Builders with any REOs in their communities better brace themselves for difficult appraisals: bank-owned properties went for an average of 35% less than non-foreclosure sales.
“One year ago, it was 65%,” Daren Blomquist, RealtyTrac’s director of marketing communications, told BUILDER Thursday, after the Irvine, Calif.-based data firm released its 2010 second-quarter statistics for foreclosure sales. According to the firm, more than 248,000 distressed properties (in default, scheduled for auction, or real-estate-owned) were sold in April, May, and June of this year.
While those figures represent nearly a 5% increase in total numbers compared to the previous quarter, RealtyTrac executives said that non-distressed sales grew even more during that period. They attributed that growth to the federal housing tax credit, which required a signed contract by April 30, 2010. Overall, foreclosure sales were 24% of all residential sales in 2010’s second quarter.
That level of volume continues to exert downward pressure on pricing. According to RealtyTrac data, foreclosure sales sold for an average of 26% less than their counterparts that were not in foreclosures. Builders with any REOs in their communities better brace themselves for difficult appraisals: bank-owned properties went for an average of 35% less than non-foreclosure sales. Short sales, which are being actively encouraged by the Obama administration, posted an average discount of 13% compared to non-distressed transactions.
Note: A foreclosure sale is a transaction on a home in any stage of the foreclosure process, while a pre-foreclosure sale is typically a short sale.
Transaction Type Average Price Discount
Foreclosure Sale 26%
REO Sale 35%
Pre-Foreclosure Sale 13%
But RealtyTrac’s Blomquist said that his company does not expect to see a much-dreaded (and much-discussed) double-dip in home values as a result of these pricing trends. “Foreclosures continue to have a dampening effect on home prices, but we don’t expect a double dip,” he said. “While REOs have been increasing, there is no evidence that there is going to be this tidal wave that will hit and crater home prices again. It’s more like a dripping faucet” that will keep home values from any significant appreciation.
Of course, in some states, that drippy faucet feels more like a constantly flooding basement. Nevada, which was mentioned earlier, has the highest percentage of foreclosure sales in the country, with 56% of all residential transactions involving a property in some state of foreclosure. Other foreclosure crisis zones are dealing with similar situations, with foreclosure sale rates of 47% for Arizona and 43% for California, which rank second and third after Nevada on that metric.
By:
Alison Rice
Builder 2010
Wednesday, October 6, 2010
Tuesday, September 21, 2010
King County to offer same-day building permits
While the type of permits that will qualify is fairly limited, it is definitely a step in the right direction and I applaud Executive Constantine for making it. Let’s see if we can get other permit review times down and bring more predictability to fees charged in reviewing them.
New “over-the-counter” permitting at DDES will enable walk-in, one-day service beginning Oct. 18
Front-line staff and supervisors redesign the process for simple permits to better serve customers and eliminate weeks-long wait time
The weeks-long wait for review of many environmental and building permits in King County will soon be a thing of the past. Beginning Monday, October 18, the county’s Department of Development and Environmental Services (DDES) will provide expedited, one-day or “over the counter” review processes for many permit types.
“It doesn’t make sense for someone who needs a quick oil change to have to wait in line behind someone who needs their engine rebuilt,” said King County Executive Dow Constantine. “This change brings that same logical approach to our permitting services, and will save our customers time, money, and aggravation.”
Under the guidance of the Executive’s reform agenda, a team of front-line employees and supervisors jointly designed the streamlined process by which customers who need a simple permit will be able to walk into DDES without an appointment, submit an application, and obtain their permit on the same day.
“It has been awkward to talk to people about our ‘over-the-counter’ permits when they have to wait weeks and weeks for an appointment just to get to the counter,” said DDES Director John Starbard. “This is part of the reforms we’re making at DDES to make our services easier, more accessible, and more predictably-priced.”
Permits that can be obtained “over-the-counter” beginning on Monday, October 18, will include small residential remodels, tenant improvements to commercial spaces, building additions, decks, seismic retrofits, and many others. Appointments will still be required for complex development proposals.
Customers who prefer to make an appointment in advance will still have that option.
DDES offered walk-in permit services in the past, but in the late 1990’s the department was compelled to move to an appointment system due to a surge in construction and other permitting activity. Starbard says the current lower volume of permit applications and a smaller customer base due to annexations and incorporations makes it possible to return to a walk-in system for many permit types.
Jarrod Lewis, DDES Assistant Supervisor for the Planning and Customer Services Section, said front-line employees leveraged their practical, daily experience in processing these kinds of permits to create a new, more streamlined, efficient and effective system.
“It has been very rewarding to see our staff come together and develop service improvements that enable us to work more efficiently while also truly benefitting our customers,” he said.
Starbard announced the redesigned permitting process at today’s meeting of the Metropolitan King County Council’s Committee of the Whole.
Labels:
building,
Constantine,
King County,
permits
Friday, September 3, 2010
Secret Squirrel missions of a land use consultant
Having others ask the questions you’re afraid to
Some time ago a client wanted to find a new space for their professional business. They found a home that another business had been using for their office and purchased it. Sometime later, my client questioned whether it was legal for them to operate their business from there. They were afraid to go to the City and ask, for fear they’d be found in violation of City codes but wanted to better understand their situation.
They hired Outdoor Perspectives to quietly investigate the matter for them. We talked with the City and others without disclosing the business or its location, then related our findings back to the client. We discovered the following:
• The property was zoned to allow for professional and legal office space without exception, so they could operate their business on the site but were subject to commercial building codes
• The previous business was using it as a home based business (i.e. using it as their primary residence and their home office). Home based businesses are regulated differently than commercial office space.
• The building did not currently meet commercial building codes. As such, they were non-compliant and subject to a code enforcement action if the City found out and took action against them.
• To bring the office space into commercial building codes compliance, the client would need to:
o Get approval for a Change of Occupancy type from the City
o Bring the building up to commercial standards (i.e. ADA compliant, parking standards etc). Additionally, the improvements done to the structure of the building would need a permit from the City).
In the end, the Client learned how the previous business had been legally operating from the site. Second, they understood what they needed to do to bring their building into compliance. Finally, they had a good idea of what might happen if they choose to continue to operate out of compliance of the City code.
The client was relieved to better understand their situation so they could plan accordingly.
www.outdoor-perspectives.com
Labels:
code compliance,
commercial,
home office,
land use,
legal,
office space,
violation
Monday, August 23, 2010
Ten-Point Program for Construction Job Recovery in Seattle
Seattle Daily Journal of Commerce
August 19th, 2010 by Jerry VanderWood
What else, in addition to infrastructure investments, can government do to stimulate the economy, particularly the struggling construction sector? Justifiably so, government entities at all levels are asking that question. AGC had the opportunity to share some ideas with the City of Seattle, and what follows is AGC’s suggested 10-point program for construction industry job recovery:
1. Ensure timely implementation of the Bored Tunnel, seawall replacement, Sound Transit 2 programs, the SR 520 and Mercer corridor projects. Plus, seek to accelerate construction of other critical infrastructure projects. City capital projects (from all departments) expected to go to bid the remainder of this year and next year should be re-estimated for potential cost savings. In the current bid environment where projects are coming in 10 to 20 percent under the engineers estimate, the City may be able to identify sufficient savings to advance additional projects.
2. Contract out some of the road maintenance and repair work typically performed in-house. With a reduced City work force and furloughs this may provide a way to maintain adequate levels of service.
3. If not already underway and subject to Federal Funding participation, embark upon energy efficiency upgrades for City-owned buildings.
4. Partner with AGC and other industry groups to work with the state legislature to develop financing mechanisms that support essential City infrastructure investments in both transportation and other public facilities.
5. Promote common sense incentives, tax credits and policy changes designed to stimulate new private- and public-sector demand.
6. Eliminate discriminatory project labor agreements (PLAs) that favor one segment of the labor force over another. We need to ensure that all workers have the opportunity to participate in the recovery.
7. Establish a single point-of-contact among departments within the City for expediting major projects (similar to what was done for the tunnel retrofit project). Improving coordination among Departments for processing permits will reduce permitting time and save on overall project costs. This could include a one-stop permit process for these projects similar to what King County and the State have established for some environmental permits.
8. Eliminate the practice of adding additional costs and fees to permits and other services to augment Department budgets in this down economy. This appears to be happening to private developers, contractors and other public agencies.
9. Timely removal or installation of utilities, particularly those for which Seattle City Light is responsible. This is a major issue for contractors.
10. As part of the City’s initiative to develop a better prepared workforce, partner with the AGC Education Foundation to establish construction math curriculums in various high schools, based on the pilot project completed in Bellingham.
Any other suggestions for the City of Seattle?
Jerry VanderWood is communications director for the Associated General Contractors of Washington, where he gets to learn about construction issues from the best in the business. He's originally from South Carolina, then Washington, D.C., and moved to the Seattle area in 1989. He resides with his wife and kids in the suburbs of Issaquah
www.outdoor-perspectives.com
Labels:
AGC,
construction,
infrastructure,
Seattle
Thursday, August 12, 2010
The new 520 bridge (video simulation)
The Washington State Department of Transportation (WSDOT) has posted a video simulation of what traveling across the new Evergreen Point floating bridge will look like.
Next month the WSDOT begins its search for a design-build team on a $700 million to $1 billion project replacing SR 520 bridge between Seattle and Medina.
The project is scheduled to finish by December 2014.
http://www.youtube.com/watch?v=nCV7COUSs0k
Next month the WSDOT begins its search for a design-build team on a $700 million to $1 billion project replacing SR 520 bridge between Seattle and Medina.
The project is scheduled to finish by December 2014.
http://www.youtube.com/watch?v=nCV7COUSs0k
Thursday, August 5, 2010
What Every Real Estate Professional Should Know About Land Surveys
A surveyor friend at Site Surveying & Mapping relayed a story about a last minute dilemma they faced that almost killed a closing for a Realtor on a million dollar deal. How did it happen? How could it have been avoided?
Do you ever wonder what type of survey you might need on your site? What are the differences in an ALTA/ACSM and the standards within WAC 332-130? Can I just use the existing survey provided by the Seller?
Having these questions asked over and over lead to the creation of a booklet which will hopefully serve as a good reference for people in understanding Land Surveys as they pertain to the Real Estate Professional.
Link to the full article:
http://www.slideshare.net/JeffMcCann/cfakepathrealtor-and-the-land-surveyor?from=share_email
Do you ever wonder what type of survey you might need on your site? What are the differences in an ALTA/ACSM and the standards within WAC 332-130? Can I just use the existing survey provided by the Seller?
Having these questions asked over and over lead to the creation of a booklet which will hopefully serve as a good reference for people in understanding Land Surveys as they pertain to the Real Estate Professional.
Link to the full article:
http://www.slideshare.net/JeffMcCann/cfakepathrealtor-and-the-land-surveyor?from=share_email
Labels:
ALTA,
mapping,
real estate,
subdividing land,
subdividing property,
subdivision,
survey
Tuesday, July 6, 2010
What’s happening in your neighborhood?
Which neighborhood are you developing in? The Government Affairs issue tracker developed by the Master Builders Association provides a brief status report on current local and regional issues.
http://www.mba-ks.com/library/issues/GA_Issue_Tracker.pdf
Labels:
builder,
entitlement,
government,
King County,
Washington
Friday, July 2, 2010
Quick Reference Sheet of Significant Changes in 2009 IRC
The 2009 International Residential Code (IRC) took effect last Thursday. The Master Builders Association has put together a good Quick Reference Sheet of Significant Changes to be aware of.
http://www.mbaks.com/library/issues/2009IRCSummaryMatrix_GH.pdf
Labels:
building,
code,
IRC,
land use,
master builders
Wednesday, June 23, 2010
Court orders $1.15M paid in property rights case
Dorothy English wanted to develop 20 acres she and her late husband bought in 1953, and divide it into eight home sites.
PORTLAND (AP) — The Oregon Supreme Court has ordered Multnomah County to pay the estate of property rights pioneer Dorothy English $1.15 million in a dispute over development restrictions.
The ruling last week ended a long legal battle over whether the county owed English compensation for initially denying permission to develop home sites on her property northwest of Portland.
English died in April 2008 at 95. She wanted to develop 20 acres she and her late husband bought in 1953, and divide it into eight home sites for her family.
She became the spokeswoman for Measure 37, which voters approved in 2004 to give property owners the right to develop their land.
When it passed, she filed the state's first Measure 37 claim. She was joined by 6,500
Oregonians who demanded either compensation for diminished property values or for the right to build, in many cases, extensive subdivisions.
Voters later scaled back development rights by passing Measure 49 in 2007. Most of the original claimants settled for a process that would allow them to build one to three homes.
English continued her battle in the courts.
In December 2006, she won a compensation judgment for $1.15 million. The county agreed to let her develop eight lots instead of paying her the compensation. But English rejected conditions the county attached.
In 2009, the Oregon Court of Appeals ruled in her favor and later scolded the county for engaging in what it called a “war of attrition” against English, who had died the year before.
Labels:
land entitlements,
land use,
property rights,
subdivision
Monday, June 14, 2010
New Legislation Extends Time Period for Final Plat Approval
Finally, a little good news for builders and developers who are trying to plat properties. The legislature has granted a temporary extension to save preliminary plats that could expire during this economic downturn.
The Municipal Research and Service Center of Washington (MRSC) has issued an opinion on the Washington State Legislature’s recent adoption of Substitute Senate Bill 6544. The legislation, signed by the Governor, extends preliminary plats for two years, from five to seven years until 2014.
_____________________________________________________________________________________
Opinion:
In SSB 6544 (Ch. 79, Laws of 2010), the 2010 legislature extended the statutory time period for submitting final plats for city or county approval from five years after preliminary plat approval to seven years after that approval. It also extended the vesting period for approved final plats from five to seven years. This legislation, which is effective June 10, sunsets on December 31, 2014.
It appears that the purpose of this temporary extension is to save preliminary plats that are in jeopardy of lapsing because of the economic downturn. This purpose should help explain which preliminary plats this legislation applies to. The original bill included an intent section that, although deleted in the substitute bill that was adopted, sheds light on legislative intent:
(1) The legislature finds that active land use permits are expiring due to a downturn on the state economy. Considerable cost has been expended by applicants and local jurisdictions to approve projects. Allowing these projects to expire would make it difficult for the state to meet its housing needs in the future and impose considerable staff costs on local governments to perform work that has already been completed.
(2) The legislature further finds that, in the current period of economic challenge, an extension for plat approvals will contribute to the overall employment of the state by employing citizens of Washington as soon as is practicable in the family wage jobs of the land development and home building industries.
The public testimony in favor of the bill, as summarized in the various bill reports, also focused on the current economic climate and its effect on development activity.
To read the full opinion, please go to: http://www.mrsc.org/Subjects/planning/ssb6544.aspx
Labels:
builder,
King County,
land entitlements,
land use,
plat,
Washington
Thursday, June 10, 2010
Can you spare 70 hours for EPA?
Got an extra 70 hours to donate? Are you willing to disclose sensitive financial information? If so, you’re invited to take part in EPA’s upcoming survey?
The U.S. Environmental Protection Agency (EPA) is asking for your input as it considers five new regulations. One of these regulations would require existing developments to retrofit inadequate storm water management controls and another that would require developers to create long-term controls designed to better manage storm water discharges well past the construction phase.
The EPA plans to distribute the survey to 2,400 builders and developers in July. Some people have objections to questions, which require respondents to detail sensitive financial information. The surveys are burdensome as well, with the longer version expected to take about 70 hours to complete, according to the EPA’s own estimates.
The agency is accepting comments from the development community through June 9. The draft is available at the EPA storm water Web site.
To submit comments to the docket — Docket ID No. EPA-HQ-OW-2009-0817 — click here or go to http://www.regulations.gov/search/Regs/home.html#home
Are you going to take the survey?
Labels:
building,
EPA,
King County,
planning,
regulations,
Storm water
Thursday, May 6, 2010
All in a day's work
During the final days of their feasibility period to purchase a property, a client requested that I go the Seller’s office to review some documents.
It seems that the Seller had located some additional material that had not previously been disclosed. I was asked to run down and make a quick review of the materials and report back on my findings.
(Note the 21 banker’s boxes of new material)
Wednesday, April 28, 2010
Lot Shortage
Even as foreclosures continue to flood some of the worst-hit housing markets in the country, economists are beginning to sound the warning that today’s extremely low levels of new residential production could lead to significant housing shortages, especially among market-rate rental apartments, as household formation rates return to normal.
The housing downturn and economic recession have kept household formation rates at below-normal levels for roughly three years, said NAHB Chief Economist David Crowe. As the economy moves to higher ground, the housing market will begin to feel the pressure from new households, he said, and there will be a surge of demand from echo boomers, who comprise an even larger group than their baby-boomer parents.
NAHB economists project that the industry will need to deliver 16 million homes over the next 10 years to keep pace with demand. As the excess inventory is worked off, which is likely by the end of 2012, the long-run demand for new housing — based on population growth, immigration and the replacement of losses from the housing stock — will average approximately 1.5 million single-family and 300,000 multifamily units annually, or about 1.8 to 1.9 million total starts.
Coming off extremely low levels of construction, starts last month were running at a seasonally adjusted annual rate of 591,000, a level that is far below what will be needed.
When housing starts bottomed out in the first quarter of 2009, they were running at only 27% of average starts during the “normal” production period of 2000 to 2003, according to analysis by NAHB. This year, production is expected to rise to 45% of normal, with a further increase to 67% of normal next year.
The road back to normal levels of residential construction will be longer for some states than others. By the end of 2011, the top 20% of the states will see their production levels back to normal. Those states include Montana, Wyoming, North Dakota, New Mexico, Kansas, Oklahoma, Texas, Louisiana, Mississippi and Alabama.
So, how long will it take to bring new Lots on-line in the Puget Sound to meet our coming demand? The average nunber of years (from plat application to recording) in King County for single family lots has been 4.75 years!
Average processing time (in years): (Source, New Home Trends)
-----------------------------------------------------------------------------------
King County: 4.75 years
Other Cities in King County: 3.26
Pierce County: 5.44
Other Cities in Pierce County: 3.25
Snohomish County: 3.09
Other Cities in Snohomish: 3.09
Thurston County: 3.09
Other Cities in Thurston County: 2.85
Labels:
building,
entitlement,
planning,
plat,
real estate,
subdividing property
Monday, April 19, 2010
Permit & Plat Extension Ordinance
The Economic Stimulus Tracker is a matrix of all the permit and plat extension ordinances and other economic stimulus measures being pursued by the King & Snohomish County Master Builder's Association. The matrix is broke down by jurisdiction and is a good tool to follow how cities and counties are working with builders during this down economy. http://www.mba-ks.com/library/issues/esp_matrix.pdf
Labels:
builder,
building,
extension,
home building,
King County,
Permitting,
Washington
Sunday, March 28, 2010
Vacant Land Checklist (Short Form)
There are many things to consider before choosing a property to develop or build a home on. My "short form" checklist is helpful to quickly evaluate sites. There is a much longer one that explores a host of additional issues but this one works well for an initial evaluation.
Remember, there are no perfect properties. The idea to keep in mind as you fill out the list is, "Can I build what I want to on this site without great difficulty?"
Thursday, March 18, 2010
The Subdivision Process
While every City or County may have its own unique process of subdividing property, most follow a similar general format. I have tried to layout how a typical plot of property might make its way from raw land to finished residential lots.
From Wikipedia
Subdivision is the act of dividing land into pieces that are easier to sell or otherwise develop, usually via a plat. The former single piece as a whole is then known as a subdivision in the United States. If it is used for housing it is typically known as a housing subdivision or housing development, although some developers tend to call these areas communities.
Subdivisions may also be for the purpose of commercial or industrial development, and the results vary from retail malls with independently owned out parcels to industrial parks.
The Subdivision Process
Phase I: Feasibility & Preliminary Preparation
• Review and Research Existing Data & Maps. Recon by consultants as necessary (wetlands, soils etc)
• Initial review of Zoning, Access, Topography, Utilities, Market
• Meet with Jurisdictions
• Preliminary Proforma & Schedule
• Internal Feasibility Results. Proceed or Halt project
• Initial Planning, Hire Engineer
• Field Work (at least enough for submittal): Survey, Mapping, Prelim. Engr., Critical Area review
Action Item: Decide on project feasibility. Prepare Pre-App package, Schedule Pre-App mtg.
Phase II: Pre-Application Meeting
• Submit Pre-App package. Meet with Jurisdiction. Discuss initial findings, potential obstacles & options.
• Post meeting: review possible revisions, variances, or re-designs options
• Hire other professionals (geotech, wetland bio, traffic, landscape arch, etc)
• Applicant could skip the pre-application meeting and move straight to preliminary submittal depending upon jurisdiction and project type
Action Item: Submit Pre-App Package (Application #1). Prepare Preliminary Submittal Package
Phase III: Preliminary Submittal to and Prelim. Approval
• Plat Submittal package and review by agencies planning department
• Complete application equals a vested project*
• Additional information requests and redline comments
• Work with other jurisdictions (Water & Sewer District, PSE, DOE, etc)
• SEPA determination* (DNS, MDNS, DS EIS)
• Public Hearing
• Issue Preliminary Plat approval with (subject to) conditions
Action Item: Submit Package (Application #2). Respond/Address Jurisdiction comments
Phase IV: Engineering Review
• Engineer will technically design plans for all roads, utilities and other infrastructure to serve project
• Enter development Extension agreements with purveyors
• Approved Engineering plans issued for construction
Action Item: Submit Engineering drawings (Application #3) & redlines
Phase V: Site work construction
• Infrastructure construction
• As-built work & final inspection upon completion with each jurisdiction (Bond as necessary)
Action Item: Hire contractor. Site Inspection & Approval
Phase VI: Final Review & Recording
• Prepare Final Plat maps
• Lot Corner staking
• Redline corrections
• Bond & Final Recording
Action Item: Prepare Final Plat map, Bond & Record
Thanks to Cramer NW http://www.cramernw.com/ for their contribution to this list.
Wednesday, March 3, 2010
Citizens' Alliance for Property Rights Meeting
Thursday, March 4th: I'll be speaking at the Citizens Alliance for Property Rights montly meeting. I'll be leading the discussion on innovative land use topics in King County. Come join us at 7:00pm
King County CAPR is dedicated to the protection of private property and the rights of property owners.
The King County Chapter meets at 7:00 PM on the first Thursday of each month at the Issaquah IHOP Restaurant located at 1433 NW Sammamish Rd. Issaquah, WA.
King County CAPR is dedicated to the protection of private property and the rights of property owners.
The King County Chapter meets at 7:00 PM on the first Thursday of each month at the Issaquah IHOP Restaurant located at 1433 NW Sammamish Rd. Issaquah, WA.
Labels:
Constantine,
DDES,
King County,
land use,
MBA,
property rights
Tuesday, March 2, 2010
Starbard picked to direct DDES
March 2, 2010
Daily Journal of Commerce
SEATTLE — King County Executive Dow Constantine appointed former Newcastle City Manager John Starbard as director of the Department of Development and Environmental Services.
The appointment must be confirmed by the King County Council.
DDES issues building and land use permits for properties in unincorporated King County. Constantine said in a press release that he wants to reduce the processing time for permit applications.
While at Newcastle, Starbard worked on upgrading Coal Creek Parkway and making downtown into a walkable urban village. He helped manage incorporation of Maple Valley, and was its first city manager. Starbard worked as a planner and senior management analyst for Bellevue.
Starbard will manage a budget of nearly $22 million and a staff of about 150.
Daily Journal of Commerce
SEATTLE — King County Executive Dow Constantine appointed former Newcastle City Manager John Starbard as director of the Department of Development and Environmental Services.
The appointment must be confirmed by the King County Council.
DDES issues building and land use permits for properties in unincorporated King County. Constantine said in a press release that he wants to reduce the processing time for permit applications.
While at Newcastle, Starbard worked on upgrading Coal Creek Parkway and making downtown into a walkable urban village. He helped manage incorporation of Maple Valley, and was its first city manager. Starbard worked as a planner and senior management analyst for Bellevue.
Starbard will manage a budget of nearly $22 million and a staff of about 150.
Labels:
building,
DDES,
Director,
King County,
Washington
Tuesday, February 23, 2010
Builders Cash in on Tax Refunds
Extension of net operating loss carry-back provision to five years are returning millions of dollars to public builders, some of which are using the money to buy land at bargain prices.
Christmas came a little late, but with a huge satchel of gifts for many of America’s largest home builders: Nearly $2 billion in total tax refunds for the last three months of 2009.
On Tuesday, Pulte, the housing industry’s largest builder, reported that its earnings loss for the three months ended Dec. 31, 2009 had narrowed to $116.9 million. That improvement in no small measure resulted from a whopping $800 million tax refund that Pulte gained from a law change that now allows companies carry back net operating losses up to five years.
The net operating loss (NOL) carryback provision was one of the key lobbying points—the other being the extension of the federal tax credit for home buyers—that NAHB and its largest members pushed Congress hardest for to resuscitate the housing sector. Pulte’s tax benefit, which helped offset $925 million in quarterly land impairments and other writedowns, is the largest among the almost $2 billion in total NOL refunds that 10 of the industry’s publicly traded builders reaped in their latest quarters. (See chart below.)
Two other public companies, Hovnanian Enterprises and Toll Brothers, ended their latest fiscal years before the law went into effect, and therefore reported losses for of $250.8 million and $78.8 million, respectively, in their fourth quarters. Both builders, however, intend to take full advantage of the law change. Larry Sorsby, Hovnanian’s CFO, told investors that his company is “now expecting a $275 million to $295 million tax refund in our second quarter of 2010.” Toll believes it will recover $161.8 million in 2010 from filing its 2009 tax return.
Indeed, the tax refunds that large public builders have received so far could be just the tip of the iceberg. D.R. Horton, for one, has submitted a claim for a $352 million refund for the current quarter.
During their first quarters of 2010, Ryland Group is counting on refunds of $99.4 million, Meritage Homes $93 million, KB Home $190.7 million, and Standard Pacific $103 million.
Lennar is also banking on a $320 million tax refund in early 2010. “Our improved balance sheet enables us to continue to capitalize on distressed land-buying opportunities, which will improve our operating results in 2010 and beyond,” said its CEO Stuart Miller.
M.D.C. Holdings expects to do the same. As it was closing the books on 2009, the Denver-based builder raised new capital by issuing $250 million in new debt. M.D.C. also expects to receive a $143 million tax refund during the first quarter of 2010. “Given these enhancements to our liquidity, we are well-positioned to continue making investments in 2010 as we build our land pipeline to support future home closings,” wrote M.D.C.’s chairman and CEO Larry Mizel.
John Caulfield is senior editor for BUILDER magazine.
Company Quarterly net income for three months ending 12/30/09 Tax refund
_______________________________________________
Pulte $(116.9) million $800 million
Lennar $35.6 million $251.1 million
KB Home $100.7 million $191.7 million
M.D.C. Holdings $127.2 million $142.6 million
D.R. Horton $192 million $113 million
Beazer $50 million $101 million
Ryland Group $39 million $97.6 million
Standard Pacific $82.7 million $94.1 million
Meritage Homes $43 million $90 million
M/I Homes $7 million $31 million
TOTAL $560.3 million $1.9 billion
Christmas came a little late, but with a huge satchel of gifts for many of America’s largest home builders: Nearly $2 billion in total tax refunds for the last three months of 2009.
On Tuesday, Pulte, the housing industry’s largest builder, reported that its earnings loss for the three months ended Dec. 31, 2009 had narrowed to $116.9 million. That improvement in no small measure resulted from a whopping $800 million tax refund that Pulte gained from a law change that now allows companies carry back net operating losses up to five years.
The net operating loss (NOL) carryback provision was one of the key lobbying points—the other being the extension of the federal tax credit for home buyers—that NAHB and its largest members pushed Congress hardest for to resuscitate the housing sector. Pulte’s tax benefit, which helped offset $925 million in quarterly land impairments and other writedowns, is the largest among the almost $2 billion in total NOL refunds that 10 of the industry’s publicly traded builders reaped in their latest quarters. (See chart below.)
Two other public companies, Hovnanian Enterprises and Toll Brothers, ended their latest fiscal years before the law went into effect, and therefore reported losses for of $250.8 million and $78.8 million, respectively, in their fourth quarters. Both builders, however, intend to take full advantage of the law change. Larry Sorsby, Hovnanian’s CFO, told investors that his company is “now expecting a $275 million to $295 million tax refund in our second quarter of 2010.” Toll believes it will recover $161.8 million in 2010 from filing its 2009 tax return.
Indeed, the tax refunds that large public builders have received so far could be just the tip of the iceberg. D.R. Horton, for one, has submitted a claim for a $352 million refund for the current quarter.
During their first quarters of 2010, Ryland Group is counting on refunds of $99.4 million, Meritage Homes $93 million, KB Home $190.7 million, and Standard Pacific $103 million.
Lennar is also banking on a $320 million tax refund in early 2010. “Our improved balance sheet enables us to continue to capitalize on distressed land-buying opportunities, which will improve our operating results in 2010 and beyond,” said its CEO Stuart Miller.
M.D.C. Holdings expects to do the same. As it was closing the books on 2009, the Denver-based builder raised new capital by issuing $250 million in new debt. M.D.C. also expects to receive a $143 million tax refund during the first quarter of 2010. “Given these enhancements to our liquidity, we are well-positioned to continue making investments in 2010 as we build our land pipeline to support future home closings,” wrote M.D.C.’s chairman and CEO Larry Mizel.
John Caulfield is senior editor for BUILDER magazine.
Company Quarterly net income for three months ending 12/30/09 Tax refund
_______________________________________________
Pulte $(116.9) million $800 million
Lennar $35.6 million $251.1 million
KB Home $100.7 million $191.7 million
M.D.C. Holdings $127.2 million $142.6 million
D.R. Horton $192 million $113 million
Beazer $50 million $101 million
Ryland Group $39 million $97.6 million
Standard Pacific $82.7 million $94.1 million
Meritage Homes $43 million $90 million
M/I Homes $7 million $31 million
TOTAL $560.3 million $1.9 billion
Saturday, February 20, 2010
Retaining Wall--Part II
I received an email update on the progress of trying to resolve the issue of the pool/retaining wall.
“The day I got down here had meeting with 15 people from 5 involved interest standing on the excavated lot below looking straight up 20 ft at my infinity edge pool with water trickling over edge into overflow basin as it should, we were arguing about who was responsible for this mess. The other side was telling me that they didn’t need to drain my pool everything would be fine.
My consultant stated it was unsafe needed to be drained immediately because if it went it go all at once and you wouldn’t want to be standing here [I promise I didn’t arrange this] at that exact moment we all heard screams and look up and saw a large wave of water rushing over the infinity edge. You never saw 15 people scatter in all direction quicker. 3 fell or jumped over edge of 10 ft deeper excavation beside us, rest including me raced in different direction. 2 that went over the edge were injured one broken leg.
Turns out the group staying in my house who bought a week in GU Coach vs. Cancer had ran out of house and did group cannon ball. Every one quickly agreed the pool should be drained.”
Friday, February 12, 2010
$1.4T in real estate loans coming due
A new report from the Congressional Oversight Panel says failed commercial real estate loans could mean the closure of smaller banks, empty buildings and another blow for the U.S. economy.
* Commercial property values have fallen more than 40% in the past 3 years.
* Unlike residential mortgages, commercial loans are refinanced every three to five years. Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will come due for refinancing, the report says. For nearly half of them, borrowers could struggle to get new financing because they'll owe more than the properties are worth.
By DANIEL WAGNER
AP Business Writer
WASHINGTON — Over the next several years, failed commercial real estate loans could litter American cities with empty stores and office complexes, cause hundreds of bank failures and weaken the economy, a watchdog report says.
Banks face up to $300 billion in losses on loans made for commercial property and development, according to a report released Thursday by the Congressional Oversight Panel. The panel monitors the government's efforts to stabilize the financial system.
The report says the defaults could lead to reduced lending and cause the eviction of families from rental properties. Bank failures also could contribute to job losses and hurt the economic recovery.
Smaller banks are more vulnerable to the losses than their larger Wall Street counterparts. That's because commercial real estate makes up a larger portion of their portfolio.
The Federal Deposit Insurance Corp., which manages bank failures and insures deposits, is under stress that will intensify over the next few years, panel chairwoman Elizabeth Warren said in a call with reporters.
Small- and mid-size banks have been failing at the fastest rate since the savings and loan crisis of the 1980s and 1990s. The failures are due mostly to bad loans they made for commercial projects.
Banks often lent too much for land and buildings whose prices were inflated by a real estate bubble. They also relied on rosy assumptions about the profitability of retail and office projects and did not consider the possibility of a severe recession.
Commercial property values have fallen more than 40 percent in the past three years, the report notes.
Some have been unable to pay the loans. Others have stopped paying because they now owe more than the properties are worth. Losses are mounting for banks, more of which will close. That could spell trouble for the economic recovery, said Warren, a Harvard law professor.
“If hundreds more community banks go under, the effect would be to ... dump sand in the gears of the economic recovery,” she said.
Unlike residential mortgages, commercial loans are refinanced every three to five years. Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will come due for refinancing, the report says. For nearly half of them, borrowers could struggle to get new financing because they'll owe more than the properties are worth.
The report attributes the looming crisis to failures of bank management and supervision. It says banks made loans based on property values inflated by the real estate bubble. They sometimes acted carelessly “in a rush for profit,” the report says. Banks and their regulators failed to consider the possibility of reduced consumer demand from a severe recession, the panel says.
The panel criticizes the Treasury Department and bank supervisors for not putting smaller banks through “stress tests” like those done last year on the nation's 19 largest banks. Warren notes that Treasury Secretary Timothy Geithner resisted calls to conduct public stress tests of smaller banks.
The Treasury Department referred to comments by Geithner that bank regulators routinely conduct such assestments confidentially.
Warren also noted that last year's tests gauged banks' strength only through 2010. The commercial real estate threat looms largest in 2011 and beyond.
The report says loan failures could weaken the financial system because banks that fear major losses will be less likely to lend. Economic recovery depends on the free flow of credit.
The report offers no specific recommendations. But it calls on the Treasury to enact a comprehensive plan to handle the expected crisis.
The bipartisan panel is one of three oversight bodies Congress mandated for the bailout at the height of the financial crisis in October 2008. It makes periodic assessments of how the government is managing the rescue program.
The bailouts also are subject to review by the Special Inspector General for the Troubled Asset Relief Program and the Government Accountability Office.
Labels:
banking,
commercial,
loans,
real estate,
Seattle
Thursday, February 11, 2010
Reinforced 2 x 4 shoring????
You leave for a week and the neighbor’s contractor removes your retaining wall and over excavates 20-feet down. You notice your pool deck is cracking and may soon become a fixture in their yard. But don’t worry; their contractor says it’s not a problem—for he has installed multiple 2 x 4’s as shoring.
Labels:
OSHA,
retaining wall,
structural wall
Lenders — and tenants — like 'apodments'
It's a rooming house. You get a single bed, table, chair and refrigerator. No closet and you share a kitchen facility. While older rooming houses dot the City of Seattle a new one hasn’t been built from the ground up for years. At $500-650/month, it’s fully leased out. Will there be more like it to come? Some say the developer used a loophole and the rooming house didn’t go through the environmental and design review like “congregate housing” normally would. Stay tuned.
Real Estate Buzz: Lenders — and tenants — like 'apodments'
Daily Journal of Commerce
By MARC STILES
Real Estate Editor
Those who doubt whether small and humble are good traits to bring to a development project haven't been paying attention to what's been occurring on Seattle's Capitol Hill, where Calhoun Properties and Kauri Investments opened Videre, a congregate-style apartment project, last summer.
The 46 units average 130 square feet. (That's not a typo.) Each comes with its own bathroom, bed, table, chair and fridge. Tenants share very basic kitchens — one for every eight units — and pay $495 to $650 per month, which also covers utilities, including broadband Internet. Videre leased up pretty much right away and today there's no vacancy. So it's no surprise that Kauri and Calhoun have been raising rents.
“Residents speak with their checkbooks,” says Dirk Mulhair, who operates Calhoun Properties with his father, Gary.
Now comes the real stamp of approval from someone with an even bigger checkbook: Sound Community Bank. It is providing permanent financing at a fixed rate of 7 percent for 10 years with 30-year amortization. These days, that's “pretty awesome,” says Kauri Chairman Jim Potter.
Despite the project's solid economics, lining up financing wasn't easy. Community banks are under pressure not to lend on commercial real estate in general. The Videre, with its tiny units — “apodments,” Dirk Mulhair calls them — and communal kitchens, is especially difficult. For Fannie Mae and Freddie Mac, which will still finance multi-family projects, the unique character of Videre put it out of their comfort zone, said mortgage broker Dan Piantanida, vice president of GP Realty Finance, the Bellevue company that lined up the deal.
“We've just never seen a product quite like this,” he said. “It took some education on our part.” Once he went over the economics with Sound Community Bank representatives and had them visit Videre, which is at 216 23rd Ave. E., the deal was done.
Piantanida said it's ironic that these days, when experts say that the region's apartment vacancy rate is headed toward historic highs, it's easier to secure standard financing for apartment projects than nontraditional multi-family developments, such as Videre and Calhoun Properties' other boarding house-like properties.
Calhoun owns a total of 140 units in the University District and Capitol Hill, including the ones at Videre it owns jointly with Kauri. All 140 units are leased, Dirk Mulhair said.
The idea of rooming houses — all that density along with what Dirk Mulhair says is their reputation as “crack-ridden, slum-lord-owned, rundown places” — is enough to scare off even the boldest of investors and the bravest of tenants. He says the key to operating a successful boarding house is a hands-on management style that emphasizes respect and dignity for tenants. “We are very customer-driven.”
Calhoun and Kauri refer to their tenants as “partners.” Dirk Mulhair says he knows every resident by name. The process of signing a lease is thorough. Properties have onsite managers and security systems, and the buildings are regularly maintained.
Residents range from baristas to white-collar professionals who live outside the city but want a place to stay when they're in town.
The formula works in good times and bad, according to Piantanida's research. Over the last five years, he says, the vacancy rate for these kinds of projects is less than 1 percent. Plus, Seattle “needs this kind of housing.”
“There's a very deep market for this kind of product,” says Potter. The key is finding in-city sites close to transit lines, grocery stores and other necessities.
Not surprisingly, he and the Mulhairs plan to build more “apodments.” Potter talks about doing three this year, and says he's talking with the Seattle Housing Authority about a project at Rainier Vista. He has another site lined up in Seattle but won't say any more about that until the deal closes this spring.
Labels:
apodments,
land use,
real estate,
real estate investing
Wednesday, February 10, 2010
Innovative Land Use Techniques, Part 1
Labels:
land use,
real estate,
real estate consulting,
subdivision
Tuesday, January 26, 2010
Q & A's on the Homebuyer tax credit
January 26, 2010
Sorting through the homebuyer tax credit
By CAROLE FELDMAN
Associated Press Writer
WASHINGTON — If you bought a home in 2009, you could be eligible for a tax credit. Figuring out which one can be confusing.
There's one credit for first-time homebuyers and another that primarily benefits homebuyers who owned a home before. But don't mix it up with the first-time homebuyer credit in 2008, which actually was a long-term loan.
There are maximum income levels and maximum sales prices. And vacation homes or rental property don't qualify.
“If you want to spend two hours reading the instructions and translating them and finding out whether you qualify, yes, it's relatively simple,” said Jeff Schnepper, an MSN Money tax expert and author of “How to Pay Zero Taxes.”
Some questions and answers about the homebuyers tax credit:
Q. What's the purpose of the credit?
A. Congress passed the tax credits in an effort to boost the struggling housing industry and fight recession. Indications are that it's had an impact. The National Association of Realtors reported that November sales of existing homes were up 44 percent from a year earlier. Although new home sales dropped in November, figures from the Commerce Department show that they're up 8 percent from the low in January 2009.
Q. How many people are claiming the credit?
A. “In all, 4.4 million households are expected to claim the tax credit before it expires,” Lawrence Yun, the Realtors' chief economist, said.
Q. How many versions are there?
A. There are actually three.
The first credit, for first-time homebuyers, was really a long-term, interest-free loan that has to be paid back over 15 years. The maximum credit was $7,500 for a principal residence purchased between April 9, 2008, and June 30, 2009.
The second iteration made the first-time homebuyers credit a true credit — it doesn't have to be paid back — and raised the amount to a maximum $8,000. It applied to homes purchased between Jan. 1, 2009, and Nov. 30, 2009.
The third change extended the eligibility dates to homes purchased through April 30, 2010. It also added a credit for long-time homeowners who purchased a new residence between Nov. 7, 2009, and April 30, 2010, but at a reduced value — up to $6,500.
Q. Do I automatically qualify if I purchased a house during those periods?
A. No. To qualify, the house has to be used as a primary residence. If purchased after Nov. 6, 2009, it cannot have cost more than $800,000. If you're a long-time homeowner, you had to have lived in the same house consecutively for five out of the last eight years, though you need not have lived in or owned that house at the time you buy your new home.
For homes purchased after Nov. 6, 2009, the credit also begins phasing out for individuals with modified adjusted gross incomes above $125,000, and for married couples filing jointly with incomes above $225,000.
Q. How does the Internal Revenue Service define a principal residence?
A. “Your main home is the one you live in most of the time,” the agency said. “It can be a house, houseboat, mobile home, cooperative apartment or condominium.”
Q. How do I claim the credit?
A. There's a form, 5405, to fill out. You'll also have to submit a copy of your settlement statement, usually Form HUD-1, with the names and signatures of all parties, the property address, the sales price and date of purchase.
To avoid refund delays, the IRS recommends that long-time homeowners who purchase a new home also provide documents to show they meet the requirement for consecutive years lived in their old house. These can include mortgage interest statements, or property tax or homeowner's insurance records.
Q. Do I have to wait until I file my 2010 taxes to claim the credit for a home purchased before the deadline in 2010?
A. No. “You can choose to claim the credit on your 2009 return for a home you bought in 2010 that qualifies for the credit,” the IRS said.
Q. I purchased my home in 2008 and filed for a credit on my tax returns. Do I still have to pay it back?
A. Yes. When Congress did away with the repayment requirement, it did not do so retroactively.
Q. What if I want to keep my original house and use it as a rental property?
A. If you qualify for the credit as a long-time homeowner, nothing in the law requires you to sell the original house. However, you must make the new one your primary residence.
Q. What if I decide to sell the house I got the credit for or convert it to a rental property?
A. You will have to pay back the credit if you don't keep the purchased house as your permanent residence for three years.
Labels:
building,
home buyer,
real estate,
tax credit
Monday, January 25, 2010
LAND ENTITLEMENTS
Real Estate Dictionary: Entitlement--The right to develop land with government approvals for Zoning density, utility installations, occupancy permits, use permits, and streets.
In essence, Land Entitlement is what happens with a project before a shovel of dirt is turned.
Entitlements are the backbone of any development. Entitlements dictate “what, where and how much” can be built on a particular property. The “what, where and how much”—have a lot to do with determining the value of a property. A property that has a large number of uses is typically more valuable than the same property with a very limited use.
Entitlements are a legal agreement with the governing jurisdiction to allow a certain development to occur on the site. Entitlements outline the density, function and setback requirements allowed for the property.
Typically, developments can only be financially viable if they can obtain a certain density or usage. Entitlements are the key to legally securing this right from the governing jurisdiction.
When reviewing a development application, a jurisdiction will consider potential impacts such as traffic and environmental risks as well as community acceptance of the proposed development. They will likely require studies from the owner as well as proposed conceptual designs of the project.
Applying for entitlements is a challenging process. Depending on the size of the project and intended use, entitlements can take from a few months to many years to obtain. This is in large part based on the complexity of the project and public acceptance of it.
Labels:
engineering,
entitlement,
land entitlements,
land use,
real estate
Monday, January 18, 2010
Community Banks Must Lend
I agree, the construction sector has been hit harder by this economic downturn than any other industry. Additionally, Pat Hillyer raises a sound point, "we" need to let our legislators know what is going on. We need banks to start lending to our local builders to bring jobs back.
The Miter Box
A Cross-Section of News and Opinion--Julianna Ross
With unemployment at historically high levels and billions of dollars flowing into the financial sector from Federal bailouts, taxpayers expect the needs and provisions to eventually intersect and provide relief to so-called ordinary Americans. Extensions of unemployment benefits and first time homebuyer tax credits are nice, but it’s hard to erase the vision of financial fat cats rolling in enormous pay bonuses just months after enjoying bailout dollars plucked from the pockets of the nearest newborn.
Irrefutably, no single industry has been hit as hard in this economic correction as construction. The construction sector is unique because it encompasses numerous and diverse fields factored into the GDP including real estate, utilities, wholesale, local government, forestry, manufacturing, transportation and warehousing, waste management, and science (a burgeoning profit center churning out all those new-fangled sustainable products). Yet mention homebuilder’s plights these days and it seems like every politician, regulator and lender is content to ignore one of our country’s most potent employment engines.
“Banks are so focused on the mess they’ve created for themselves,” says Nick Schmitt, a local private investment and banking consultant. “They are focused on their problem loans instead of the future. Once TARP is gone, banks will have to turn to entrepreneurial ways to generate new loans.” In a climate where many builders say it’s hard to even get a bank’s attention unless they stop paying on their loans, there is no reward for good behavior and understandable frustration. “I’m being forced into an early retirement,” says one Seattle builder, 42, who has as an exemplary lending track record. This is a builder fueling the other small businesses of local suppliers, employing staff and quickly selling through his stock of well-designed homes, even throughout 2008 – 2009.
Martha Rose, one of King county’s first spec builders of sustainable housing, launched an ambitious letter writing campaign on behalf of her business and the opportunity she sees as having a permanent impact on how people build. “The letter explains that spec construction loans must be made available to builders of homes that are super energy efficient. Green builders do not have access to other sources of funding and currently are lumped together with all spec builders,” she writes on her blog. The letter is to accompany an individual or business moving their money out of federally funded banks and into community banks, in return for the local banks agreeing to lend again, this time to responsible and environmentally minded builders.
Unfortunately, it is now the commercial credit crisis that has many of those community banks landing in the regulation handcuffs of their bigger brethren. Everyone agrees, the old days are gone and aren’t coming back. What option does an entire segment of industry have in a time like this?
One source cites Oregon Congressman Jeff Merkley’s bill titled Banking on our Communities (www.merkley.senate.gov). It strives to put TARP funds to work in partnership with private investors, recapitalizing community banks so they can lend again to small businesses and consumers. In fact, private investors could be the biggest winners coming out of the crisis, as builders begin imagining new partnerships and ways of securing funding. “We all know when a void is created, it gets filled,” says Scott Cameron of Windermere. “The banks need a plan, because they’ve created a void.”
The NAHB’s Put Housing First coalition was successful in lobbying for the $8,000 first time homebuyer credit and also its extension. Now it’s time to form a new coalition and let our elected officials know that we want community banks lending to community builders and bringing back jobs. “Our banks and our legislators don’t understand, and it’s our fault,” states Pat Hillyer of Umpqua Bank. “You’ve got to let them know what’s going on.”
Senator Patty Murray’s office recently reported holding dozens of meetings with small builders and is introducing legislation after the Thanksgiving break to focus credit and support on community banks lending to local builders. “Start a parade, and I’ll lead it,” Senator Warren G. Magnuson once said, and it is time to get this parade started and push our elected officials to lead. The needs and contributions of Main Street homebuilders cannot be ignored.
-- Julianna Ross, Publisher, The Builder’s Journal
The Miter Box is an ad-hoc column welcoming opinions about all topics concerning the residential building market, particularly as they pertain to King and Snohomish counties of Washington State.
The Miter Box
A Cross-Section of News and Opinion--Julianna Ross
With unemployment at historically high levels and billions of dollars flowing into the financial sector from Federal bailouts, taxpayers expect the needs and provisions to eventually intersect and provide relief to so-called ordinary Americans. Extensions of unemployment benefits and first time homebuyer tax credits are nice, but it’s hard to erase the vision of financial fat cats rolling in enormous pay bonuses just months after enjoying bailout dollars plucked from the pockets of the nearest newborn.
Irrefutably, no single industry has been hit as hard in this economic correction as construction. The construction sector is unique because it encompasses numerous and diverse fields factored into the GDP including real estate, utilities, wholesale, local government, forestry, manufacturing, transportation and warehousing, waste management, and science (a burgeoning profit center churning out all those new-fangled sustainable products). Yet mention homebuilder’s plights these days and it seems like every politician, regulator and lender is content to ignore one of our country’s most potent employment engines.
“Banks are so focused on the mess they’ve created for themselves,” says Nick Schmitt, a local private investment and banking consultant. “They are focused on their problem loans instead of the future. Once TARP is gone, banks will have to turn to entrepreneurial ways to generate new loans.” In a climate where many builders say it’s hard to even get a bank’s attention unless they stop paying on their loans, there is no reward for good behavior and understandable frustration. “I’m being forced into an early retirement,” says one Seattle builder, 42, who has as an exemplary lending track record. This is a builder fueling the other small businesses of local suppliers, employing staff and quickly selling through his stock of well-designed homes, even throughout 2008 – 2009.
Martha Rose, one of King county’s first spec builders of sustainable housing, launched an ambitious letter writing campaign on behalf of her business and the opportunity she sees as having a permanent impact on how people build. “The letter explains that spec construction loans must be made available to builders of homes that are super energy efficient. Green builders do not have access to other sources of funding and currently are lumped together with all spec builders,” she writes on her blog. The letter is to accompany an individual or business moving their money out of federally funded banks and into community banks, in return for the local banks agreeing to lend again, this time to responsible and environmentally minded builders.
Unfortunately, it is now the commercial credit crisis that has many of those community banks landing in the regulation handcuffs of their bigger brethren. Everyone agrees, the old days are gone and aren’t coming back. What option does an entire segment of industry have in a time like this?
One source cites Oregon Congressman Jeff Merkley’s bill titled Banking on our Communities (www.merkley.senate.gov). It strives to put TARP funds to work in partnership with private investors, recapitalizing community banks so they can lend again to small businesses and consumers. In fact, private investors could be the biggest winners coming out of the crisis, as builders begin imagining new partnerships and ways of securing funding. “We all know when a void is created, it gets filled,” says Scott Cameron of Windermere. “The banks need a plan, because they’ve created a void.”
The NAHB’s Put Housing First coalition was successful in lobbying for the $8,000 first time homebuyer credit and also its extension. Now it’s time to form a new coalition and let our elected officials know that we want community banks lending to community builders and bringing back jobs. “Our banks and our legislators don’t understand, and it’s our fault,” states Pat Hillyer of Umpqua Bank. “You’ve got to let them know what’s going on.”
Senator Patty Murray’s office recently reported holding dozens of meetings with small builders and is introducing legislation after the Thanksgiving break to focus credit and support on community banks lending to local builders. “Start a parade, and I’ll lead it,” Senator Warren G. Magnuson once said, and it is time to get this parade started and push our elected officials to lead. The needs and contributions of Main Street homebuilders cannot be ignored.
-- Julianna Ross, Publisher, The Builder’s Journal
The Miter Box is an ad-hoc column welcoming opinions about all topics concerning the residential building market, particularly as they pertain to King and Snohomish counties of Washington State.
Labels:
banking,
home building,
land use,
lending,
real estate
Wednesday, January 6, 2010
Rural zoned condominium lot
A family owned some property in the rural area of King County. The property included the main home as well as a secondary home that was built many years ago. They wished to have the ability to sell one of the homes and keep the other.
The normal way would be to subdivide the property via a short plat. Short platting the property probably would have cost them about $110,000 for applications, engineering, site construction, bonding etc. and taken about 3 years to complete. Unfortunately, they didn’t even have enough area (a large enough lot) to subdivide, so that wasn’t an option.
In talking with their engineer, they learned of a creative solution for their problem. Cramer Northwest Inc. advised them to do a Condo Survey. The Condo survey accomplished their objective utilizing a different code. In the end, they got their two lots (just like in a short plat) but at a fraction of the time and expense of one.
The normal way would be to subdivide the property via a short plat. Short platting the property probably would have cost them about $110,000 for applications, engineering, site construction, bonding etc. and taken about 3 years to complete. Unfortunately, they didn’t even have enough area (a large enough lot) to subdivide, so that wasn’t an option.
In talking with their engineer, they learned of a creative solution for their problem. Cramer Northwest Inc. advised them to do a Condo Survey. The Condo survey accomplished their objective utilizing a different code. In the end, they got their two lots (just like in a short plat) but at a fraction of the time and expense of one.
Method..............~Cost............Time
Short Plat.................$110,000...........3 years
Condo Survey..........$9,500...............7 months
Condo Survey..........$9,500...............7 months
===============================
Savings................91%..............80%
Savings................91%..............80%
Disclaimer: The codes in your jurisdiction may not be the same. The key to this example is that the clients had two existing homes on the same lot. Please consult a professional such as Cramer Northwest http://www.cramernw.com/ to discuss your particular case.
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