Do I Hear a Housing Rebound? Not Yet

With residences only slightly overvalued in many markets, according to recent reports, some believe prices will stabilize soon; but home auctions tell a different story. Observers say the events are attracting first-time investors as well as regular buyers and are generating low-ball offers. Citing a cycle in which falling prices drive up foreclosures that in turn boost inventory and exert even more downward pressure on prices, Goldman Sachs chief economist Jan Hatzius says excess supply will contribute to another 15-percent drop in home prices on a national basis.
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From "Do I Hear a Housing Rebound? Not Yet"
New York Times (04/22/09) P. B1; Leonhardt, David

Refinancing Demand Boosts US Mortgage Applications

The Mortgage Bankers Association reports that homeowners looking to lock in near record-low interest rates boosted mortgage demand last week. Refinancings represented almost four-fifths of all applications for the period, with the overall index gaining 5.3 percent. The increase in refi volume offset a decrease in purchase-loan demand.
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From "Refinancing Demand Boosts US Mortgage Applications"
Reuters (UK) (04/22/09) Adler, Lynn

Economists Seek Breakup of Big Banks

The government should break up large financial institutions into smaller, more transparent firms, some economists stated April 21 to the Joint Economic Committee of Congress. One witness, 2001 Nobel Prize recipient and Columbia University Professor Joseph Stiglitz, who has been skeptical of the government's financial rescue plans, said that large banks are more likely to take excessive risks. Another economist, Massachusetts Institute of Technology Professor Simon Johnson, said that antitrust laws should be overhauled to prevent banks from growing too large. Financial institutions should be broken up, either by region or business type, and sold to new private-equity owners. Federal Reserve Bank of Kansas City President Thomas Hoenig, also on the panel, added that the government's responses may prolong the crisis, or create another one when the programs are ended.
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From "Economists Seek Breakup of Big Banks"
Wall Street Journal (04/21/09) Randall, Maya Jackson

Shakeout Nears for Real Estate Firms

Real Capital Analytics reports that at least $153 billion worth of commercial real estate is in distress worldwide. More than $87 billion of that is in the form of defaulted mortgages, with outstanding debt from about 40 commercial property and investment firms that have folded accounting for the remainder. In response, REITs like AMB Property Corp., Kimco Realty Corp., and Simon Property Group have issued $4.7 billion in equity to flood them with capital for near-term debt maturities. REIT Zone Publications editor Barry Vinocur expects more REITs to follow suit, reasoning, "At some point in time, there are going to be opportunities, and these companies will be better positioned to take advantage of them."
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From "Shakeout Nears for Real Estate Firms"
New York Times (04/22/09) P. B5; Pristin, Terry

Fed's Kohn Says Recovery Possible in '09

Evidence of a stronger-than-expected economic recovery is starting to appear, according to Federal Reserve Vice Chairman Donald Kohn. In a recent statement, Kohn suggested that trace evidence of a modest economic recovery coming together this year can already be seen. "The crosscurrents in the recent data and a bit more favorable financial news of late stand in contrast to the uniformly bleak picture of a few months ago," he said. Among the early signs is consumer spending, which has stabilized, and low mortgage rates and more affordable homes, which will provide a needed boost to the U.S. housing sector. These pieces "may be an early indication" that the economy's contraction is ebbing and will level off later this year, he concluded. Kohn's remarks come just ahead of the Federal Open Market Committee policy meeting, where Fed policy makers could issue a statement acknowledging the improvements.
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From "Fed's Kohn Says Recovery Possible in '09"
Wall Street Journal (04/21/09) Hilsenrath, Jon



Rent Control Jeopardizes Mobile Home Park

The United States District Court for Northern California in April handed down a ruling in favor of Equity Lifestyle Properties, which purchased the Contempo Marin Mobile Home Park in San Rafael more than a decade earlier and has since been embroiled with the city over its rent control laws. The decision requires park owners to honor current rent control laws for another 10 years but removes the protection if a mobile home owner sells their property before then. A statement from the management at Contempo Marin read: "We are very happy with this ruling. In terms of broader implications, the decision addressed only the San Rafael ordinance, but raises serious issues about rent control in California." Indeed, ELS owns an estimated 300 mobile parks -- about a tenth of them in California.
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From "Rent Control Jeopardizes Mobile Home Park"
ABC7 News (CA) (04/21/09) Freedman, Wayne

Venice Eases Up on Its City Codes for Mobile Home Park

The Venice Bay Adult Park, a mobile home community in Florida, is eyeing expansion now that the city has exempted the park from some of its zoning laws. The development was built in the 1940s before Venice city planners drafted laws regulating how far mobile home communities must be situated from streets, public water sources, and nearby houses. "It's like putting on a suit that was too small," said Venice Bay Adult Park Inc. President Larry Rutter. "So we wanted to let the suit out." Park residents began petitioning city leaders in 2005 to change the laws to allow park tenants to build garages, decks, and other add-ons that are restricted under current laws. Venice Planner Roger Clark supported the exclusions for the park because even though most of its 75 units violate city building codes in some way, the infractions are "acceptable and not a cause for any life-safety issues."
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From "Venice Eases Up on Its City Codes for Mobile Home Park"
Sarasota Herald-Tribune (FL) (04/22/09) P. BM5; O'Connor, Terry

ELS Reports First Quarter Results; Stable Core Performance

Chicago-based Equity LifeStyle Properties Inc. announced a net income of $13.6 million for the first quarter of 2009, nearly $1 million more than its net income for the same time period of 2008. Stockholders will receive a dividend of $0.54 per share on a fully diluted basis, up from $0.52 a share for the term ended March 31, 2008. The company -- which owns or has ownership stakes in 308 manufactured housing properties in 28 U.S. states and in Canada -- increased its property operating revenues from $106.4 million in the first quarter of 2008 to $124.4 million in the first quarter of 2009, while decreasing operating expenses by 0.8 percent during the same time period.
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From "ELS Reports First Quarter Results; Stable Core Performance"
Sarasota Herald-Tribune (FL) (04/20/09)

Want a Second Home? Save Up

Home buyers in the market for vacation or investment properties could find it difficult to get financed. Government-backed mortgages with low down payments apply only to primary residences, and it is difficult to obtain home equity lines of credit or private mortgage insurance these days. Additionally, because of their perceived high level of risk, second-home hunters will have to pay 0.25 to 0.50 percentage points more in interest; and those looking to rent out the properties will need appraisals that take into consideration local rental rates, among other factors. However, the National Association of Realtors (NAR) says cash purchases were made by more than 30 percent of vacation-home buyers and 40 percent of investors in 2008, with a median income of $97,200 and $85,000, respectively. In comparison, buyers of primary residences had a median income of $73,300 last year. Despite drops in second-home sales and prices since the start of the economic downturn, NAR chief economist Lawrence Yun believes the 45 million people comprising the age 40-to-49 age segment will fuel second-home sales over the next 10 years.
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From "Want a Second Home? Save Up"
Washington Post (04/18/09) P. F1; ElBoghdady, Dina


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