Mallard Park Purchases Additional Tract
Source: Tom Cook, Baton Rouge Business Report
American Homeland, represented by Kevin Nguyen, purchased an additional 30-acre tract from Audubon Plantation for the new Mallard Park subdivision off Hoo Shoo Too Road. The sale closed last week for $1,538,640 or about $51,288 per acre. This is the second tract that has been assembled for the development, which is sandwiched between Montrachet and Mallard Lakes subdivisions. Mallard Park's first filing will be developed with about 65 lots that measure about 150 feet front and will be highly restricted. The layout has 30% greenspace and open areas that are improved with walking trails. Many of the proposed median areas are heavily landscaped and have fountains, and the entire community will be gated. The subdivision will complement the adjoining Montrachet and Mallard Lakes and should be a welcome addition to the area.
Homeowners in Deep Denial
SEATTLE, WA - Despite repeated highly publicized reports of a home sales slump and pricing slides, there's a surprising amount of positive consumer sentiment - and perhaps a good measure of homeowner denial as well: Even in a negative home pricing environment, 77 percent of homeowners from around the country believe the value of their home has increased or remained the same in 2007, according to a recent Zillow.com survey conducted by Harris Interactive®. What's more, sizable fractions of all homeowners -- not just those who believe their homes appreciated in 2007 -- say they are planning to do things in 2008 -- even before the Fed's latest interest rate cuts -- that you might not expect during the housing, construction and credit slumps:
How Bad it is in the Reality-Based World
The Zillow® Q3 Home Value Report says U.S. home values dropped 5.7 percent nationwide year over year (2007 to 2006). Zillow released its Q4 report Feb. 12 and results indicate home values in most U.S. markets have continued their descent. In a recent report, Merrill Lynch predicted "housing prices will remain in free fall," declining 15 percent in 2008 and 10 percent in 2009, "with more depreciation likely beyond the forecast period," even if the Federal Reserve continues to cut interest rates.
How Homeowners Perceive the Situation
About a third of homeowners (36%) in the Zillow.com Home Value Survey said their homes had actually increased in value during 2007. Zillow's Zindex® data proves the contrary, showing median value declines across regions as of October 2007.
What's Driving Homeowner Perception?
"This survey reveals that despite the data to the contrary, people either aren't paying attention to their housing market or are in denial about their own home's value," said Dr. Stan Humphries, Zillow.com vice president of data & analytics. "This likely reflects the fact that most Americans have not realized home-related losses because they're staying in their homes. Even in declining markets where a greater percentage of new homeowners are underwater on their mortgage, it's important to remember most people are not really affected by declining values unless they absolutely must sell or need to immediately refinance or withdraw equity. This has contributed to the healthy investment intent, particularly in home upgrades, despite the downward trending markets."
Headlines in the national press would lead most observers to believe that residential foreclosure levels are at historic highs from coast to coast. The truth of the matter is that while foreclosure levels are high, the lion's share are limited to certain geographic areas that do not include Louisiana.
According to a recent report by the Mortgage Bankers Association, new foreclosure rates in the third quarter of 2007 were the highest in Nevada, Michigan, Ohio, Indiana and Florida. The mortgage type with the highest default rate, adjustable rate subprime loans, is the worst in California and Florida, which together account for 33.8% of all foreclosure starts in the category. Previous data implies that if you take out the top five or six states in terms of foreclosures, the remaining states are fairly stable.
There is no doubt that there were subprime loans made in Louisiana that have gone or will go bad. It appears, however, that the levels are consistent with previous years and certainly not the epidemic level being experienced elsewhere.
The unfortunate consequence of the mistaken impression that foreclosure rates have spiked in Louisiana is that local homebuyers are delaying purchases, thinking that prices will drop as lenders take back properties. I just do not see this price drop occurring in the Interstate 10/12 corridor and I feel that homebuyers are unnecessarily delaying purchases.
With interest rates continuing to be at historically low levels and home prices returning to pre-Katrina levels, creditworthy homebuyers really have no reason to wait out the South Louisiana market. If, however, you are looking for a steal of a deal, considering picking up a foreclosure in Flint, Mich. You might want to wait until the temperature gets above freezing.
(Brian Andrews is a certified mortgage banker specializing in the financing of commercial real estate. His business is Andrews Commercial Mortgage and he can be reached at brian.andrews@acmla.com.)
Source: Baton Rouge Business Report Weekly
Home Appraisals In Greater Baton Rouge Market
Major national retailers are cutting back on store openings and planning to close locations because of the sluggish national economy, but Real Estate Weekly readers don’t think the slowdown will affect Baton Rouge. Forty-eight percent of the people who responded to an online survey say commercial construction in the Capital Region will not be affected, while 43% think it will. Nine percent say they don't know what will happen. More than 100 people participated in the survey.
Today's question: Have you noticed a rise in construction costs as a result of the traffic impact fees in East Baton Rouge Parish? To Vote, Click Here
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Since the new traffic impact fee schedule was implemented by Mayor Kip Holden in late summer, the city-parish has collected $95,678 in permit charges from small residential and commercial projects. Many projects didn’t pay anything under the old fee system, which allowed commercial projects that are less than 30,000 square feet to be built without paying a fee -- even though many of these projects boosted the traffic on city-parish roads.
But Passman Homes owner Jerry Passman says the new fee schedule is unfair to businesses and homebuyers. "These are all taxes that get passed on to the end user. It's unfair to buyers that need property." Passman says there is a need to raise more money to fix parish roads, but said a wheel tax would be a better solution, since the money could be used for fixing old roads and older problems, as opposed to the impact fee, which must only go to new projects.
Passman says the fees that homebuilders pay are being passed directly onto buyers -- and at a slightly higher cost. While the traffic impact fee for a single family home might be $800, it ends up getting marked up by the standard 12% to 15% profit margin for builders and 5% commission for Realtors. "So you're talking $950, and that’s before you put that into a mortgage and pay interest on it for 22 or 23 years," he says. "That's one of the points that the homebuilders have tried to make." --Timothy Boone
Source: Baton Rouge Business Report Weekly Real Estate Report
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Mortgage Rates Drop to Five-Month Lows
Mortgage rates have fallen to lows not seen in five months, according to the latest weekly report from Freddie Mac. The average interest for 30-year fixed loans was 6.26 percent, compared to 6.33 percent a week ago; and this was the lowest level since rates averaged 6.21 percent during the week of May 17.
“Continued market concerns about weaker economic growth and further declines in the housing market have kept mortgage rates low over the last few weeks,” according to Frank Nothaft, chief economist at the mortgage finance giant.
Also, rates on 15-year fixed products fell to 5.91 percent from 5.99 percent last week; rates on five-year adjustable rate mortgages declined to 5.98 percent from 6.03 percent; and rates on one-year ARMs slipped to 5.57 percent from 5.66 percent a week ago.
Source: Chicago Sun-Times, Martin Crutsinger (11/02/07)
Bill Cobb, Accurate Valuations Group Appraiser, has operated as a home appraiser for 15 years now primarily in the Greater Baton Rouge, Louisiana market. For more information on Accurate Valuations Home Appraisal Group, visit FHA Appraisers in East Baton Rouge, West Baton Rouge, Ascension & Livingston Parishes
BusinessWeek: B.R. good for real estate bargains
The national housing market may be in the dumps, but there are still some markets that are good places to invest — and Baton Rouge is one of them. BusinessWeek recently came out with a list of the best bargain markets for real estate and the Capital Region was ranked No. 2, behind Austin, Texas. The magazine notes that median home prices in Baton Rouge are still under $175,000. Over the next two years, home prices are projected to go up by 7.7% locally, because of the solid employment growth. Jim Gillespie, the chief executive for Coldwell Banker, says that college towns and state capitals are typically good places to invest “because real estate there just doesn’t go down in value”. Read the rest of the story here.
Accurate Valuations Group Appraiser, William D. Cobb, has operated as a home appraiser for 15 years now primarily in the Greater Baton Rouge, Louisiana market. For more information on Accurate Valuations Home Appraisal Group, visit FHA Appraisers in East Baton Rouge, West Baton Rouge, Ascension & Livingston Parishes
Risk of house price declines falling in many areas
Drop in PMI risk index does not indicate market has hit bottom
Tuesday, October 09, 2007By Matt CarterInman News
Declining home prices boosted affordability during the second quarter, reducing the risk of price declines in 28 of the 50 largest metropolitan areas, according to an analysis by PMI Mortgage Insurance Co.
PMI said its U.S. Market Risk Index -- which takes into account economic factors like home-price appreciation and volatility, affordability and employment -- fell for the first time in 2 1/2 years during the second quarter.
While that's an encouraging sign that housing markets are beginning to correct, it's not evidence that they've hit bottom. Scores in many areas remain elevated, and risk remains high nationwide, said Mark Milner, PMI's chief risk officer.
"We have seen a significant slowdown in price appreciation nationwide, and appreciation has gone negative in some areas," Milner said. "That's improved affordability, which is being reflected in the risk scores. But risk is still high and it's way too early to say we're at an inflection point."
The average risk score for the 50 largest metropolitan statistical areas (MSAs) remained near an all-time high of 329, which translates into a projected 32.9 percent chance of price decline in those areas during the next two years. That's down from 346 during the first quarter (see Inman News story), but still well above the national average of 289 for all 381 MSAs studied.
During the second quarter, 11 MSAs had risk scores of 500 or above, correlating to an estimated 50 percent or greater chance of price declines in the next two years, compared with 15 MSAs in the first quarter. The 11 MSAs were:
Dropping off the list of MSAs with risk scores of 500 or higher were Miami-Miami Beach-Kendall, Fla. (466), Tampa-St. Petersburg-Clearwater, Fla. (462), Boston-Quincy, Mass. (400) and Washington, D.C.-Arlington-Alexandria, Va. (439).
Boston, Phoenix and West Palm Beach, Fla., saw the largest quarter-to-quarter drop in risk scores, although all three cities remained well above the national average. Boston has seen price declines in four of the last five quarters, helping the city shave 101 points from its risk score, while West Palm Beach (down 75 points) and Phoenix (down 71 points) saw improvements not only in housing affordability, but employment.
Housing affordability, which improves when income growth outpaces home-price appreciation, showed gains in 297 MSAs, or 78 percent of all of those studied. In the top 50 MSAs, all but two saw improvements in affordability. Some areas, such as Phoenix, saw affordability gains even as prices appreciated modestly during the second quarter, because income growth outpaced home-price appreciation.
The MSAs that saw the largest improvements in affordability were in areas that were already at low to moderate risk of price declines. On average, MSAs in the Western states scored the highest for risk (451), followed by the Northeast (273) and the South (243). MSAs in the Midwest had the lowest average risk score (187).
Risk scores are generally low in the Midwest because the region did not experience the rapid and sustained price appreciation places such as California, Nevada and Florida saw during the boom years, said LaVaughn Henry, PMI's director of economic analysis.
"Our model is fundamentally based on price volatility, and much of the Midwest and areas of the South have had low price volatility, and didn't participate in the rise in prices we had" during the boom, Henry said, attributing much of the rise in delinquencies and foreclosures in the Midwest to increased unemployment.
While PMI found weakening employment was not a significant issue for most of the 50 largest MSAs, nine of the 25 MSAs with the largest increases in unemployment were in Ohio (seven of the top 25 MSAs) and Michigan (two). California (seven) and Louisiana (five) also had a large proportion of the 25 MSAs experiencing the largest increases in unemployment.
Home-price appreciation, which peaked in the second quarter of 2005, has been "decelerating" in seven in the last eight quarters. In other words, while prices are still going up on average, they are not going up as fast. Homes with conforming mortgages appreciated at a rate of 3.2 percent per year during the second quarter, compared with 4.5 percent in the first quarter.
Prices were actually falling in an increasing number of MSAs during the second quarter, with 28 percent of the 50 largest MSAs seeing price declines, compared with 16 percent of the remaining 331 MSAs.
The fact that large MSAs were more likely to experience price declines in the second quarter -- a reversal of past trends -- indicates that price declines are starting to take hold even in more populated areas where prices and employment are typically more stable, the report concluded.
In an attempt to help prospective home buyers decide whether it's a good time to buy, PMI's fall 2007 Economic Real Estate Trends report also looked at how those who bought homes during the three worst downturns in the last 25 years fared.
That analysis, which assumed the average homeowner made a 20 percent down payment, found that home ownership produced a positive return on investment 98.9 percent of the time over 10 years. In the worst of the three scenarios studied -- Houston's housing downturn during the 1980s following layoffs in the oil industry -- it took homeowners who bought at the peak of the cycle 15 years to show a positive return.
Milner said the analysis demonstrates that "home ownership is a good way to build long-term wealth, and that (home buyers) shouldn't panic when we are going through a phase like that."
***
Send tips or a Letter to the Editor to matt@inman.com, or call (510) 658-9252, ext. 150.
Copyright 2007 Inman News
B.R. makes huge jump on Best Performing Cities Index
B.R. makes huge jump on Best Performing Cities IndexBaton Rouge climbed 65 spots in a list of where jobs are being created and sustained. The city was 67th in the Best Performing Cities Index, up from No. 132 in 2005. Officials with the Milken Institute, the economic think tank that conducts the study along with Greenstreet Real Estate Partners, say Baton Rouge saw the drastic move as a result of the population shifts caused by Hurricane Katrina. Stephen Moret, president and CEO of the Baton Rouge Area Chamber, says the jump doesn’t surprise him. “We’ve just had two of our best years on record, and it looks like 2007 will be another top year,” he says. “We’re on a great growth trend right now.” The city also did well because of the high-tech sector. Baton Rouge ranked 31st among 200 cities for high-tech output growth from 2005-06. “A substantial number of our employers are becoming more and more technology intensive,” Moret says. Lafayette made the biggest jump in the index, from No. 143 to No. 24, because of Katrina-related moves and the surging oil and gas industry. Other Louisiana cities fell. Shreveport dropped from No. 111 to No. 131, and New Orleans dropped from No. 163 to No. 186. To read the complete rankings, click here. –Timothy Boone Baton Rouge Business Report
Accurate Valuations Group Appraiser, William D. Cobb, has operated as a home appraiser for 15 years now primarily in the Greater Baton Rouge, Louisiana market. For more information on Accurate Valuations Home Appraisal Group, visit Denham Springs Real Estate Appraisers Denham Springs Homes Realtor
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William D. Cobb, CREA23816 Snowdon AvenueDenham Springs, LA 70726225-293-1500 (Office)1-888-678-3544 (Toll-Free Phone)1-866-663-6065 (Toll-Free Fax)225-953-0638 (Mobile)http://www.getfastvalue.com (Website)fastvalue2@cox.net (Email)
Accurate Valuations Group Appraiser, William D. Cobb, has operated as a home appraiser for 15 years now primarily in the Greater Baton Rouge, Louisiana market. For more information on Accurate Valuations Home Appraisal Group, visit FHA Appraisers in Baton Rouge Real Estate Appraisers Baton Rouge Homes Realtor
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