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According to the National Quarterly Housing Survey, only 64 percent – slightly less than 2/3 – of Americans think that “owning their own home is a safe investment.” That is down from 70 percent at the beginning of 2010 and from 83 percent in 2003[1]. And while home sales rose in January 2011 for the third straight month, the median home price hit its lowest point since April 2002. What does this mean for homeownership as “The American Dream?” It could mean that that particular concept has run its course.

There are disagreements on the part of experts about whether or not this is a bad thing. Some point out that a shift in perception of homeownership will cause rents to rise and could lead to an adoption of the “common-sense, rational concepts disregarded during the housing bubble years”[2]. Furthermore, as renting becomes more acceptable, it could lead to a prevalence of more desirable rental options in which favorable locations, “multi-modal transportation options,” pleasing layouts that feel more like homes and “higher levels of aesthetic and construction quality” dominate the market and make both renting and ownership of rental units a pleasant and profitable experience.

Doug Duncan, Fannie Mae’s chief economist, believes that this change in perspective is going to lead to “the demand side increase [being] in the rental market, not the housing [purchase] market.” And some experts believe that since high rental vacancies have “weighed on the core consumer price index” that a new focus on rental properties and multifamily housing could help the economy as a whole. Do you think that it is necessarily a bad thing – in the grand scheme of things – if owning your own home is no longer considered part of “The American Dream?”

Thank you for reading REJournalOnline’s Commercial Real Estate Letter.

Describe your perception of “The American Dream” below.

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[1] http://www.huffingtonpost.com/2011/02/28/buying-a-home_n_829138.html

[2] http://www.washingtonpost.com/wp-dyn/content/article/2011/02/25/AR2011022500045.html

Tax lien investors who bid on liens for the purpose of making money when those liens are redeemed often want to avoid states in which bidding is accomplished not by declaring a stated amount that one will pay for a lien, but rather how little interest one will accept on the debt. After all, if a lien is “bid down” to a very low interest rate then a tax lien investor will collect less money when that lien is redeemed by the homeowner. Bid low enough, and the lien is not worth the trouble.

In order to attract tax lien investors to their auctions, states that use a bidding-down structure for their property tax auctions may install a “safety net” to keep investors interested in their properties. This safety net takes the form of a minimum penalty to the owner when the tax lien is redeemed. For example, Florida has this type of safety net: a minimum penalty of 5%. This means that if you bid on a tax lien in Florida and you win with a bid of 3% interest, then you will get an additional 5% interest on that lien as a minimum penalty. Of course, you will need to check the fine print. There may be rules governing how long the lien must be delinquent before the penalty kicks in or even on how much of the lien can be assessed for a penalty. Either way, however, the investor will get more than just the low initial interest bid.

Thank you for reading REJournalOnline’s Tax Deeds Investment Letter.

Let us know where you like to invest and why below.

If you are thinking that email negotiations on real estate deals do not count until you put pen to paper, then think again. Last week a New York state court ruled that “handwriting and email should now basically be considered one and the same”[1]. The ruling comes from the Appellate Division, First Department of State Supreme Court in Manhattan and has been appealed to New York’s Court of Appeals.

The Naldi v. Grunberg case is based around a commercial real estate transaction, but the court ruling also applies to residential transactions. The court considered emails proof of a deal just like any other hard-copy contract because “an e-mail is retrievable from computer storage.” Only if the email contains adequate disclaimers can it be excluded from proof of negotiations, explains Mario J. Suarez, a lawyer in New York. The disclaimer should specifically state that anything in the communications “shall not be deemed an offer, as no documents are binding unless and until executed,” he said. However, you should definitely check your own disclaimer with your own lawyer before relying on it to protect you, and always be careful how you phrase things in email.

Do you think that this ruling is fair? Is it reasonable to make email as binding as any other type of written word?

Thank you for being part of REJournalOnline’s Investor Academy.

Let us know what you think of email content being potentially binding in a contract below. Are you concerned about your own past emails?

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[1] http://www.ibtimes.com/articles/115112/20110222/watch-before-you-email-court-says.htm

One after another, the major players in real estate are moving to add mall properties to their portfolios in addition to the mad dash for multifamily housing[1]. According to Bloomberg news, Blackstone Group, L.P., agreed to buy one of the biggest U.S. shopping centers, Centro Properties Group, for $9.4 billion over the past weekend[2]. And this is not just one mall; it’s 588 of them, making this deal Blackstone’s biggest deal since 2007. Experts hope that the firm is right on the money, literally, and betting on a major U.S. commercial recovery in the coming months.

Centro Properties Group is an Australian company that has suffered both in the U.S. and at home as both countries’ real estate markets struggled. This acquisition will likely enable “Centro’s Australian operations to continue as an independent company,” said an unnamed source familiar with the deal. Michael Wood, a Sydney-based real estate advisor, believes that this purchase price is a good sign because the price that Centro is getting is close to net tangible assets, or the total assets of the company. This could indicate that the commercial real estate world is, at least in some cases, returning to “normal” as companies buy and sell for near-worth rather than focusing exclusively on bargain basement prices and desperately made deals.

Recently, Forrester Research released a study in which its vice president and research director announced that “consumer purchasing behavior [is] returning to normal,”[3] albeit much of this buying is now taking place online, which does not necessarily help the physical retail real estate industry. Do you think that the retail real estate sector will ever fully recover from the past few years, or have consumer buying habits changed in such a way that some of the damage will be permanent?

Thank you for reading REJournalOnline’s Commercial Real Estate Letter.

Let us know how you are feeling about the commercial sector in general and retail property in specific below.

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[1] http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/morning-meeting-blackstone-joins-mall-spree/article1923183/

[2] http://www.bloomberg.com/news/2011-02-28/blackstone-to-buy-centro-s-u-s-assets-for-9-4-bln-wsj-says.html

[3] http://www.businesswire.com/news/home/20110228005297/en/Double-Digit-Growth-Online-Retail-Western-Europe

Last week, President Obama and his administration proposed a plan to settle with banks plagued by robo-signer concerns. Among other things, the settlement included an agreement on the part of the lenders saying that they would either pay around $20 billion in civil fines or that they would fund a comparable amount of loan modifications, including reducing principal on those loans[1]. Not only do lenders say that this settlement will “bring…enormous costs that would far outweigh any potential benefits,” (according to BofA mortgage strategist Chris Flanagan), but they also believe that in the grand scheme of things, that $20 billion “would accomplish little” in dealing with the $744 billion dollars in underwater mortgages around the country.

Unfortunately, lenders do not appear to have a return proposal that is a viable solution to the massive lack of trust – and the lost faith on the part of the consumers and investors – in today’s housing and lending markets. While the Obama administration’s proposal is fraught with perils – attorney Gloria Einstein points out that “requiring banks to eat the loss and at the same time allowing them to administer the program is a recipe for a program that will not do anything except raise people’s expectations and frustrate them,” just for starters – lenders are going to have to deal with the myriad problems that permeated the lending industry for years prior to the housing crisis and that were brought to light last fall. Do you think that the administration’s plan is workable? Is it even enough?

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Let us know your feelings about conventional lending below.

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[1] http://online.wsj.com/article/SB10001424052748703905404576164870685407618.html?mod=googlenews_wsj

In an effort to make property taxes more manageable – and collectable – many counties around the country have moved from a single deadline for all property taxes to two or even four quarterly deadlines throughout the year at which homeowners can pay portions of their taxes. In Tuscawara County in Ohio, the move seems to be working. However, for those who fail to pay their taxes, the county will not hesitate to act[1].

Many local governments have hesitated to foreclose on homes via property tax liens or utility bill liens because the move is so extremely unpopular in today’s economy. For many people, property taxes have been the least of the problem. However, in Tuscawara County, adding multiple payment periods and preparing to enforce collections is paying off, with “only about $1.5 percent” of the total taxes due for payment in 2010 are now past due to the point of being pursued for foreclosure (delinquent for a year or more).

Now, that “only 1.5 percent” does equal a combined total of $1.18 million, which is why the county treasurer is actively pursuing payment contracts for property owners who are delinquent and promptly pursuing foreclosure for those who do not or cannot set up alternate means to make up the delinquency. It’s important that people realize they have to pay their taxes,” said Jeffery Mamarella, the county treasurer. It appears that this type of fast action is working well as deterrent at least in Tuscawara County’s case.

Thank you for reading REJournalOnline’s Tax Deeds Investment Newsletter.

Do you find that the deals are better in places that foreclosure regularly and swiftly or in places where tax delinquencies are permitted to pile up?

Let us know what you think below.

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[1] http://www.timesreporter.com/news/x1040067793/Tuscarawas-County-steps-up-tax-collection

In Arizona, previously-common lending practices that led to the robo-signer fiasco last fall could now lead to impossible foreclosures and voided foreclosure sales. The state Senate has passed a bill, SB 1259, requiring that lenders provide a complete list of any previous owners of a mortgage note before they can foreclose on that note[1]. Failure to do so not only sets the lender up for a lawsuit including damages and foreclosure reversal, but can also void a foreclosure sale. The bill has not yet passed the Arizona House of Representatives.

Essentially, the bill requires that before a lender forecloses, a “full chain of title for the property” must be produced and filed[2]. While Arizona is the first to set such a law in motion, similar legislation is also being considered in New York, Oregon and Virginia. Lenders would be required to list all former owners of the deed and detail how ownership was transferred from one owner to the next. Lenders who fail in this face a voided foreclosure sale and can be sued for failure to comply and forced to not only provide compensation to the foreclosed homeowner, but also pay for “other provisional remed[ies] related to the claim.”

Lenders are warning that states with this type of legislation will make lending in these areas much more difficult and that it could become difficult to even get a loan in these states. Do you think that this bill is worth it?

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Let us know what you think of these new lending laws below.

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[1] http://nationalmortgageprofessional.com/news23802/arizona-senate-passes-bill-would-void-foreclosures-lacking-title-history

[2] http://www.totalmortgage.com/blog/mortgage-rates/arizona-bill-would-make-it-more-difficult-to-foreclose/10452

According to Jones Lang LaSalle Hotels, a hotel investment firm, Miami area hotel investing is about to take off[1]. Over the past 12 months the hotel industry has begun to show signs of recovery in many areas around the country, with real estate investment trusts (REITs) and foreign investors showing renewed interest in the industry. Now, Jones Lang LaSalle predicts that “deal volume in the area could reach $750 million in 2011.” This would be a 250 percent increase over the previous year.

While not everywhere in the country is projected to experience such a dramatic comeback as Miami, executive vice president of Jones Lang LaSalle Hotels Fernando Garcia-Chacon predicts that Miami is definitely going to be a hot spot because of the high number of distressed properties currently controlled by lenders and “ripe for investment” in the area. Garcia-Chacon predicts that not only are investors ready to take advantage of low prices – and to snap up deals in a market that is not currently producing new-hotel construction – but that brand hotels like Marriott will also be looking to buy up previously-private properties and convert them. Short sales on hotels, already somewhat common in the area, could rise as well, showing that “these hotel experts do have a lot of confidence in South Beach,” he said.

Last year, many experts predicted that the hotel industry might not recover until late 2011 or even 2012 and beyond. Do you think news like this indicates that they were wrong, or is Miami an isolated example of resort property recovery?

Thank you for reading REJournalOnline’s Commercial Real Estate Letter.

Let us know if you plan to invest in hotels or other resort property in 2011 by leaving a comment below.

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[1] http://www.miamiherald.com/2011/02/24/2084083/increase-in-hotel-investment-expected.html

While it might not have been quite as exciting as tax auctions used to be, owners of properties with delinquent property taxes are probably loving the newer, quieter, computerized bidding system that enabled tax lien buyers to quietly punch in bids on their personal keyboards rather than shouting them out and struggling to be heard[1]. The average bid at the Madison County (IL) tax auction was “just under four percent,” reported treasurer Kurt Prenzler, who ran on the promise to use this computerized system in his tax sales moving forward in order to “provide better accuracy and less chance for collusion or fraud.”

With less excitement and confusion came lower bids – including a number for zero-interest in hopes of collecting 12 percent in the second year of delinquency – and a chance for a nap on the part of at least one observer. Prenzler considered the auction to be a success, however, particularly in light of his predecessor’s controversial approach to tax auctions which, according to many observers, including picking winning bidders “more or less at random.” Using the new computerized system, results of bidding were displayed on a screen in the front of the room while tax buyers each sat quietly with their own laptop and entered their bids on their personal computers.

Do you think that computerized auctions will improve the way that tax liens are sold?

Thank you for reading REJournalOnline’s Tax Deeds Newsletter.

Let us know how you feel about computerized auctions below.

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[1] http://www.thetelegraph.com/news/tax-50927-bids-brings.html

Large investors involved in the law suit against Bank of America’s Countrywide Financial Corporation are pulling out of the process as the approval date for the $624 million settlement approaches[1]. Believing that they can “get a better deal by going it alone,” investors like the California Public Employees Retirement System are rejecting the settlement as too small[2]. Oregon’s attorney general, John Kroger, stated in reference to the $624 million settlement that the state would net less than $500,000 in damages when it suffered $14 million in losses. “Oregon will not accept pennies on the dollar when Wall Street defrauds Oregonians,” Kroger said[3].

As more investors withdraw, the settlement number is shrinking along with the lawsuit. The current agreement is now down to $601.5 million. Although the settlement could be retracted thanks to opt-outs, BofA and the Countrywide division have decided to keep the settlement alive, calling the situation “unfortunate” and expressing regret that “some investors have not wanted to embrace a fair and equitable agreement.” Plaintiff’s lawyers, who have knocked about $1 million off their fees, also have stated that they believe the settlement is a “really excellent deal,” but understand that some investors will prefer to “take a different kind of risk” in order to have a chance at recouping more losses.

Do you think that the BofA/Countrywide settlement numbers are fair?

Thank you for reading REJournalOnline’s Commercial Real Estate Letter.

Let us know how you feel about Countrywide and BofA’s role in this lawsuit below.

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[1] http://blog.riskmetrics.com/slw/2011/02/some-investors-flee-624-million-countrywide-financial-settlement.html

[2] http://blogs.wsj.com/law/2011/02/22/countrywide-deal-too-thin-for-some-investors/

[3] http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202482515549