26.
House prices fell 18 percent over the 12-month period ending in October, according to the S&P/Case-Shiller 20-city composite index. Every city posted a second consecutive month of decline in October. From its peak in July 2006, the composite index is down 23.4 percent.
Monday, December 29, 2008
It's Been A Long, Long Time
U.S. Housing and Urban Development Secretary Steve Preston today approved plans from the state of Pennsylvania seeking to recover from the effects of high foreclosures and declining home values. Funded under HUD’s new Neighborhood Stabilization Program (NSP), these communities will shortly begin to target emergency assistance to particular neighborhoods by acquiring and redeveloping foreclosed properties that might otherwise become sources of abandonment and blight.
"It is critical that we work closely with State and local governments to put this money to work as quickly as possible to help communities recover from the effects of foreclosure and declining property values,” said Preston. “Stabilizing neighborhoods is what this program is all about. HUD will continue to work closely with these communities to make certain these funds are targeted to neighborhoods with the greatest needs.”
Today, HUD is approving the plans submitted by the state of Pennsylvania for $59,631,318 in NSP funds.
"It is critical that we work closely with State and local governments to put this money to work as quickly as possible to help communities recover from the effects of foreclosure and declining property values,” said Preston. “Stabilizing neighborhoods is what this program is all about. HUD will continue to work closely with these communities to make certain these funds are targeted to neighborhoods with the greatest needs.”
Today, HUD is approving the plans submitted by the state of Pennsylvania for $59,631,318 in NSP funds.
Hopefully the Fish Won't Be Killed
Peter O. Rostenberg, M.D., president of The Fishkill Ridge Caretakers will give a presentation on protecting the watersheds/wells which tap into the Clove Creek aquifer to provide water for the Town and Village of Fishkill at a meeting hosted by The Fishkill Democrats on Thursday, January 8th from 7:00pm-8:00pm at the Courtyard Marriott, 17 Westage Dr and Rt 9 in Fishkill.
Dr. Rostenberg will also lead a discussion on recent findings by the Department of Health of a contaminated water well in the Merrit Park water district in Fishkill (see Poughkeepsie Journal article: Fishkill may sue DOT over contaminated well, Sun Nov 16, 2008 ). Plans for this well are that it will be utilized in the near future by residents from the Merrit Park/Toll Bros. development in Fishkill and Shenendoah neighborhood in East Fishkill. Participants will be given information on future plans for community action.
Dr. Rostenberg will also lead a discussion on recent findings by the Department of Health of a contaminated water well in the Merrit Park water district in Fishkill (see Poughkeepsie Journal article: Fishkill may sue DOT over contaminated well, Sun Nov 16, 2008 ). Plans for this well are that it will be utilized in the near future by residents from the Merrit Park/Toll Bros. development in Fishkill and Shenendoah neighborhood in East Fishkill. Participants will be given information on future plans for community action.
PR 1 Bureaucracy 0
In an effort to accelerate the process of awarding grants to state and local governments, non-profit organizations, and other community-based applicants, the U.S. Department of Housing and Urban Development today announced a new streamlined funding process. HUD will now announce funding notices on a program-by-program basis, an action that will speed up the application process for prospective grantees that would otherwise be required to wait for the publication of HUD's comprehensive funding notice.
Bailout for GMAC
The Treasury Department today announced that it will purchase $5 billion in senior preferred equity with an 8 percent dividend from GMAC LLC as part of a broader program to assist the domestic automotive industry in becoming financially viable.
Under the agreement, GMAC must be in compliance with the executive compensation and corporate governance requirements of Section 111 of the Emergency Economic Stabilization Act, as well as enhanced restrictions on executive compensation.
GMAC will issue warrants to Treasury in the form of additional preferred equity in an amount equal to 5 percent of the preferred stock purchase that will pay a 9 percent dividend if exercised.
Additionally, the Treasury has agreed to lend up to $1 billion to General Motors so that GM can participate in a rights offering at GMAC in support of GMAC's reorganization as a bank holding company. This commitment is in addition to the assistance previously announced for GM on Dec. 19.
This loan will be exchangeable at any time, at Treasury's option, into the GMAC equity interests being acquired by GM in the rights offering. Furthermore, this loan will be secured and will have other terms and conditions as outlined in the attached term sheet. The ultimate level of funding under this facility will be dependent upon the level of current investor participation in the rights offering at GMAC.
Under the agreement, GMAC must be in compliance with the executive compensation and corporate governance requirements of Section 111 of the Emergency Economic Stabilization Act, as well as enhanced restrictions on executive compensation.
GMAC will issue warrants to Treasury in the form of additional preferred equity in an amount equal to 5 percent of the preferred stock purchase that will pay a 9 percent dividend if exercised.
Additionally, the Treasury has agreed to lend up to $1 billion to General Motors so that GM can participate in a rights offering at GMAC in support of GMAC's reorganization as a bank holding company. This commitment is in addition to the assistance previously announced for GM on Dec. 19.
This loan will be exchangeable at any time, at Treasury's option, into the GMAC equity interests being acquired by GM in the rights offering. Furthermore, this loan will be secured and will have other terms and conditions as outlined in the attached term sheet. The ultimate level of funding under this facility will be dependent upon the level of current investor participation in the rights offering at GMAC.
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