New Partnership To Yield A 275-Property Affordable Housing Portfolio

A new partnership hits the real estate market. Forming a new company, the partnership aims to provide affordable housing to as many people as possible.

Low Income Housing Tax Credit industry leader Michael Costa, Highridge Partners and Citi form Highridge Costa Housing Partners to manage a portfolio amounting to $3.4 billion, consisting of 275 affordable, multifamily properties. Each one will play a part and contribute something to the newly-formed partnership in meeting its mission of seeking new opportunities as well as managing the current portfolio built in the last 15 years.

Citi will be contributing a previously foreclosed portfolio, which was also made in partnership with Costa. On the other hand, Highridge Partners can not only provide global capital markets relationships and strategic financial management perspective but new equity capital as well. Costa, with his business acumen and unparalleled experience in the tax credit syndication, will contribute highly through strategic planning.

Citi Community Capital’s managing director Steven N. Fayne says, “We explored several options for these properties and determined that a partnership with Highridge Costa maintains much needed affordable housing throughout the United States while protecting Citi’s investment.”

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Net Lease Deals Are Back In Style

It is a common occurrence: old fads come back to haunt us, the way bell bottoms of the 1960s came back as flare and boot-cut jeans in the 1990s. Even in the field of real estate, old trends that have been deemed “unfashionable” are coming back as the in thing. Making its comeback are -modest, worry-free property investments that our grandparents once knew as “net lease deals”.

The way our grandparents worked the real estate market was that they derived steady income by purchasing retail or office buildings then renting them out to ultra-creditworthy single tenants signing long-term leases – tenants like Walgreens, McDonald’s, or the U.S. Postal Service. The tenants would have to take care of everything else from maintenance, utilities and repair – so if a new roof is needed or a toilet is to be fixed, the tenant will have to shell out cash. All the lessor has to do is sit back and count his money.

Net lease deals are a steady and dependable source of income but it is not a fancy business and it not a lucrative form of business – it is to the real estate what blue chip is to the stock market. Since it is seen as conservative, it was easily deemed as “for the unambitious” and went out of style in this fast-paced real estate era. But the real estate market is not exactly in the go-go pace at the moment, and investors prefer to go back to laid back real estate style of the old.

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Atlantic City May Be Losing Tax Money On Undeveloped CRDA-Owned Land

Atlantic City’s government officials are facing state intervention because of a budget deficit – which is why it hurts the city more to have half of Casino Reinvestment Development Authority-owned land sitting idle. With no construction date in sight or even a project assigned, the parcels of land are leaving Atlantic City with much untaxable land.

CRDA has 139 parcels of land that remain undeveloped because of its strategy to stockpile on land even without an assigned development plan and because of the recent economic crisis that hit the real estate market the hardest. If all of these CRDA land, regardless if developed or not, are taxable then Atlantic City will be receiving additional $5.4 million in taxes. This will be enough to offset the city’s budget deficit amounting to $10 to $15 million.

City Mayor Lorenzo Langford, who also holds a seat on the CRDA board, has expressed frustrations about the authority-owned lands as early as May when the Office of the State Controller issued an audit and charged the city government with wasting millions of dollars. In a reply to that audit, Langford gave eight recommendations to the state, one of which is a complaint on CRDA’s tax-exempt land. In the same reply, though, Langford did not offer solutions to the CRDA issues.

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Social Media Is Now Used As A Real Estate Marketing Campaign

It is undeniable that the Internet is the fastest and most effective way of reaching as much number of people around the globe. It is no surprise then that Internet is also used by different industries to promote their businesses – and the real estate market is not one to be left behind. More than just the World Wide Web, though, the real estate market is also now joining the social media bandwagon.

With how hard the real estate industry was hit by the recent economic crisis, real estate agents need a stronger and more effective means of reaching home buyers and sellers. Since more and more buyers and sellers are making Internet an important part of the buy-and-sell process, tech-savvy realtors are joining in on the fun: they have started to connect to clients via the World Wide Web. And some are attesting to its success.

Sarah Elle Boggs, a real estate agent, has made it a routine to leave location-based whereabouts tips to the virtual world and to update her Twitter while making a showing of one of the downtown Miami condo towers. Micro-blogging, Facebook updating, and real estate-related application downloading have become just a few of the social media-related activities that Boggs have incorporated into her work. She says it is working so far – she’s had two new clients over Twitter in the last month alone and is now working with a buyer over Facebook.

True enough, social media networking is now not just a hobby for Realtors. Real estate firm board rooms and trade meetings are now discussing the importance of social media to the industry. Even various online platforms are now being used by companies to track return on investments.

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Will The Commercial Real Estate Debt Cause Another Market Crisis?

If the residential real estate market is having problems, so is the commercial real estate market – perhaps even more so. Commercial real estate properties – like apartments, shopping malls, hotels, and office buildings – were at a peak until 2007 but devalued 36% in the last two years. The real estate market has incurred debts in the past years and may still incur more debts in the coming years.

The real estate market may still be valued at $6.7 trillion but its debt amounts to $3.5 trillion. Half of the market’s debt is held by banks, a quarter by financial institutions, and the last quarter by other investors. The real estate market came staggering because of low occupancy and depressed property values.

In mid-2009, almost 9% of the commercial real estate loans offered by banks were deviant from what is usual: levels were double than what they were from a year ago. Banks faced problems, especially in lending for construction and development.

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Real Estate Losses And Wins For September

October has just begun yet it seems like Halloween came in early for the real estate market: September reflects horror stories for the market, much like the previous months of the year. Recent reports and surveys for the month of September show staggering figures for the economy and personal finances. But if there is some grim news, there are also light and fun stories for real estate watchers.

The highlight for the month of September is the record low rates for 15- and 30-year mortgages. A September 30 report from Freddie Mac reveals that both 15- and 30-year mortgage rates have either met or exceeded what is currently on record, with 30-year mortgage rates averaging 4.32% for fixed mortgages. Though this bit of good news was expected to encourage people from purchasing a home, it did not create too much of a dent on home sales.

Consumer confidence is also at a low, making buyers less willing to make that leap to home ownership despite the low mortgage rates. Though the August to July existing home sales had a 7.6% difference in favor of the recent month, National Association of Realtors chief says this is subpar. Considering how mortgage rates are for the month, he had a point.

So why were people not buying homes in September? Census Bureau’s American Community Survey provided an answer in a September 28 report: more than 20% of Americans can barely afford to rent what more to buy a home. Including utilities, housing costs take 35% of income according to two-fifths of the respondents.

Even commercial real estate properties are seeing plummeting prices. Current prices are only a 0.9% improvement versus what was seen in the October 2009 recession low, as reflected in the Moody’s/REAL All Property Type Aggregate Index.

Perhaps next to the mortgage rates, another thing that really caught the attention of real estate watchers is the ongoing investigations on lenders. The month of September was first buzzed with news of GMAC Mortgage, a unit of Ally Financial, being under investigation by attorneys general in Iowa, Illinois and Texas because of a December 2009 allegation by an employee that the lending company signed off on foreclosures without verifying accuracy of borrower’s loan records. Before the month ended, JPMorgan Chase and Co. was also put under scrutiny by lawyers in Florida.

As always, though, there are exceptions to the rule as the month of September also includes successful property purchases and sales by celebrities. Both Chris Bosh and LeBron James scored real estate slam dunks: Bosh bought a $12.5 million, seven-bedroom house in Miami Beach and James paid for a four-bedroom pad in Coconut Grove. Even the Olsen twins were able to sell their unoccupied 6,000-square foot condo in New York – the property sold for less than the initial asking price of $11.995 million at $7.7 million, which is still $300,000 more than what the twins paid for the unit back in 2004.

Perhaps in time for Halloween, the Amityville Horror House – a Dutch Colonial house in Long Island, New York – gets a new owner in the person of Caroline and David D’Antonio, who paid $950,000 for the house which they are calling their “dream house”. First known as the site of a brutal 1974 murder by Ronald DeFeo Jr. of his mother, father and four siblings, the Amityville Horror House became more famous as Jay Anson wrote a book on the Lutz family’s horrific experience in the house. The D’Antonios claim that they are not afraid that the house may be haunted but are worried about the possible throng of fans for Halloween.

More Foreclosure Freezing To Happen, Says Experts

The recent weeks have been about a stoppage on foreclosures by one of the biggest mortgage lending servicers and one of the country’s largest banks. The flurry of notices to suspend foreclosures was brought about by reports that some were signed off without looking at and verifying information in the borrower’s documents. The recent news has certainly given hope to the many who are currently facing foreclosure.

Both JPMorgan Chase and GMAC have frozen some foreclosure proceedings because of investigations on “robo-signing”, a term recently coined for foreclosures signed without reviewing and verifying document accuracy. Attorney, educator, and FrontlineSeminars.com President Lance Churchill says this should no longer come as surprising. According to him, the volume of underwater homes is so staggering that attorneys cannot have personal knowledge of each and every one of them.

For JPMorgan Chase, 56,000 foreclosures will be affected. MarketWatch reports that a JPMorgan Chase employee said in a disposition that she and her team did not review the reports on the 18,000 monthly foreclosures that were signed off. GMAC, on the other hand, has a reported 500 affidavits per day that were signed without having signatures notarized or files reviewed.

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GCI: Asia Will Play A Big Role In Global Growth

The good thing about being in the bottom is that there is no other way but up. The chief investment officer of the world’s sixth largest state investment company says there’s a major shift in economic influence and the emerging influence is Asia.

In a private wealth management conference in Singapore this week, Government of Singapore Investment Corp’s Investment Officer Ng Kok Song said that the global growth this year will greatly rely on Asia. He says that half of the economic boost globally will come from Asia, with 34% of total gross domestic product coming from the region. He further states that China – which quickly changed the growth landscape, as was never since World War II – can contribute 26% to global growth.

With Asia’s economic growth outpacing the rest of the world, Ng just may have a point. Policy makers in the continent have even raised interest rates even before U.S. and Europe did so as to curb asset price bubbles and fight inflation. Manila-based lender Asian Development Bank also had better outlook for Asia: 2010 growth forecast for the region (excluding Japan) was raised from 7.5 to 8.2% and 2011 growth remains at 7.3%.

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Housing Market Still In The Dumps Despite Record Low Mortgage Rates

It has been written many times, many ways: the real estate market has to hit bottom before it can finally find its way up. With the way low mortgage are being ignored by home buyers, perhaps the theory is gaining a stronger proof that it is high time the housing market be left to free fall.

It has been reported that mortgage rates have not been as low as they currently are. Earlier in September, the 30-year fixed rate mortgages are at an all-time low of 4.32%. Even with that figure, people are still not rushing to take advantage of the low mortgage rates; the total number of people who bought homes and refinanced is even higher in 2003 when mortgages were 1.5 percentage points higher than what we have now.

Refinancing may have seen a little boost, especially from January to June of this year, but it’s not a big a dent as was seen last year or even in 2003. New home sales were at its second slowest pace on record in the month of august. Even existing home sales are not faring well, with a 19% decline from the year 2009.

IBISWorld’s housing analyst Robert Andrews said, “Anemic demand continues to hamper real (economic) growth. The housing market needs to find its true bottom before things can finally turn around.”

He is not the first to say that. And perhaps he also won’t be the last.

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More And More Residential Sales Are Connected To Forelcosure

The number of foreclosed homes is increasing and it does not surprise analysts that it comprises the biggest chunk of sold homes this year. The figures for the second quarter of the year show exactly that – foreclosed homes still account for almost a quarter of the residential sales in that period.

RealtyTrac, a firm that looks at the foreclosure market and the real estate market in general, revealed the home sales statistics for the second quarter of 2010. The statistics show that 24% of the residential homes sold from April to June were foreclosed homes. In different stages of foreclosure – default, scheduled for auction or bank repossession – some 248,534 U.S. properties have been handed over to third parties through a sale. Though this number is 5% higher than that of the January to March number, it still represented a 20% decline from last year’s.

The good news does not end there.

RealtyTrac CEO James J. Saccacio says, “While foreclosure sales increased in the second quarter, non-foreclosure sales increased even more, spurred on by the home buyer tax credit that expired during the quarter.”

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