REAL ESTATE & MARKET NEWS UPDATES
In a Yearlong Housing Downslide, Charlotte Keeps Getting Better
The Fed's rates dilemma
~ Courtesy of REAL Trends ~
Federal Reserve Chairman Ben Bernanke has no plans to raise interest rates and is more concerned about growth than inflation, a Washington Post opinion editor reported on Monday, June 16th. According to the Post, speculation that the Federal Reserve is about to begin inflation-fighting interest rate increases appears to be incorrect. The Post stated the Federal Chairman is worried more about runaway oil prices contracting the global economy than inflating it through a wage-cost spiral. According to close sources, America's leading central banker has no plans for an interest rate increase. Citing "sources close to" Bernanke, columnist Robert Novak said Bernanke sees high energy prices as a threat to growth, not a driver of inflation. The depressing impact on the oil-driven American economy is especially menacing in his view. "Privately, Bernanke is said to be much more concerned about low growth," Novak wrote.
Clock ticking again on seller-funded down payments
HUD taking comments on FHA rule change until Aug. 15
~By Inman News, Tuesday, June 17, 2008~
Federal regulators on Monday renewed their efforts to ban seller-funded down-payment assistance on FHA-guaranteed loans, publishing a proposed rule and reopening the public comment period on the plan until Aug. 15. The Department of Housing and Urban Development says allowing sellers or others with a financial stake in the sale of a home to fund down payments inflates home prices and triples the chance that a home will end up in foreclosure. A federal district court judge in March blocked HUD from implementing a final rule banning the practice that was published in the Oct. 1 Federal Register, saying HUD had not fully explained why it was reversing course from past policies. Nehemiah Corp. of America and two other nonprofits that operate seller-funded down-payment-assistance programs sued HUD to block implementation of the rule (see story). In Monday's Federal Register, HUD restated its previously proposed rule, but provided additional details on the rationale behind it. Although HUD had previously argued that it could continue to allow seller-funded down-payment programs by introducing risk-based pricing, Congress has not acted to allow HUD to charge riskier borrowers higher rates. The FHA Mutual Mortgage Insurance Fund now faces losses that would require taxpayer subsidies of $1.4 billion in fiscal year 2009, HUD said. Loans involving seller-funded down-payment assistance made up more than 35 percent of all home purchase loans insured by FHA in fiscal year 2007, compared to less than 2 percent seven years earlier. Lifetime claim rates for the loans are above 28 percent, compared with 12 percent for all other high-loan-to-value FHA backed loans. It costs HUD six cents for every $1 of such loans it insures. "It is not possible under current law to charge insurance premiums in an amount sufficient to cover this increased insurance claim risk, even if the maximum allowable insurance premiums were charged to all FHA-insured home buyers," HUD said in Monday's Federal Register. Once the public comment period is closed, HUD will decide whether to publish a final rule. The final rule would go into effect 180 days it is published, barring another legal challenge by groups that facilitate seller-funded down-payment assistance.
UBS: Atlanta, Charlotte, and Texas Will Be First to Recover
~By Sarah Yaussi - From: BIG BUILDER 2008~
It may be too soon to call a bottom in the housing market, but that’s not stopping UBS from pinpointing which geographical markets will be the first to rebound--and which single-family and multifamily builders will be most able to take advantage of the turnaround in those markets. In a new Q-Series report released this morning, UBS analysts David Goldberg and Alexander Goldfarb selected Atlanta, Austin, Charlotte, Dallas/Ft. Worth, and Houston as their top picks for markets that will lead in a housing recovery. The outlook for those five markets was optimistic because they exhibited stronger positive trends in demographics, economic growth, affordability, and inventory than the other eight markets examined. Based on these same metrics, Orlando, Las Vegas, Phoenix, Riverside, and Tampa fared the worst. For-sale inventories and declining home sale prices have increased competition among single-family builders, a fact that also poses hurdles for apartment fundamentals. San Diego, Los Angeles/Orange County, and Washington, D.C., were identified as “coincident” markets, meaning they were somewhere in between market leaders and market laggards. Using the results of this analysis, Goldberg and Goldfarb also calculated home builders’ and apartment REITs’ exposure to each market and were able to forecast which companies would be the best positioned for a housing rebound. Out of the nine public home builders in Goldberg’s coverage universe, The Ryland Group was the big winner. With the release of the report, Goldberg upgraded Ryland stocks to a buy status. Ryland’s geographic diversification--it has no more than 10% of its business concentrated in any one geographic market--merchant builder model, and strong balance sheet puts it in a position to take advantage of a market return quickly. Moreover, the company has a higher concentration in markets with more favorable outlooks and less of a presence in more troubled markets such as Las Vegas, Phoenix, and Tampa. In a related conference call, Goldberg pointed out that, based on community counts, Ryland has roughly 33% of its communities spread across top pick markets Atlanta, Dallas, and Houston versus an average of 24% for the group. On the multifamily side, Essex Property Trust was Goldfarb’s buy-rated stock. He pointed to the company’s exposure in coastal California and Seattle--markets less affected by the housing downturn--as major pluses. During the call, Goldfarb also pointed out that the market report was slightly more reflective of single-family building than multifamily activity. “A good apartment market is where single-family remains in check,” he explained. Thus, as the single-family market has struggled, the apartment industry has felt some fallout. He also stressed this point in the report: “There has not been an influx of new renters as the housing market collapses--indeed we are seeing competition from rental homes in some markets. For example, 14% of Camden Property Trust’s move-outs in Las Vegas are to rental homes.”
DEVELOPMENT
Fat City facade will live again in NoDa
Neighbors invited to help decide on graffiti for wall of new lofts
~Doug Smith: 704-358-5174; dougsmith@charlotteobserver.com
Courtesy of EYE Wk of 6.4.08~
Fat City Lofts under construction on North Davidson Street.
A NoDa landmark disappeared a year ago when high winds blew down the
graffiti-splashed facade of Fat City Deli. Now, the developers, who had
planned to integrate it into the new Fat City Lofts on the site, are working
to bring back the funkiness and perhaps create another icon for the North
Charlotte neighborhood. "We went to great lengths to find and match the
brick that tumbled," said Eric Vargosko of BlueSky Partners. "We are going
out of our way to make the facade look like it did." But the re-creation
isn't stopping there. BlueSky, which is providing development and marketing
services for Fat City Lofts owners Crosland LLC and Merrifield Partners,
also is inviting neighbors to help decide how to cover another wall of the
new building with graffiti. "The people in the community are the ones
looking at it," said Doggett Advertising's Heather Coggins, who is assisting
the developers on the graffiti project. "We want them to tell us what they
want to see on the outside." Five artists, including some who painted the
original designs on the building, will display their creative concepts
Friday night at a NoDa event where people can vote on their preferences. No
matter which design is selected, Coggins said, the artists will work
together to paint the side of the 70-foot-tall building that faces the
uptown skyline. Within a couple of weeks, she said, passersby can expect to
see "guys on a scaffold doing graffiti on the wall" at North Davidson and
East 35th streets. Fat City Deli opened in the early 1990s and closed about
five years ago, leaving the original building on the site vacant. Deli
founder K.C. Terry, a partner in the new venture, said he chose the location
back then for one key reason: "It was the cheapest building in town." He
commissioned the initial artwork, but he didn't mind graffiti artists
embellishing it. Fat City Deli became a neighborhood gathering place for
NoDa's body-pierced musicians and artists, but over the years the clientele
grew to include business people in dress shirts and suits. Fat City Lofts,
which includes 26 condos and 8,000 square feet of street-level retail, is
the latest example of the neighborhood's transition from restored mill
houses to commercial and multi-family development. Vargosko said 15 units
are under contract for purchase and about half of the restaurant and shop
space is taken. The majority of the remaining lofts, on the upper three
levels of the building, are priced from about $315,000, he said. "We are now
able to walk through and show people the 20-foot ceilings, floating
mezzanines and character of the building," Vargosko said. Some of the brick
salvaged from the old building is being incorporated into the lobby,
corridors and lofts interiors, he said. SkyGroup Properties, a BlueSky
affiliate, is handling sales and marketing of the units, which range from
700 to 2,000 square feet. Information:
www.fatcitylofts.com. Vargosko
expects to complete the $8 million project by August.
Finally, a shift from center After years of investment uptown, city takes new direction
~Charlotte Business Journal - by Susan Stabley Staff writer~
Charlotte is preparing to shift its economic-development focus to long-neglected neighborhoods after years of targeting uptown in promoting job growth and investment. The city's proposed $1.8 billion budget for next year allocates nearly $60 million for economic development and planning support in five distressed business zones. City funds and infrastructure projects are designated for redevelopment of Eastland Mall on Central Avenue and to revitalize four thoroughfares: Beatties Ford Road, Rozzelles Ferry Road, North Tryon Street and the Morehead Street-Freedom Drive-Wilkinson Boulevard corridor. "We're now extending our efforts and energies to business corridors and parts of the city that are tougher to redevelop," says City Council member John Lassiter, who chairs the city's economic-development committee. The proposed budget makes demolition of the still-operating Eastland Mall a key priority -- with $16 million committed over the course of two years for sidewalks, storm drains and similar infrastructure at the site -- even though the city does not control the property. While the city has an option on one of the empty anchor stores at the aging shopping center, possession of the 90-acre tract remains split among five owners.
Study: Queen City ranks No. 7 for young people
~Courtesy of Charlotte Business Journal~
Charlotte is one of the hottest markets in the country for young people, according to a new study. The Queen City ranks as the seventh-most-desirable market for young adults 18 to 34 years old among the country's largest metro areas. It placed below Raleigh, which took the top spot, but beat out other Southeastern cities such as Orlando, Fla.; Nashville, Tenn.; and Atlanta. "Charlotte is a city that welcomes people from the outside," says Michael Juby, the 2008 board chair of Engage Charlotte, a Charlotte Chamber networking group for young professionals. "And it's a great place to come and live a balanced life." Bizjournals.com, an affiliate of the Charlotte Business Journal, analyzed 67 major metropolitan areas, searching for qualities that would appeal to workers in their 20s and early 30s. The formula gave the highest marks to places with strong growth rates, moderate costs of living and substantial pools of young college-educated adults with jobs. "Youthful spirit and economic vitality go hand in hand," the study says. "Communities with large concentrations of young adults are more likely to prosper." Charlotte's ranking jumped to No. 7 from No. 19 last year. Raleigh was the only market in the study to finish in the top 10 in three key categories: population growth, job growth and the percentage of young adults with college degrees. Rounding out the top five were Austin, Texas; Washington; Las Vegas; and Phoenix. Eight of the 20 best markets for young adults are in the South. Charlotte ranked No. 7 mainly because its job base expanded nearly 4% during the last year. The city's metro population has also steadily grown 3% or more every year since 2000 to 1.65 million last year. Nearly 24% of its population is between 18 and 34 years old. About 5% of those under 25 years old have a household income of $75,000 or more. Engage Charlotte's Juby, an attorney at Parker Poe Adams & Bernstein, says Charlotte also has vibrant and growing downtown, which is attractive to young professionals. The city needs to continue to improve its attractions to ensure the young people stay here, he says. "They're a highly mobile group," Juby says. "Our job is to take the young professionals and get them involved. The hope is they'll stay here and put down roots." That will help Charlotte better prepare for the future. Engage Charlotte's mission is to work with city leaders, the business community and organizations to attract and retain young professionals in our community. "We're trying to develop the intellectual infrastructure for the city," Juby says. "Young professionals are the most technologically savvy, the most innovative and the hardest working, in terms of the hours they can put in." Bizjournals studied the top 67 U.S. metro areas that had at least 750,000 residents as of mid-2007. It looked at factors including:
- The annual rate of population growth from 2000 to 2007;
- Per capita income;
- The share of residents who are between 18 and 34 years old; and
- The share of households under the age of 25 who have household income of $75,000 or more. The least-desirable place for young adults is New Orleans, according to the survey. The Crescent City is still recovering from Hurricane Katrina. According to the study, it has the worst long-term rates of job and population growth. The other least-desirable cities in the country are Detroit (No. 66); Cleveland (No. 65); Dayton, Ohio (No. 64); and Grand Rapids, Mich. (No. 63).
QUICK INFO STUDY HIGHLIGHTS
- Population growth: Charlotte has grown steadily since 2000 to 1.65 million. About 24% of its population is between 18 and 34 years old.
- New Orleans was ranked as the least- desirable place for young adults.
Distinctive Craftsman Living In The NoDa Arts District
