Archive for the ‘NEWS’ Category
County Plan Would Split Landmark Building Into 2 Stories
POSTED: 10:14 pm CDT April 16, 2009
UPDATED: 7:39 am CDT April 17, 2009
DES MOINES, Iowa — Some Polk County leaders said they’d like to renovate Veterans Auditorium in order to draw more convention business to Des Moines.
The proposal’s possible $40 million price tag could create opposition, but county leaders said that refinancing the debt and renovating the facility could pay off over the long haul.
"We have lost about half of our state convention business, and the more we lose, the harder it is to get back," said Ron Olson.
Supporters favor closing the Polk County Convention Complex and dividing Veterans Auditorium into two floors, creating meeting rooms and a ballroom. With Wells Fargo Arena next door, the center would be able to compete with other cities.
"We were at the Plex, and prior to that, Veterans Auditorium for 40 years," said Larry Carl, who runs a statewide dental convention. "We moved it out of here (to Coralville) because we didn’t know what Polk County was going to do."
He said that his group would like to meet in Des Moines if the convention facility had a ballroom.
Adding a floor inside Veterans Auditorium isn’t going to come cheaply.
"We may want this, but God knows, we don’t need it," said Bob Wessel.
Renovations, supporters said, could cost up to $41 million. Remodeling just half of the site would cost $30 million. Wessel said that’s too much, especially right now.
"Just do nothing," he said. "This is not the time to be playing these kinds of games."
County leaders said doing nothing would cost even more if conventions keep moving out of town.
"We have to be competitive, that’s the number one issue," said Angela Connolly. "We have to stay competitive."
County leaders said the project wouldn’t raise property taxes a penny. They would pay for it by refinancing the current loans and stretching them out a few more years.
Most people at the public hearing on Thursday evening said they favored the idea, but county leaders said they want more feedback before holding a vote, possibly in three to four weeks.
This story was submitted by one of our readers and originally appeared at kcci.com
COMMENTS:
Tony: Do I smell property values rising in Des Moines?
Tax plan more likely to sting Iowa renters, simple filers
By JASON CLAYWORTH • jclayworth@dmreg.com • April 3, 2009
Low- and middle-income Iowans like Nikki Roe are far less likely than homeowners to benefit from proposed changes in the state’s tax laws.
Roe is a divorced mother with three children who works full time as a housing counselor at a Waterloo nonprofit group. She lives in and owns a mobile home but doesn’t itemize deductions on her tax returns.
Because of that, she has a greater possibility of joining more than 450,000 Iowans in the current tax year who would pay more if lawmakers end federal deductibility.
Almost 282,000 of those Iowans make less than $50,000, according to estimates from the Iowa Department of Revenue and Finance.
Those who would pay extra are more likely to be people who file simple tax returns and do not take deductions. Many times such people are renters or people like Roe who believe the lower value of their property isn’t worth the hassle of claiming deductions. They’re also more likely to be lower-income or recent high school and college graduates, said Mike Lipsman of the revenue department.
House File 807 will likely be debated next week in the Iowa House. It would end Iowans’ ability to subtract what they pay in federal taxes from their income when figuring their state taxes.
The bill also would reduce state income tax rates, offering low- and middle-income families the greatest breaks, Democrats say. The state would not take in extra money as a result, supporters say.
“Of course, with three kids, having more money in my pocket would be a huge benefit,” Roe said. “The more I have, the more I could provide for them.”
In addition, the proposal would increase the earned income tax credit.
Roe doesn’t know for sure how ending federal deductibility might affect her or the hundreds of people she helps in her job every year to avoid home foreclosures or bankruptcies.
Generally, individuals or families who make less than $125,000 per year would pay less in state income taxes. However, thousands of people in nearly every income category would pay more.
“It boils down to if you don’t itemize, you’re more likely to see your taxes go up,” Lipsman said.
Information from the Internal Revenue Service shows that of the 1,378,083 Iowans who filed taxes in 2006, 349,532 claimed a deduction for mortgage interest while 400,714 claimed a deduction for real estate taxes.
Rep. Tyler Olson, D-Cedar Rapids, and Rep. Thomas Sands, R-Columbus Junction, met with Des Moines Register reporters and editors on Thursday. Both acknowledged that the elimination of federal deductibility may not be as beneficial to families who don’t claim deductions.
Sands, like most of the members of his party, is opposed to the bill.
“Less than half of Iowans will see a benefit from this, whereas everyone else will either see no change or pay more to make up the difference,” Sands said, noting 
state revenue estimates.
Olson, who supports the bill, noted that two-thirds of Iowans would see either a tax decrease or no change at all.
“I’m hearing this hasn’t been thought through and we don’t know how this will affect taxpayers. I just totally disagree with that statement,” Olson said.
House Democrats decided to delay debate of the controversial proposal until next week, saying they were tweaking the bill. They declined, however, to go into details about what changes they are considering.
“If you make one single tweak to an area, it could have a $14 million or $15 million effect on your balance sheet one way or another,” said House Majority Leader Kevin McCarthy, D-Des Moines. “It’s very complicated.”
House Speaker Pat Murphy, D-Dubuque, hinted that the change would be in favor of giving more working families a bigger break.
“Our goal is to get as many people a tax cut with this, especially middle-class families,” Murphy said. “I’ll just tell you, we were ready to go on the bill but we’re working with the governor’s office to make sure he’s OK with every detail that’s in the bill.”
Some advocates for low-income Iowans urged residents Thursday to look at the bigger picture. Overall, more low- and middle-income families would win under the proposal, they said.
“It concerns me but, generally, in terms of good public policy, it’s good for Iowa,” said Victor Elias of the Iowa Fiscal Partnership, an Iowa City group that advocates for working families. “If you can help middle- and low-income families, then you’re helping the whole state.”
Freeing Towns to Tackle Blight
By ELSA BRENNER
(this article originally appeared in the NY Times online)
FORECLOSURES can be costly, not just to borrowers and lenders, but to neighbors as well.
“If I were buying my condo again and saw what’s across the street now, I’d never move in,” said Flora Caivano, who has lived in Fleetwood, one of Mount Vernon’s most sought-after neighborhoods, for 15 years. “It’s starting to look like the city dump around here.”
For about a year, the view from Mrs. Caivano’s living-room window has been dominated by a house with boarded-up windows and a litter-strewn yard.
Like other homeowners who live near abandoned foreclosed properties, Mrs. Caivano is concerned that her two-bedroom condominium may have decreased in value. And ever since vandals defaced the property with graffiti, she worries about her personal safety.
Her fears are well founded on both counts. According to a study last summer by the Center for Responsible Lending, a nonprofit group in Durham, N.C., living near a foreclosed home knocks $8,667 off the value of a property, and abandoned homes contribute to an increase in violent crime.
Working its way through the State Legislature in Albany is one of the first bills in the country to protect property values and neighborhood safety when a foreclosed property is left untended.
The proposed law, sponsored by Senator Jeff Klein, a Democrat who represents the Bronx and sections of Westchester County, would allow municipalities to clean up unsightly foreclosures, issue violations and recoup the costs from the lending institution. The bill has cleared the State Senate and is now before an Assembly committee.
In a statement describing the proposal, Mr. Klein pointed out that although there are laws to protect borrowers from lenders, there aren’t any to address the plight of “the neighbors who had nothing at all to do with the foreclosures in the first place but are nevertheless affected by them.”
In Westchester, 405 properties were bank-owned as of March 30, according to an online site that collects foreclosure data, RealtyTrac.com.
The proposed Neighborhood Preservation Act is being welcomed by brokers and officials, and by the president of at least one homeowners’ association.
It may also be welcome elsewhere in the region: there were 566 bank-owned properties in Nassau County as of March 30, as well as 316 in Suffolk County and 195 in the Bronx.
Specifically, the law would empower municipalities to clean up a property during “that tricky in-between period” after an owner defaults on the mortgage and abandons the property, but before the bank owns it, said Joe Hasselt, the owner of Hasselt Real Estate in the Bronx, which lists houses throughout the New York area.
“We’ve seen terrible situations where homes have been burned or vandals have gone in and stripped it,” Mr. Hasselt said. “Or there’s so much drug paraphernalia all over that we’ve had to put on thick-soled shoes before we went in there. A property can deteriorate very quickly if no one steps in and takes over.”
The law would also ease the way for a property to be maintained after the bank takes it over but before it is sold to a new owner, said Charles B. Strome III, the city manager of New Rochelle.
In this way, it would act as a complement to a “standard of habitability” law already on the books in New York. That law holds homeowners responsible if, for instance, there are no locks or other security devices on a property, garbage is accumulating, insects and rodents have infested the premises, or there are sewage leaks.
In such cases, Mr. Strome said, if notifying the delinquent property owner fails to produce results, the building department is then empowered to send in a contractor to remediate the problem and bill the owner for the work. If he or she does not pay the bill, the city can put a lien on the property.
The proposed law would empower cities and towns to take similar actions on foreclosed properties. As Mr. Strome said, “This will give us an important new tool.”
In Mount Vernon, the 200-member Fleetwood Neighborhood Association — which first alerted city officials to the rapidly deteriorating condition of the property opposite Mrs. Caivano’s home — is also awaiting passage of the new bill, said Susan Granata, the group’s president.
“Especially with warm weather coming,” Ms. Granata said, “the city needs to act quickly or the site will start to attract vermin and become a health hazard.”
In many parts of the state and the country as a whole — especially where the incidence of foreclosures is high — banks often hire private companies to do the cleanup work.
And in Westchester, lenders paying for repairs frequently turn over the hiring of contractors to the listing agents for the foreclosed properties, said Gary Leogrande, an associate broker at Keller Williams NY Realty in White Plains.
Mr. Leogrande has been engaged by almost a dozen banks to manage foreclosed properties in Westchester, where he said fewer than 10 percent of houses on the market are short sales or bank-owned.
But Mr. Klein said during an interview that some management companies and real estate agents “are just another form of absentee landlord, and even though they say they’re taking care of the property, that’s not always what we see.”
“One foreclosure can devastate an entire community,” he said, “and we’re seeing too much of that these days. We need a more effective way to combat that.”
S&P May Cut $12 Billion of Subprime Mortgage Bonds
By Mark Pittman for Bloomberg
July 10 (Bloomberg) — Standard & Poor’s said it may cut the credit ratings on $12 billion of bonds backed by subprime mortgages, prompting investors to dump the securities.
S&P is preparing to lower the ratings on 2.1 percent of the $565.3 billion of subprime bonds issued from late 2005 through 2006 because the housing slump is worse than the company anticipated. The announcement sent U.S. government bonds higher, the dollar lower and caused shares of financial companies to drop.
“S&P’s actions are going to force a lot more people to come to Jesus,” said Christopher Whalen, an analyst at Institutional Risk Analytics in Hawthorne, California. “When a ratings agency puts a whole class on watch, it will force all the credit officers to get off their butts and reevaluate everything. This could be one of the triggers we’ve been waiting for.”
Investors criticized S&P, Moody’s Investors Service and Fitch Ratings because their ratings on bonds backed by mortgages to people with poor or limited credit don’t reflect the fastest default rate in a decade. Prices of some bonds backed by subprime mortgages have declined by more than 50 cents on the dollar in the past few months while their credit ratings haven’t changed.
A downgrade would be S&P’s biggest reduction of subprime ratings. Insurers and pension funds may be among investors required to sell their bonds if they are downgraded, potentially driving down prices of $800 billion in subprime mortgages and $1 trillion of collateralized debt obligations, which package mortgage bonds into new securities.
S&P said it is also reviewing the “global universe” of CDOs that contain subprime mortgages. Investors in CDOs alone stand to lose as much as $250 billion, according to Institutional Risk Analytics, which writes computer programs for auditors.
Treasuries Rise
The yield on the benchmark 10-year note fell the most since June 29, declining 10 basis points, or 0.10 percentage point, to 5.04 percent at 3:08 p.m. in New York, according to bond broker Cantor Fitzgerald LP. The dollar dropped to $1.3729 per euro from $1.3626 late yesterday.
An index of credit-default swaps linked with 20 securities rated BBB- and created in the second half of 2006 fell 9.5 percent to a new low of 50.25, according to New York-based derivatives broker GFI Group Inc. The ABX-HE-BBB- 07-1 index has fallen by nearly half since January, reflecting growing expectations of defaults on the bonds.
Lehman Brothers Holdings Inc., this year’s biggest U.S. underwriter of mortgage bonds, led declines among securities firms with a 4.6 percent drop. Bear Stearns Cos., No. 2 in mortgage-backed securitizations, fell 3.5 percent. Both firms are based in New York.
Bear Stearns
Accurate rankings for mortgage bonds and CDOs are important because the securities trade infrequently, making it difficult for investors to immediately value their holdings when market conditions change. Instead, they often rely on sales of similar securities or computer models that use ratings and past performance of the underlying collateral to derive a value for their holdings.
CDO investors were jolted last month by losses in two hedge funds run by Bear Stearns. The firm was forced to inject $1.6 billion into one fund after creditors began seizing assets. The threat of forced sales sparked concerns that prices would ratchet down.
Almost 65 percent of the bonds in indexes that track subprime mortgage debt don’t meet the S&P ratings criteria that were in place when they were sold, according to data compiled by Bloomberg.
`Not Abating’
S&P said today it plans to change the methods it uses to rate existing and new mortgage bonds to reflect the increased likelihood of mortgage defaults and losses.
“We do not foresee the poor performance abating,” S&P said. “Loss rates, which are being fueled by shifting patterns in loss behavior and further evidence of lower underwriting standards and misrepresentations in the mortgage market, remain in excess of historical precedents and our initial assumptions.”
S&P’s review covers ratings on 612 pieces of bonds backed by subprime mortgages. S&P will implement a “stress test,” of hypothetical scenarios to see how a bond will react.
While most of the securities being reviewed by S&P have ratings of BBB+, BBB, or BBB-, the lowest investment grade, some were rated as high as AA.
The credit rating of any bond will be cut to CCC+, the sixth-lowest junk rating, if the test shows it would experience a principal loss within the next year, S&P said. Ratings will be reduced to B, the eighth-lowest rating, if the security may have a principal loss in the next 13 to 24 months. S&P will lower the rating to BB if the bond is projected to have a principal loss in the next 24 to 36 months.
Criticism
Declines in the ABX index indicate that investors believe the bonds are worth less than their ratings suggest. “If you look at where the market was trading these bonds, they weren’t trading like BBB bonds,” said David Land, a portfolio manager in St. Paul, Minnesota at Advantus Capital Management, which owns $783 million of mortgage bonds.
S&P said it will reassess ratings and seek higher protection for investors on bond classes that rank directly above any security it downgrades, a change in practice.
Critics of the ratings companies include Bill Gross, chief investment officer at Pacific Investment Management Co. Gross, who runs the world’s biggest bond fund, said last month that Moody’s and S&P gave mortgage bonds investment-grade ratings because they were fooled by the “six-inch hooker heels” of the collateral backing them.
`Why Now?’
“I’d like to know: Why now?” Steven Eisman, a portfolio manager at Frontpoint Partners in New York said on a conference call hosted by S&P to discuss the possible ratings changes. “The news has been out on subprime now for many, many months. The delinquencies have been a disaster for many, many months. The ratings have been called into question for many, many months. I’d like to know why you’re making this move today instead of many months ago.”
Tom Warrack, an S&P managing director, said it takes time for performance to show through.
“We have been surveilling these deals actively on a regular basis beginning in 2005 and 2006,” Warrack said on the call. “We believe that the performance that we’ve been able to observe now warrants action.”
In response to the investor criticism, executives at S&P, Moody’s and Fitch have said they were waiting until foreclosure sales of homes proved that the collateral backing the bonds has declined enough to create losses.
Fran Laserson, a spokeswoman for Moody’s, and James Jockle, a spokesman for Fitch, said they had no immediate comment.
No Manpower
Some investors assume the ratings will lag the bonds’ credit quality because there are “thousands of deals in this space, and the manpower it takes to review each one means they can’t stay on top of things,” said Paul Colonna, a bond manager for Stamford, Connecticut-based GE Asset Management, which has $120 billion in fixed income assets under management.
Many of the bonds S&P is reviewing were made up of loans originated by New Century Financial Corp., which filed for bankruptcy protection in April, and Fremont General Corp., which federal regulators forced from the subprime-loan business in March.
Delinquencies and foreclosures are increasing for bonds issued in 2006, S&P said. Total losses on all subprime transactions issued since the fourth quarter of 2005 are 0.29 percentage point, compared with .07 percentage point for similar transactions from 2000, which until now had been the worst performing this decade.
S&P also said doubt had been cast over some data it used after the Mortgage Asset Research Institute reported mortgage fraud had risen above industry highs.
“Data quality is fundamental to our rating analysis,” S&P said. “The loan performance associated with the data to date has been anomalous in a way that calls into question the accuracy of some of the initial data provided to us.”
To contact the reporter on this story: Mark Pittman in New York at mpittman@bloomberg.net.
Wednesday, April 01, 2009
SUZANNE PRATT, NIGHTLY BUSINESS REPORT ANCHOR: The housing industry is showing some positive signs. The National Association of Realtors says pending sales of previously owned homes jumped more than 2 percent in February. Those sales were mostly due to low mortgage rates and lower home prices. But they do hint at a possible pickup in activity in the all important spring selling season. Tonight, we begin our series "Reviving the Economy: Real Estate" and as Stephanie Dhue reports, after three years of declines in housing, it looks like things may be turning around.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: With distressed sales bringing prices not seen since 2003, buyers swooped in in February driving new and existing home sales up. Construction is also showing signs of life. Mark Zandi of Moody’s economy.com says the market is beginning to thaw.
MARK ZANDI, CHIEF ECONOMIST, MOODY’S ECONOMY.COM: I think the very worst is behind us, at least in terms of sales, I think we’re finding a bottom in sales and in construction, I think we are pretty close to a bottom in housing construction. In terms of pricing we probably have a bit more to go, I think prices will fall through most of ‘09 bottom out at the end of the year.
DHUE: Policy prescriptions are beginning to help. Government efforts have sent mortgage rates on a 30-year fixed loan down to nearly 4.5 percent. Anticipation of the Obama administration’s loan modification program slowed the pace of foreclosures. And the tax credit for first time homebuyers is expected to lure people off the fence. Builders report the first weekend of spring brought increased traffic into models. National Association of Home Builders chief economist David Crowe expects sales to pick up in the next few months.
DAVID CROWE, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF HOME BUILDERS: We’re basically waiting on the consumer to say, ah, the deal is good. Prices have come down, interest rates are low, I can get a first time home buyer tax credit if I qualify. There’s a lot of options, a lot of available inventory, builders are dealing.
DHUE: The location, location, location mantra of real estate still holds. Areas of the country that have lost fewer jobs are expected to do better. Detroit is under pressure. Manhattan has seen prices drop 25 percent since Wall Street hit the skids. Florida, which enjoyed some of the largest gains in the boom, saw a 31 percent drop for the year. It’s a similar story in California, with home prices down by half in several metro areas. Prices in the Washington, DC area fell 8 percent overall. Zandi expects the housing picture to brighten nationwide by the end of this year. But the biggest wildcard is jobs.
ZANDI: If we continue to lose jobs at this clip, we’re losing 650,000 per month. If that doesn’t slow, then the housing market isn’t going to find a bottom any time soon.
PRATT: Stephanie joins me live to talk about the housing outlook. One of the things that strikes me when I listened to your story, Stephanie is the question of supply. Here in Manhattan, we are fortunate. We don’t talk about things in terms of inventory by months or how much inventory is left. But the rest of the country is facing years of inventory. So how are we going to work through all the supply do you think?
DHUE: There’s about a 10-month supply nationwide. It is going to vary by region. But the hope is that the low prices coupled with the low interest rates and some of these incentives for first-time home buyers are really going to help clear out that inventory by the end of the year, maybe (INAUDIBLE) into next.
PRATT: All right, now next week we’re going to do the profile of the five cities that we looked at last year and you’re going to look at Prince William County outside of DC. Things have changed significantly certainly in Manhattan and they’ve changed a lot around the country. What about in that that area that you’re going to be profiling? How have things changed?
DHUE: Well, I was surprised to see how much further prices have fallen (INAUDIBLE). They’ve fallen 25 percent just in the last year and investors are starting to swoop in here and grab up the bargains. There’s jobs here so people are able to rent out properties and there’s a lot of interest. The properties are distressed, but they’re starting to see some kind of life there.
PRATT: OK. Thanks. I think we have to leave it there. Thanks, Stephanie, for joining us.
DHUE: Thanks, Suzanne.
PRATT: Stephanie Dhue in Washington. Tomorrow, our series continues with a look a commercial real estate and the challenges it faces, including falling demand and a surprising bright spot for investment.
Deal to Cut Costs Is Close For Builders and Unions
Published: March 31, 2009
Reeling from the real estate downturn in the city, construction unions and builders are edging closer to an agreement that they say will reduce labor costs and enable at least some of their projects in Manhattan to proceed despite the weak economy.
The stakes are high for both sides. Developers, who paid record-breaking prices for land during the boom years, are now desperately seeking ways to cut their costs and keep projects alive.
The unions, in turn, are eager to keep their members employed and to retain their traditional dominance over large-scale projects in New York. Yet many are reluctant to give up hard-won wages and benefits.
Some construction managers and union officials involved in the negotiations say that the pending agreement on work rules, wages and benefits would cut labor costs by 15 to 20 percent, but not the 25 percent originally sought by builders. Many involved are loath to discuss it publicly for fear of blowing up the fragile talks with the union construction trades, all of which are covered by contracts. The carpenters and the electricians have been much more willing to bend, union officials and contractors say, than the steamfitters and the operating engineers, the highly paid operators of cranes, bulldozers and other heavy equipment.
Some developers, however, are skeptical that any agreement will translate into substantial savings. Some doubt whether even a 25 percent reduction would be enough to salvage a residential project when rents have dropped by a third or more.
“A lot of my developers are concerned that it doesn’t go far enough,” Steven Spinola, president of the Real Estate Board of New York, said of the proposed agreement. “But we’re grateful discussions are taking place.”
Among the developers pushing for a deal are Larry Silverstein, who is building at ground zero, Stephen M. Ross, who has a slow-moving project on 42nd Street at 10th Avenue, and the Milstein family, which has a project under way at Battery Park City.
The three people at the center of the negotiations — Raymond G. McGuire, president of the Contractors Association of New York, Louis J. Coletti, president of the Building Trades Employers Association, and Gary La Barbera, president of the Building and Construction Trades Council of Greater New York, an alliance of unions — did not return calls requesting comment.
“Industry leaders,” said James A. Parrott, chief economist at the union-supported Fiscal Policy Institute, “should be seeking help from Washington to retain construction jobs and maintain wages, benefits and safety standards.”
“Our national economic recovery depends on labor and management working together to expand and not weaken the middle class,” he said.
Construction employment in New York City climbed to roughly 130,000 during the boom years. But a report by the New York Building Congress predicts that that number could fall by 23 percent to 100,000 next year.
Nonunion projects are showing up in what has been a union bastion: Manhattan. The Atlantic Development Group is putting up an 89-unit apartment house at 10th Avenue and 23rd Street in Chelsea with nonunion contractors. And at a union job on the Upper West Side, the Chetrit Group and Stellar Management took the highly unusual step of asking contractors for new bids on three 15-story buildings already under construction on Columbus Avenue, between 97th and 100th Streets. Developers and union officials expect nonunion contractors to take over the project.
“Our main goal was to continue with the project and keep as many people working as possible,” said Jeff Gdanski, a vice president at the Chetrit Group.
Bruce Ratner, a developer who traditionally builds with union contractors, recently stopped at the 38th floor of his planned 76-story Beekman Tower in Lower Manhattan, threatening to cap the building at 40 stories if construction unions did not accept concessions on wages and work rules.
Mr. Ratner, who is not involved in the current negotiations, stopped work for three months early last year while he scrambled to obtain $680 million in construction financing. At that time, he decided to switch from condominiums to rentals. In another cost-cutting move, he modified the design by the architect Frank Gehry, using a standard curtain wall instead of one that would seem to be undulating, on one of the tower’s eight sides.
It was not so long ago that major Manhattan developers and their lenders worried little about these things, figuring that rents and sale prices would gallop well ahead of the surging cost of land, concrete and steel.
But the cityscape is now littered with half-finished towers that have run into financial problems. Construction managers say that developers are stuck with land costs of $400 a square foot or more, up from $200 five years ago.
In January, developers and construction managers who often use union contractors began talking about a citywide agreement on wages, work rules and benefits. Developers and managers say they prefer union contractors, despite their higher wages, because they provide highly skilled workers.
“This year is not too bad,” said one union official who insisted on anonymity because he was not supposed to discuss the talks. “But 2010 is looking like we’re going off the ledge.”
But many unions have balked at wage cuts, particularly those who have not suffered layoffs, like cement workers and operating engineers. Some contractors have also questioned the value of the concessions that some unions have agreed upon, even ones that have been verified by consultants. There was talk of a compromise for a select group of six projects, including those owned by Mr. Ross, Mr. Silverstein and the Milstein family.
Executives and labor officials who have been briefed on the latest discussions say the unions may agree to consider projects on a “case-by-case” basis for a special “project labor agreement” that would save developers whose projects are otherwise not viable up to 20 percent on the current labor contracts.
A version of this article appeared in print on April 1, 2009, on page A28 of the New York edition.
By DONNELLE ELLER • deller@dmreg.com • March 26, 2009
Here’s a worrying sign going into the homebuilding season: Three times more homes were demolished last month in Des Moines than were constructed.
“We see interest. People are coming in, talking about building. They’re just timid about moving forward,” said Phil Delafield, administrator of the Des Moines building department. His data show that 13 homes and apartments were torn down last month; four were being built.
In a typical homebuilding season, Des Moines officials inspect 20 to 30 homes each month.
Still, Des Moines builders, real estate leaders and developers are cautiously optimistic this construction season, even though metro new-home sales in February were about 38 percent lower than January and year-ago sales.
“It’s a 29-years-in-the-business gut feeling,” said Carolyn Helmlinger, chief executive of Coldwell Banker Mid-America Group.
Helmlinger points to the company’s Ankeny office, which has sold 58 homes in the past week, many of which were new.
And she points to an improving stock market, mortgage interest rates below 5 percent and an $8,000 tax credit for first-time buyers provided through the $788 billion stimulus package.
U.S. sales of new homes showed a glimmer of hope Wednesday, rising for the first time since July. Sales last month, however, were still the second-worst on record in 45 years.
Rick Tollakson said Hubbell Homes sold nine homes the day after President Barack Obama signed the stimulus package. “It’s having a positive impact,” rippling from entry-level buyers to “move-up buyers.”
Tollakson said the West Des Moines developer expects to build 200 homes this year, a 20 percent increase over 2008. “I expect to sell more product and build more product,” he said.
Hubbell has bought single-family and townhouse projects that competitors like Regency Cos. left behind when they closed operations. Tollakson said Hubbell’s sales are helped because it can pass those discounts onto buyers. “Our homes are very competitively priced,” he said.
Colin King, co-owner of K&V Homes, said a lot of small builders left behind inventory along with big builders like Regency, once the state’s largest. The West Des Moines company left about 300 homes on the market when it closed nearly a year ago.
Selling existing new-home inventory is key to driving demand for new homes — and business for companies like K&V Homes, King said.
Concerns about job security, combined with challenges in selling existing homes, have stopped many Des Moines residents from building a home. King is hopeful that’s changing.
“Consumer confidence is starting to return. People are buying lots and getting their home plans together. They just want some assurances their existing home will sell,” said the Waukee builder, who expects to construct 10 homes this year, about half of a typical year.
“A lot of people are on the cusp — ready to go, ready to build — once their house sells,” King said.
This and other Realty news available at www.LotInvestor.com
Here’s a little information about the 2009 Tax Credit for Home Buyers. Contact Pat or Beth at 515.537.9922 for more information about how you may be eligible to get up to $8,000 from the government just for buying a home!
The proportion of people thinking it is a good time to buy a house continues to rise, even as most people taking part in a new survey expect house prices to fall further.
The ASB housing confidence survey for the three months ending January found 53 per cent of respondents think now is 
a good time to buy, up from 45 per cent the previous quarter.
With 15 per cent considering now a bad time, down from 21 per cent, a net 38 per cent expect now is a good time to buy, compared to 24 per cent previously.
At the same time 60 per cent expect house prices to go lower, compared to 55 per cent previously, the survey published on Friday shows.
The 9 per cent expecting higher prices in the latest survey, compared to 11 per cent, leaves a net 51 per cent of respondents expecting house prices to fall in the next year.
That is up from a net 44 per cent in the previous quarter and moving back towards July’s low of a net 55 per cent.
"Recent results remain overwhelmingly the weakest in the survey’s history," ASB chief economist Nick Tuffley said.
Declining interest rate expectations continued to have a significant influence on attitudes towards the housing market, with lower prices also helping.
But the lower mortgage rates and improvement in sentiment towards housing had not had much apparent effect on the housing market, so far.
Reasons for the lack of recovery included little urgency among buyers given they expected further price falls, while higher deposit criteria would be another factor, Mr Tuffley said.
"But increasingly an air of uncertainty about the direction of the economy is taking hold on decision-making by all and sundry at present."
The lower interest rates may have put a floor under turnover and could help some recovery in housing turnover during the year.
Despite that, he continued to expect house prices to fall for much of this year, though at a slightly more gradual pace than last year.
Several structural issues argued against a strong rebound in house prices, Mr Tuffley said.
House prices were still on the high side relative to incomes, and rental yields were still low in an absolute sense even if they were starting to look attractive relative to interest rates.
Globally the credit environment would be different in years to come, with credit set to be a far weaker driver of asset prices than was the case until recently.
Reverse mortgage for buyers debuts
New program frees up cash for seniors, addresses flipping
By Tom Kelly, Wednesday, January 28, 2009. Inman News
Reverse mortgages have been available for more than two decades for older homeowners who have accrued a significant amount of equity in their homes. Now, the government is backing a program to help older homeowners purchase a home with the increasingly popular financing program.
The Federal Housing Administration, a component of the U.S. Department of Housing and Urban Development, insures the nation’s most popular reverse mortgage known as the Home Equity Conversion Mortgage, or HECM.
T
he Housing and Economic Recovery Act of 2008 recently approved the HECM-for-purchase program, allowing lenders to close the mortgages after Jan. 1, 2009. The move allows older homeowners to make a large down payment on a new home and then utilize the reverse mortgage as permanent financing.
The same law reduced the maximum loan fee on reverse mortgages to 2 percent on the initial $200,000 of the home’s value and 1 percent on the balance thereafter, with a cap of $6,000. Previously, HECM fees were capped at 2 percent of the home’s value or the county lending limit, whichever was lower.
A reverse mortgage historically has enabled senior homeowners to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. Reverse mortgages are available to individuals 62 or older who own their home. Funds obtained from the reverse mortgage are tax-free.
"The HECM for purchase will give seniors several more options," said Sarah Hulbert, president of Senior Financial Corp., a reverse mortgage lender. "I think one of the key aspects is that they can stay more liquid. They do not have to reinvest all of their funds into their new home before getting the reverse mortgage, freeing up more cash for other uses."
For example, if a 70-year-old homebuyer wanted to purchase a $300,000 home, he or she could put approximately $123,000 down and finance the balance of $177,000, plus closing costs, with a reverse mortgage. The buyer would make no monthly payments for as long as he or she maintained the home as a principal residence.
Interest and MIP (Mortgage Insurance Premium) accrue on the initial loan amount and become due when the borrower, or surviving spouse, dies, moves or sells the home. The current annual percentage (APR) for the monthly adjusted HECM 200 is 3.62 percent (including the government’s 0.5 percent annual mortgage insurance). When refinanced, the APR for the program has averaged approximately 6.5 percent for the past 15 years.
Eligible properties include:
- 1- to 4-unit single-family homes
- Manufactured homes, built after June 15, 1976, that meet HUD’s permanent foundation guidelines
- Condominiums
"I think you will see the typical purchaser for a HECM will be the move-down buyer — perhaps headed to the sunshine," said former Puget Sound resident Ken Keranen, who now originates reverse mortgages for Seniors Reverse Mortgage in Carlsbad, Calif.
Customers interested in the HECM for purchase must enroll in a HUD counseling class. Borrowers may not obtain a bridge loan (also known as "gap financing") or borrow against other assets for the down payment or closing costs. This restriction includes personal loans, cash withdrawals from credit cards, seller financing and any other lending commitment that cannot be satisfied at closing.
Lenders will be required to verify the source of all funds prior to closing. A verification of deposit, along with the most recent bank statement, may be used to verify savings and checking accounts. If there is a large increase in an account or the account was opened recently, the lender must be able to obtain a credible explanation of the source of those funds.
To avoid cases of property flipping, lenders must take steps to ensure that: a) only current owners of record may sell properties that will be financed using FHA-insured mortgages; b) any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing; and c) FHA will require additional documentation validating the property’s value for resale that occurs between 91 and 180 days where the new sales price exceeds 100 percent of the previous sales price.
More than 450,000 HECMs have been made since 1989, the year FHA launch its reverse mortgage pilot program. FHA insured approximately 112,000 HECMs in fiscal-year 2008, up from 107,367 HECMs in 2007 and 43,131 in 2005.
The only challenge seniors now face in this slow market is finding a willing buyer to purchase their present home so they can "move down" via a reverse mortgage. After all, you have to sell your primary residence before you can buy another one.
